Love, H. v Desmone (Des) Williams
[1994] FCA 984
•16 DECEMBER 1994
HAROLD LOVE v. DESMONE (DES) WILLIAMS AND OTHERS
No. NG98 of 1994
AUSTRALIAN ELECTORAL COMMISSION v. RODNEY GLENN TOWNEY AND OTHERS
No. NG102 of 1994
AUSTRALIAN ELECTORAL COMMISSION v. DESMONE (DES) WILLIAMS AND OTHERS
No. NG104 of 1994
FED No. 984/94
Number of pages - 11
Costs
(1994) 54 FCR 383
COURT
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
FOSTER J
CATCHWORDS
Costs - application for award of costs on indemnity basis - principles to be applied in determining appropriate basis - whether special circumstances exist to justify departure from usual rule - whether proceedings in the nature of a test case.
Commonwealth Electoral Act 1918 (Cth) - s 360
Federal Court of Australia Act 1976 (Cth) - s 43(2)
Aboriginal and Torres Strait Islander Commission Act 1989 (Cth) - s 10(1)(k), s 26, Pt 2 of Sch 4
Knight v F.P. Special Assets Ltd (1992) 174 CLR 178
Colgate Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248
Ragata Developments Pty Ltd v Westpac Banking Corporation (Federal Court of Australia, Davies J, 5 March 1993, Unreported)
Fountain Selected Meats (Sales) Pty Limited v International Produce Merchants Pty Limited (1988) 81 ALR 397
EMI Records Ltd v Ian Cameron Wallace Ltd (1983) Ch 59
Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (Federal Court of Australia, French J, 3 May 1991, Unreported)
Hudson v Lee (1993) 177 CLR 627
Nile v Wood (1988) 167 CLR 133
Qantas Airways Limited v Dillingham Corporation and Ors (Supreme Court of New South Wales, Common Law Division, 14 May 1987 Unreported)
Cachia v Hanes (1991) 23 NSWLR 304
Australian Federation of Consumer Organisations Inc. v Tobacco Institute of Australia Pty Ltd (1991) 100 ALR 568
Baltic Shipping Co. v Dillon "Mikhail Lermontov" (1991) 22 NSWLR 1
HEARING
SYDNEY, 10 November 1994
#DATE 16:12:1994
Counsel for the Applicant: Ms R. Henderson
Instructed By: Australian Government Solicitor
Counsel for the First, Second,
Third, Fifth, Seventh, Eighth
and Ninth Respondents: Mr J. Mccarthy QC
Counsel for the Fourth, Sixth,
Tenth and Eleventh Respondents: Mr J. Kildea
Instructing Solicitors for the
First, Second, Third, Fifth,
Seventh, Eighth, Ninth Tenth
and Eleventh Respondents: Aboriginal Legal Service
Instructing Solicitors for the
Fourth and Sixth Respondents: Craddock, Murray and Neuman
ORDER
THE COURT ORDERS THAT:
1. In proceedings NG 98/94 and NG 102/94, the Australian Electoral Commission pay the Applicants' costs as taxed or assessed on the basis that such costs are to include all costs except in so far as they are of an unreasonable amount or were unreasonably incurred, so that, subject to such exceptions, the applicants will be completely indemnified by the Australian Electoral Commission for those costs.
2. In proceedings NG 98/94 and NG 102/94, the Australian Electoral Commission pay the Applicants' costs of this motion on the party and party basis of taxation.
3. In proceedings NG 104/94 there shall be no order as to costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
FOSTER J This Notice of Motion has been brought in connection with three related sets of proceedings: matters NG 98/94, NG 104/94 and NG 102/94. Each of these proceedings concerned petitions brought pursuant to Pt 2 of Sch 4 of the Aboriginal and Torres Strait Islander Commission Act 1989 (Cth) ("the Act"). The petitions in NG 98/94 and NG 104/94 concerned the election for regional councillors for the Northern Rivers Ward in the Coffs Harbour Region on 4 December 1993 ("the Love petition"). The petition in NG 102/94 concerned an election held on the same date for regional councillors for the Wirawongam Ward of the Wagga Wagga Region ("the Towney petition"). The elections had been conducted by the Australian Electoral Commission ("AEC"). During the hearing of the motion I was advised that settlement had been reached in matter G 104/94. This leaves for consideration the motion in relation to matters NG 98/94 and NG 102/94.
At the hearing of the petitions, the Court made orders which were novel in electoral law. These orders resulted in polling errors, that had been made by polling officers, being rectified by a forensic scientific process of matching envelopes containing voting papers with original voter identification slips. This procedure enabled the carrying out of a further scrutiny and count of the votes originally cast but previously excluded from the poll. The need for a fresh election was thereby avoided and an electoral result was obtained which was in accordance with the voting wishes of the electors.
The Court, by consent, made the following orders as to costs:
(a) In proceedings NG 98 of 1994, "The Court orders the Ninth Respondent in proceedings NG 98 of 1994 (AEC) to pay the costs of the Petitioner and the First to Eighth Respondents in those proceedings and gives liberty to the parties to apply to the Court in respect of an appropriate scale if the parties are unable to otherwise agree."
(b) In proceedings NG 102 of 1994, "The Court orders the Petitioner
(AEC) to pay the costs of the Respondents and gives liberty to apply to the Court in respect of an appropriate scale if the parties are unable to otherwise agree."
In August 1994, the Aboriginal Legal Service ("ALS"), which, with some exceptions, acted for the respondents in the petitions, submitted to the Australian Government Solicitor ("AGS"), solicitor for the AEC, a bill of costs in relation to the petitions. The ALS was notified by the AGS that the amount and scale of costs claimed in each matter was disputed. The AEC asserted that the appropriate scale for costs was on the party and party basis. The ALS, was not prepared to accept this basis for costs, as it would occasion a considerable reduction in the amounts claimed. It sought the payment of costs on an "indemnity" basis. This basis was distinguished in argument from the "solicitor-client" and "solicitor-own client" basis. No orders were sought on those bases.
It is necessary to say something about the applicants in the Motion. Mr Love was a voter at the Northern Rivers Ward election. All other applicants were respondents to the petitions brought by AEC in respect of the flawed elections. They were councillors who had been elected. In respect of some of them, their election was nullified as a result of the counting of the originally excluded votes. Mr McCarthy QC appeared for Mr Love and all the respondents with the exception of the fourth, sixth, tenth and eleventh. These respondents were separately represented at the hearing of the petitions and on this Motion, by Mr Kildea of counsel. These respondents had originally opposed the making of the orders enabling the scientific procedures to be established. They sought, instead, a fresh election. It was not disputed, however, that their costs should be paid by AEC, on the broad basis that the miscarrying of the elections had been occasioned by fault on the part of AEC's employees in the conduct of the elections. These respondents, as applicants, supported the motion brought by the other applicants. At the hearing, leave was granted to them to seek similar orders for "indemnity" costs on their own behalf. In relation to their application the AEC made a similar submission, namely that costs should be awarded only on a party and party basis.
Accordingly, the only matter in issue in this motion is whether AEC should pay costs on a party and party or "indemnity" basis. The Court has received, as part of the evidence, the bill of costs which was submitted with the actual amount of money claimed in respect of each item blanked out. The Court has not been asked to consider the individual items separately on the basis of whether they should be allowed or disallowed. It is accepted that this would be the task of the Court's taxing officer, as would be the allocation of specific amounts to each item. It is not disputed, however that taxation on a "party and party" basis would, in the ordinary course, result in the disallowance of a substantial number of items with the probable outcome that something in the order of one-third to two-fifths of the amount claimed would be taxed off. Taxation on an "indemnity" basis would not result in the whole of the bill being allowed as asked. It would, however, result in the allowance of a large number of the items that would otherwise be taxed off.
It is convenient, at this stage, to indicate that I have not been persuaded that the applicants for whom Mr Kildea appears should be dealt with differently in relation to their entitlement to costs from the applicants for whom Mr McCarthy QC appears. Although they originally opposed the making of the orders that were finally made, their opposition was useful to the Court in the novel situation that was presented. It sharpened the focus upon the questions for decision. I should add that it is plain that these applicants, like the other applicants, being aboriginal citizens of limited means, are not in a financial position to accept the burden of the costs payable to their solicitors, which are not recoverable from AEC as a result of taxation.
The order sought by the applicants is that:
"The Australian Electoral Commission pay the Applicants' costs as taxed or assessed on the basis that all costs shall be allowed except in so far as they are of an unreasonable amount or have been unreasonably incurred, and any doubts which a taxing officer may have as to whether the costs were unreasonably incurred or unreasonable in amount shall be resolved in favour of the Applicants."
This is the form of order for indemnity costs provided for in Rule 28A of the Rules of the Supreme Court of New South Wales. Such orders, however, are not always made in this form, a matter I shall return to later.
THE COURT'S JURISDICTION TO AWARD COSTS
10. There is no dispute between the parties that the Court has jurisdiction to award indemnity costs in these matters. The power of the Court of Disputed Returns to award costs appears in Schedule 4, s 10(1)(k) and s 26 of the Act, which states:
"(1) The powers of the Court in trying an election petition include but are not limited to the following powers: ...
(k) to award costs.
(2) The Court may exercise all or any of its powers under this clause on such grounds as the Court in its discretion thinks just and sufficient.
...
s 26 The Court may award costs against an unsuccessful party to a petition or reference."
Evidently, there is no explicit reference in the Act as to the scale of costs and charges. Nevertheless, the parties agree that the discretion of the Court in relation to costs orders is not circumscribed; subject to it being "exercised judicially and in accordance with general legal principles pertaining to the law of costs": Knight v F.P. Special Assets Ltd (1992) 174 CLR 178 per Mason CJ and Deane J at 192 (Gaudron J agreeing at 205).
Even if jurisdiction could not be found in the Act, the Court's jurisdiction to award costs could be derived from s 43(2) of the Federal Court of Australia Act 1976 (Cth) and, by reason of its status as a superior court of record and court of law and equity: Colgate Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248 per Sheppard J at 252; see also, per Davies J in Ragata Developments Pty Ltd v Westpac Banking Corporation (Federal Court of Australia, 5 March 1993, Unreported); Fountain Selected Meats (Sales) Pty Limited v International Produce Merchants Pty Limited (1988) 81 ALR 397; EMI Records Ltd v Ian Cameron Wallace Ltd (1983) Ch 59; Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (Federal Court of Australia, 3 May 1991 French J, Unreported).
The principles to be applied by the Court in determining the basis for costs were expounded by Sheppard J in Colgate Palmolive at 256:
"The ordinary rule is that, where the court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on the party and party basis. In this court the provisions of O.62, rr.12 and 19, and the Second Schedule to the rules will apply to the taxation. In many cases the result will be that the amount recovered by the successful party under the Order will fall short of (in many cases well short of) a complete indemnity. This has been the settled practice for centuries in England. It is a practice which is entrenched in Australia. Either legislation (perhaps in the form of an amendment to rules of court) or a decision of an intermediate Court of Appeal or of the High Court would be required to alter it."
His Honour went on at 256-7 to note that:
"In consequence of the settled practice which exists, the court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England. The tests have been variously put. The Court of Appeal in Andrews v Barnes (39 Ch D at 141) said the court had a general and discretionary power to award costs as between solicitor and client `as and when the justice of the case might so require'. Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v Preston (1982) 1 All ER at 58 namely, there should be some special or unusual feature in the case to justify the court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at 8) in Tetijo: `the categories in which the discretion may be exercised are not closed'. Davies J expressed (at 6) similar views in Ragata."
There is no dispute between the parties that there is nothing in the Act which displaces the usual rule that costs be awarded on the party and party basis. Nor is there any disagreement that special circumstances must be present to justify a departure from the usual rule.
ARE THERE SPECIAL CIRCUMSTANCES IN THIS CASE?
16. Circumstances that have been held to warrant a departure from the usual rule were summarised in Colgate Palmolive at 257:
"...the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the court and to other parties ( French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise ( eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No.2) (1992) 27 NSWLR 721 at 724 (Court of Appeal); Crisp v Kent (SC(NSW)(CA), 27 Sept 1993, unreported) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records)..."
To this list may be added the category identified by Davies J in Ragata: namely, "where the case was understood to be a test case, or to have a wider effect than merely inter parties, in which circumstances additional and special work and responsibilities would have been undertaken."
There were substantially three grounds advanced by the applicants to comprise "special circumstances" so as to justify the proposed order: the proceedings involved a process of public administration; the absence of indemnity of the applicants; and the proceedings were in the nature of a test case.
THE PROCESS OF PUBLIC ADMINISTRATION
19. The applicants sought to distinguish these proceedings from the ordinary inter parties proceedings by emphasising the involvement of councillors and electors in their public capacity. The petitioner in the Love petition took advantage of the feature of electoral litigation adverted to by Gaudron J in Hudson v Lee (1993) 177 CLR 627 at 633:
"... very few impediments are placed in the way of a person who wishes to bring proceedings challenging an election in the Court of Disputed Returns."
The consequences of the petitioner availing himself of the opportunity to bring proceedings included the investment by the elected office bearers of considerable time and expense in participating in the proceedings. There is no dispute about that.
Nor is there any dispute that error occurred in the balloting and recording of votes in the elections. It is submitted that the elected officials, not responsible for the commission of the error, should not incur liability for the mistakes made by the polling officials. At the same time, the applicants point to what they characterise as the AEC's central role in the circumstances leading to the dispute and consequent responsibility for the involvement of the other parties.
The fact that the councillors were involved in the proceedings concerning the process of public administration is not, in my view, in itself a sufficient basis to award costs upon the basis desired by the applicants. The appropriateness of the AEC paying the costs of the applicants is not in dispute. The Court's discretionary powers under the Act to award costs resembles the discretionary power of the Court of Disputed Returns in s 360 of the Commonwealth Electoral Act 1918 (Cth). In Nile v Wood (1988) 167 CLR 133, the High Court ordered a third party (the Commonwealth) to pay the costs of an electoral petition, but there was no suggestion that the costs order would be on anything other than the usual basis. Mr Kildea sought to distinguish these matters from Nile v Wood on the basis that the latter case concerned competing candidates vying for the same position. I do not find that argument persuasive. I accept the AEC's submission that contested proceedings are inter parties in the relevant sense.
The AEC correctly points out, in my opinion, that in judicial review proceedings, or cases containing constitutional principles, costs are awarded on the usual basis even though the public acts of administration officials are called in question. The fact that these proceedings involve errors made by officials in the process of public administration does not, in my view, afford "special circumstances" sufficient to justify departure from the party and party basis.
ABSENCE OF INDEMNITY
24. Mr McCarthy QC made essentially three points in arguing that the absence of full indemnity represents "special circumstances".
In the first place, reliance was placed upon the comments of Rogers J (as he then was) in Qantas Airways Limited v Dillingham Corporation and Ors (Supreme Court of New South Wales, Common Law Division, 14 May 1987, Unreported) where his Honour suggested (at p 8) that:
"...in the current context of litigation, there is a great deal to be said for the proposition that a successful party should always be fully indemnified for costs...".
His Honour was referring to the notorious discrepancy between costs recovered on the party and party taxation of costs and costs payable by the successful party to its own solicitors.
The comments of Rogers J have precipitated some debate. A contrary view was expressed by Handley JA in Cachia v Hanes (1991) 23 NSWLR 304 where, after acknowledging the unlikelihood of complete indemnity, his Honour commented that:
"The limited indemnity provided to a successful represented litigant for expense incurred and time lost reflects a compromise between the interests of successful and unsuccessful litigants. It is also an important spur to settlement. The rule that a litigant in person can only recover out of pocket expenses also represents a compromise between the interests of successful and unsuccessful litigants. In my opinion if the existing law is to be changed this must be done either by the High Court or by Parliament."
In Colgate Palmolive, Sheppard J affirmed the view that settled practice could only be altered through legislation, the decision of an intermediate Court of Appeal, or the High Court (at 256). In Ragata, Davies J asserted that it was "not open to an individual Judge to award costs having regard to his own view as to the adequacy of party/party costs so fixed."
I respectfully concur in these views.
Secondly, Mr McCarthy QC cited the financial disadvantage to aboriginals or aboriginal communities likely to accrue if costs were awarded on the usual basis. The third and associated point is the argument that if the motion fails, a considerable proportion of costs will necessarily be borne by the Aboriginal Torres Strait Islander Commission, the ALS or other legal representatives, as the individual councillors are in no position to pay these costs.
I have given close consideration to these submissions but, in my view, they are answered by the comments of Sheppard J in Colgate Palmolive (at 256) and Davies J in Ragata (at page 4) noted above. Significantly, when Morling J awarded an indemnity costs order in Australian Federation of Consumer Organisations Inc. v Tobacco Institute of Australia Pty Ltd (1991)100 ALR 568, his Honour noted that the extent of the applicant's financial resources and degree of legal aid were insignificant (at 572) and based the award on another footing. I am satisfied that I must reject the submission that the absence of full indemnity of the applicants justifies departure from the usual basis.
WERE THE PROCEEDINGS IN THE NATURE OF A TEST CASE?
32. Mr McCarthy QC submitted that the applicants acted in the public interest by participating in the proceedings. The proceedings were characterised as being in the nature of a test case, in that they had wider implications than the particular interests of the parties and involved novel elements of law and procedure in election litigation.
Particular reference was made to the comments of Davies J in Ragata, where his Honour concluded that " special orders of costs were made where the case was understood to be a test case, or to have a wider effect than merely inter parties, in which circumstances additional and special work and responsibilities would have been undertaken."
The applicants also placed reliance upon the judgment of Morling J in the Tobacco Institute case. In that case, his Honour emphasised that the proceedings were in the nature of a test case on the issue of whether passive smoking was a health hazard to non-smokers. His Honour held that the applicant acted in the public interest by bringing the proceedings and that, under the circumstances, it was inappropriate that a person should be left to meet part of his costs, "in consequence of the public-spirited action it has taken." (at 572).
Although Morling J's order was set aside on appeal ((1993)113 ALR 257), the Full Court's cost orders were influenced by the decision on other aspects of the appeal and do not reflect on the order of Morling J made on the basis of his Honour's findings at first instance.
With these principles in mind, I turn to the matters urged in support of the submission that the proceedings were in the nature of a test case and that the applicants conducted themselves in the public interest. There were two points advanced. First, the proceedings featured the unprecedented use of forensic testing in order to save the election. Secondly, the issues had wider ramifications than between the parties.
It is to be recalled that as proceedings unfolded, there was a real possibility - indeed a case was made out for so doing - that the elections in both wards would be declared void and new elections ordered. As it transpired, the use of the forensic process allowed the elections to be validated after the subsequent scrutiny and recount. The applicants claimed that the process rectified the problem and their involvement in the proceedings facilitated the public interest in avoiding fresh elections.
The AEC contended that the proceedings fell short of constituting a test case. It argued that they established no new principle which would govern the decision of subsequent cases. Indeed, it was unlikely that there would be similar cases in the future. In short, the AEC characterised the forensic process adopted as being no more than a pragmatic solution to a peculiar problem.
In making these submissions, the AEC sought to distinguish the proceedings from the Tobacco Institute case and Baltic Shipping Co. v Dillon "Mikhail Lermontov" (1991) 22 NSWLR 1 by arguing that in contrast to the former decision, the proceedings were not brought for the public interest; and in contrast to the latter, the proceedings could not be construed as establishing any binding precedent.
In my view, these submissions underestimate the significance of the utilisation of the forensic process proposed by the applicants. There is no dispute that the process preserved the election nor that the idea of utilising it originated with the applicants. The process was a uniquely practical measure which obviated the need for the elections being declared void. Although the process may be considered pragmatic it was, nevertheless, an ingenious adaptation of existing scientific skills to serve an important public purpose. The cost and considerable inconvenience of the holding of fresh elections was avoided and the voting intentions of a number of electors, who had been disenfranchised through no fault of their own, were given effect to. All this was very much in the public interest.
Whilst these proceedings cannot be described as a "test case" in the true sense of that phrase they, nevertheless, "have a wider effect than merely inter parties". They introduced into electoral law the concept of using forensic scientific expertise to overcome the effects of human error in the electoral process. It was at least a path-finding or trail-blazing approach, more than a mere one-off practical solution.
The evidence clearly points to the initiative of the ALS in proposing an approach to the Court for orders for the forensic procedures. Much professional time was expended by the ALS in bringing the interested parties to accept the practicality and legality of the proposals, in implementing the investigation by the scientists, and compiling the results.
Notwithstanding that the AEC expended large effort and cost itself in the preparation of affidavits and the Agreed Statement of Facts and Contentions, I accept that it was the applicants, through their solicitors, that were the driving force in having the forensic process implemented. In any event, the costs order is sought only in respect of work done by the applicants. The amount of work undeniably done by AEC and its legal representatives can have no bearing upon this. In my opinion, the applicants' role in this case in facilitating a solution to a problem not of their own making sufficiently constitutes "special circumstances" to ground an indemnity costs order.
THE TERMS OF THE ORDER
44. The proposed order duplicates the terms of Rule 28A of the Rules of the Supreme Court of New South Wales. It is to be observed that the first limb of the order reflects the terms of the indemnity costs orders made Woodward J in Fountain Selected Meats (at 401) and by Morling J in the Tobacco Institute case (at 574). Mr McCarthy QC, in seeking that the order in these proceedings should contain the second limb, contended that it merely reinforces the first limb.
However, the AEC resisted the second limb of the proposed order on the ground that it went further than the case reasonably warranted. I agree. The Supreme Court rule no doubt relates to the policy in those rules of penalising the rejection of reasonable offers of compromise.
I consider that the special circumstances of these proceedings which justify the special order should not warrant what is, in effect, a circumscribing of the discretion of the taxing officer. For this reason, I prefer and adopt the formulation of Morling J in the Tobacco Institute case. The applicants should bear the onus of demonstrating that individual cost items were not unreasonably incurred and are not unreasonable in amount. For instance, it will be very much a question for the taxing officer to determine whether it was reasonable for the applicants to incur the cost of the attendance of either or both of their legal representatives at the scrutiny and counting of the reconstituted votes. The order for indemnity costs, of course, does not remove this or like questions from consideration.
I do not consider that the costs of this motion should be awarded on an indemnity basis. I consider that the award of costs on that basis should be limited to the special circumstances in which the applicants' acted in the public interest in urging a process to save the elections.
I make the following orders:
1. In proceedings NG 98/94 and NG 102/94, the Australian Electoral Commission pay the Applicants' costs as taxed or assessed on the basis that such costs are to include all costs except in so far as they are of an unreasonable amount or were unreasonably incurred, so that, subject to such exceptions, the applicants will be completely indemnified by the Australian Electoral Commission for those costs.
2. In proceedings NG 98/94 and NG 102/94, the Australian Electoral Commission pay the Applicants' costs of this motion on the party and party basis of taxation.
3. In proceedings NG 104/94 there shall be no order as to costs.
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