New South Wales Aboriginal Land Council v Hoddinott
[1999] NSWLEC 225
•09/22/1999
Land and Environment Court
of New South Wales
CITATION:
New South Wales Aboriginal Land Council v Hoddinott and Anor [1999] NSWLEC 225
PARTIES
APPLICANT
New South Wales Aboriginal Land CouncilRESPONDENTS
Hoddinott and Anor
NUMBER:
40196 of 1998
CORAM:
Pearlman J
KEY ISSUES:
Costs :- costs of interlocutory proceedings - whether Court may nominate source from which costs are to be paid
LEGISLATION CITED:
Aboriginal Land Rights Act 1983
Land and Environment Court Rules 1996
DATES OF HEARING:
08/10/1999
DATE OF JUDGMENT DELIVERY:
09/22/1999
LEGAL REPRESENTATIVES:
APPLICANT
Mr T S Hale (Barrister)SOLICITORS
The Law Firm of Solari'sFIRST RESPONDENT
Mr T F Robertson (Barrister)SOLICITORS
Henrietta J DeanSECOND RESPONDENT
SOLICITORS
Mr P F Singleton (Barrister)
Crown Solicitor's Office
JUDGMENT:
IN THE LAND AND 40196 of 1998
ENVIRONMENT COURT Pearlman J
OF NEW SOUTH WALES 22 September 1999
- Applicant
- First Respondent
- Second Respondent
Introduction
1. This is a costs application. Each of the respondents seeks an order for costs against the applicant, and the applicant resists the orders which they seek.
2. The costs application arises out of class 4 proceedings commenced on 15 October 1998 by the applicant, New South Wales Aboriginal Land Council (“NSWALC”). It sought a declaration of the invalidity of the appointment of the first respondent, Mr Hoddinott, as administrator of the Darkinjung Local Aboriginal Land Council (“the Darkinjung LALC”), and it sought to restrain Mr Hoddinott from tendering for sale or entering into any contracts for the disposal of certain land other than in accordance with heads of agreement between the Darkinjung LALC and Walker Corporation Ltd.
3. On 22 October 1998, NSWALC sought an interlocutory injunction in terms of the injunctive relief sought in the substantive application, that is, it sought to restrain Mr Hoddinott from disposing of the land except as specified. At the same time, both the Minister for Aboriginal Affairs and Mr K Gleeson (the chairperson of Darkinjung LALC) applied by respective notices of motion to be joined as a party. The Minister was joined, and Mr Gleeson withdrew his application. In a judgment which I delivered on that date (“the first judgment”), I granted the interlocutory injunction until further order of the Court, and gave the parties liberty to apply on two days’ notice.
4. At a callover on 13 November 1998, the Court was informed that the Minister intended to appoint an investigator into the affairs of Darkinjung LALC, and on 2 December 1998 that appointment was made.
5. By notice of motion, Mr Hoddinott then sought the discharge of the interlocutory injunction. That application came on for hearing on 29 January 1999, and was stood over part heard until 12 February 1999. In a judgment which I delivered on that date (“the second judgment”), I discharged the interlocutory injunction which I had earlier granted, I refused an application for a further interlocutory injunction, and I reserved the question of costs.
6. On 17 February 1999, NSWALC filed a notice of discontinuance of the proceedings. On 3 March 1999, the term of the appointment of Mr Hoddinott as administrator of the Darkinjung LALC expired.
The competing costs arguments
7. Against the background I have set out, the respondents each seek an order for costs in their favour. Their respective notices of motion are couched in slightly different terms. Mr Hoddinott seeks (a) an order that NSWALC pay his costs on an indemnity basis; and (b) an order that NSWALC “… pay its own costs and all costs it is ordered to pay in these proceedings out of its own funds”. The Minister also seeks costs from NSWALC, but does not seek indemnity costs. He also seeks a further order in the following terms:
- That costs paid by … [NSWALC] … shall not be financed by taking funds from the Darkingjung Local Aboriginal Land Council, reducing any budget or monetary amounts to be given to the Darkingjung Local Aboriginal Land Council or otherwise acting to the prejudice of the Darkingjung Local Aboriginal Land Council.
8. It will at once be apparent that the orders which each of the respondents seek are based upon a concern that, by virtue of the control of funds for local aboriginal land councils which resides in NSWALC, any costs which it may be ordered to be paid will ultimately come out of the coffers of the Darkinjung LALC, so that, in effect, Darkinjung LALC will be the real payer of such costs. I shall return to consider this concern, which arises from some of the evidence and from certain provisions of the Aboriginal Land Rights Act 1983 (“the Land Rights Act”), but, since an order in the terms which the respondents each seek will only arise if NSWALC is ordered to pay their costs, it is appropriate that I defer consideration of this aspect for the moment and deal first with whether I should make an order for costs in favour of each of the respondents.
9. The basis upon which each of the respondents claims costs is twofold. First, they each claim that they are entitled to an award of costs in their favour under the usual rule that costs follow the event. In this case, they claim that they were the successful parties. Although an interlocutory injunction was granted on 22 October 1998, it was granted in effect temporarily, and when the matter was fully heard in the hearings on 29 January 1999 and 12 February 1999, they succeeded in having the interlocutory injunction discharged and a further injunction refused.
10. Secondly, the respondents claim that they are prima facie entitled to an order for costs in their favour because the applicant discontinued the proceedings. That follows, they submit, pursuant to pt 11 r 5(1) of the Land and Environment Court Rules 1996 (“the LEC Rules”), which provides as follows:
5(1) If a party to any proceedings discontinues them in whole or in part, the Court may, on the application of another party, order the discontinuing party to pay the costs of any party against whom the discontinued claim was brought and who does not consent to the discontinuance.
11. The applicant’s response to the claims for costs is that no costs order should be made. In support of that proposition, Mr Hale, appearing for the applicant, relied upon Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; ex parte Lai Qin (1997) 186 CLR 622. In that case, McHugh J pointed out (at p 624) that, as a general rule, the successful party is entitled to costs, but where there has been no hearing on the merits (so that the court is deprived of knowing which party has been successful in the action), a court may nonetheless make an order for costs where it is able to conclude that one of the parties has acted unreasonably. McHugh J continued in the following passage at 625:
If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings.
12. Mr Hale submitted that these principles should be applied in this case, because there has been no hearing on the merits and because the applicant acted reasonably both, in commencing the proceedings and ultimately in discontinuing them.
13. In the alternative, Mr Hale claimed that, since the outcome of each of the interlocutory hearings before the Court was different, any cost order should reflect that difference. Thus, the applicant should be entitled to an order for costs in its favour in relation to the hearing on 22 October 1998, when it was successful in obtaining an interlocutory injunction, and that the only costs order which should be made in relation to the hearing of 12 February 1999 is an order in favour of Mr Hoddinott, who was successful in getting the interlocutory injunction discharged and resisting another interlocutory injunction. In relation to any other part of the proceedings, the applicant claims that there should be no order as to costs. The applicant also claims that no costs should be awarded in favour of the Minister because, although he was joined as a party, no interlocutory relief was sought against him, and his only interest in the proceedings must be regarded as confined to whether or not the appointment of Mr Hoddinott was valid.
Should no order as to costs be made?
14. The decision in Minister for Immigration ex parte Lai Qin is predicated upon circumstances in which there has been no hearing on the merits. As McHugh J pointed out at p 624:
Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.
15. I think, however, that the facts in Minister for Immigration ex parte Lai Qin are distinguishable from the facts in this case. In that case, there was no hearing. Before the hearing came on, the prosecutrix obtained the relief which she had sought in the proceedings in the High Court, because in the meanwhile the Minister for Immigration had exercised his discretion and granted a protection visa to her. In this case, however, there have been two hearings on the question as to whether or not interlocutory relief should be granted. It is true that there has been no hearing of the substantive issues. It is also true that the nature of a hearing on the question of interlocutory relief is different from that of the substantive hearing. The former proceeds on the evidence as it then stands, and the Court’s task is limited to determining whether there is a serious case to be tried and where the balance of convenience might lie (Castlemaine Tooheys Ltd & Ors v The State of South Australia (1986) 161 CLR 148). But this difference is of no relevance in the circumstances of the present case. There was an issue for determination, and it was determined in the two hearings into that issue. Accordingly, the Court is not deprived, as the High Court was in Minister for Immigration ex parte Lai Qin , of the factor that usually determines whether or how the Court will make a costs order.
16. Accordingly, having regard to my conclusion on this point, it is unnecessary to determine (at least in connection with whether there should be an order for costs at all) as to whether or not NSWALC acted both reasonably in commencing the proceedings and ultimately in discontinuing them. The determination of costs should proceed in the usual manner, that is, by, firstly, considering which party was successful in the proceedings; and secondly, whether there are any other relevant factors to take into account.
Who is entitled to costs?
17. In considering the question of success in the proceedings, it is necessary to examine the course which the proceedings took.
18. NSWALC applied for and was granted an interlocutory injunction on 22 October 1998. However, although the other parties were represented at the hearing and opposed the grant of the injunction, the evidence was substantially led from NSWALC. I expressly noted in par 11 of the first judgment that the respondents claimed that they each had contrary evidence but had not then had an opportunity to present it to the Court. I made clear that, in those circumstances, the interlocutory injunction should remain on foot until a further order of the Court, and I granted leave to any party to restore the matter to the list on two days’ notice.
19. On 13 November 1998, the proceedings were listed for callover, and at that time, the Court was informed that the Minister intended to appoint an investigator into the affairs of the Darkinjung LALC. The investigator was formally appointed on 2 December 1998. On 12 January 1999, the proceedings were again listed for callover, and they were set down for hearing on 24 - 26 February 1999.
20. On 22 January 1999, Mr Hoddinott filed a notice of motion seeking a discharge of the interlocutory order. It was returnable on 29 January 1999. On that date, the hearing commenced, but ultimately NSWALC sought and was granted an adjournment in order to consider further documentation.
21. The adjourned hearing took place on 12 February 1999. When the hearing commenced, NSWALC filed in Court without objection an amended class 4 application which changed completely the original prayer upon which the interlocutory order had been based. Instead of seeking an order that Mr Hoddinott be restrained from dealing with certain land other than in accordance with certain heads of agreement, it now sought an order that Mr Hoddinott be restrained from dealing with that land “other than in accordance with approvals by the applicant for the sale and lease of the property on 6 th February, 1997 and/or 26 th February, 1998”. NSWALC then applied for a second interlocutory order in terms of the new prayer in the amended class 4 application. As the parties had anticipated, more evidence was available, and on that evidence I was not satisfied that there was a serious case to be tried either on the question of invalidity of Mr Hoddinott’s appointment, or on the question of an order restraining his dealing with the specified land. I was also satisfied that the balance of convenience did not favour the making of another interlocutory order.
22. That history of the matter leads me to conclude that the proceedings should be regarded as a whole. The issue was whether or not to grant an interlocutory injunction. That was the issue in both hearings, although, strictly speaking, the form of the order sought was slightly different on each occasion. But the gravamen of the order sought was the same - NSWALC sought to restrain Mr Hoddinott from dealing with certain land. At the first hearing, the grant of the interlocutory injunction was expressly stated to be temporary, and the purpose of the second hearing was to determine whether it should, in effect, be continued (although in a slightly different form).
23. It is for these reasons that I reject NSWALC’s claim that any costs order should vary as between the first and the second hearings. In the proceedings as a whole, the respondents were successful in opposing the grant of an interlocutory injunction, and they are entitled to a costs order in their favour.
24. I also reject NSWALC’s claim that no costs should be awarded in favour of the Minister because he had no interest in the interlocutory relief which was sought. The Minister was joined as a party, and he was entitled to appear in the proceedings for all purposes. Furthermore, the grant of interlocutory relief depended upon NSWALC showing that there was a serious case to be tried on the question of Mr Hoddinott’s appointment, which, of course, was an appointment by the Minister. The Minister accordingly had an interest in showing that there were no grounds upon which Mr Hoddinott’s appointment could be challenged.
25. Additional support for my conclusion that the respondents are entitled to a costs order in their favour is pt 11 r 5(1) of the LEC Rules, which confers a discretion on the Court to award costs in favour of the non-discontinuing parties where proceedings are discontinued. However, I do not base my conclusion on the operation of this rule. Rather, I have concluded that the respondents are entitled to costs on the basis of the usual rule that costs follow the event.
Indemnity costs
26. Mr Hoddinott seeks an order that any costs awarded in his favour should be on an indemnity basis. Three matters were relied on by Mr Robertson as justifying the making of a costs order upon that basis. It was said, firstly, that the proceedings ought not to have been commenced in the first place, since there was material in the possession of NSWALC, at the time the proceedings were commenced, which showed that there was no ground for challenging the validity of Mr Hoddinott’s appointment. Secondly, it was said that Mr Hoddinott’s position as an administrator of Darkinjung LALC was in the nature of a fiduciary, akin to a trustee, and his costs should be fully met in the interests of ensuring that persons in those positions should have no fear of the financial risk of becoming involved in litigation. It was finally said that the Court should take account of the fact that Mr Hoddinott was sued in the capacity of an administrator, and there was no allegation of impropriety on his part.
27. The material upon which Mr Robertson relied to make good the first matter on which he relied was an affidavit from Mr J Carter, the manager of the evaluation unit of NSWALC sworn on 23 December 1998. That affidavit revealed a critical conversation between Mr O Cruse, the chairperson of NSWALC and Mr G Scott, the Director General of the Department of Aboriginal Affairs which took place on 28 August 1998, before Mr Hoddinott was appointed on 2 September 1998. It is a conversation to which I referred to at par 6, par 7 and par 8 in the second judgment as establishing the fact that one of the requirements for the validity of Mr Hoddinott’s appointment, namely, consultation between the Minister and NSWALC, had in fact taken place.
28. Mr Robertson submitted that NSWALC knew or ought to have known before it commenced proceedings that this conversation had taken place. It, therefore, acted improperly in commencing the proceedings as it knew that it had no ground on which to challenge Mr Hoddinott’s appointment. However, the question of whether or not consultation had taken place as required by s 57(2) of the Land Rights Act was only one of four grounds set out by NSWALC in the points of claim which it filed on 24 December 1998. Ultimately, as revealed in the second judgment, I found that there was no serious question to be tried on any of the four grounds, but it is in relation only to the first ground that Mr Robertson argued that NSWALC knew that it had evidence contrary to its claim. Accordingly, I reject the first matter as justifying an order for indemnity costs.
29. For completeness in relation to the first matter, I mention Mr Hoddinott’s affidavit evidence sworn 28 July 1999, about a conversation which he had on 19 February 1999 with Mr B Rambaldini, the assistant executive director of NSWALC. The conversation was about whether agreement could be reached as to the payment by NSWALC of Mr Hoddinott’s costs of the proceedings. Mr Rambaldini is alleged to have said “I am not even sure that the Court proceedings were properly authorised by NSWALC”. I do not accept that this statement is evidence that NSWALC should not have commenced the proceedings. It is no more that Mr Rambaldini’s equivocal opinion, and I place no weight upon it.
30. I do not consider that the second matter, that is, the representative capacity in which Mr Hoddinott was sued, justifies an award of costs on an indemnity basis. Ordinarily, a trustee is entitled to be indemnified for his or her costs out of the fund of which he or she is the trustee (see Supreme Court Rules 1970 pt 52A r 42 and the cases cited in Ritchie’s Supreme Court Procedure at 52A.42.3). But that ordinary rule does not require the unsuccessful party to pay costs on an indemnity basis, making the unsuccessful party, as it were, the fund out of which full costs are paid. The rule merely ensures that, unless the trustee has acted unreasonably or for his or her own benefit, the fund itself bears the costs. Even if Mr Hoddinott could be regarded as being in a position akin to that of a trustee, that does not justify the Court ordering NSWALC to pay his costs on an indemnity basis. Rather, the usual basis for indemnity costs should apply, and that is only where there is some relevant delinquency on the part of the unsuccessful party ( Oshlack v Richmond River Council (1998) 193 CLR 72 per Gaudron and Gummow JJ at 89).
31. For the same reasons, I do not think that the fact that there was no impropriety alleged against Mr Hoddinott justifies an award of costs on an indemnity basis. It is the conduct of the unsuccessful party which may justify such a basis, not the fact that the successful party is blameless.
By whom are the costs to be paid?
32. Having concluded that each of the respondents is entitled to an award of costs in its favour, I turn then to consider their claim that NSWALC should be ordered to pay those costs out of its own funds.
33. Section 23(1)(a) of the Land Rights Act relevantly provides that one of the functions of NSWALC is to administer the New South Wales Aboriginal Land Council Account. Section 28 provides for the payment into that account of an amount equal to 7.5 per cent of the amount of land tax paid in the previous year. Section 29A provides that 50 per cent of the money paid into that account in each year shall be invested and shall not be disbursed. Section 29 provides that there shall be paid from that account (presumably from the remaining 50 per cent) money to be provided to local aboriginal land councils (amongst others) for the purposes of the Act, amounts required to meet NSWALC expenditure in the execution or administration of the Act, and other payments authorised by the Act or any other Act.
34. Ms C M Hammond, who is the co-ordinator of the Darkinjung LALC, swore an affidavit dated 28 July 1999 which was read in relation to this costs application. Her evidence was not entirely clear, but it appears that NSWALC sets an annual “budget allocation” of amounts to be paid to local aboriginal land councils, and, so far as concerns Darkinjung LALC, that annual “budget allocation” is $83,000. However, according to Ms Hammond, NSWALC records indicate that NSWALC has deducted various amounts from the “budget allocation” of Darkinjung LALC, including the fees payable to NSWALC’s solicitors in relation to these proceedings.
35. I have already referred to a conversation between Mr Hoddinott and Mr Rambaldini in which the possibility of agreement as to costs was discussed. According to Mr Hoddinott, he required an undertaking from NSWALC that it would not deduct any costs from the “budget allocation” of Darkinjung LALC. The same requirement was outlined in a letter which he later faxed to NSWALC, to which there was no response. Copies of correspondence to the same effect between Ms H J Dean, Mr Hoddinott’s solicitor, and NSWALC’s solicitors, were annexed to Ms Dean’s affidavit, and similar correspondence was annexed to the affidavit of Ms K Ferris, the solicitor for the Minister. The Court was asked to draw an inference that the requirement that the account of Darkinjung LALC should not be debited with any costs was the sticking point in the costs negotiations, which, it was said, substantiates the threat that such a debit is likely to be made.
36. The respondents claim that these facts demonstrate that there is a threat that NSWALC will deduct from the “budget allocation” of Darkinjung LALC any costs which it may be ordered to pay in these proceedings, which will have the consequence that Darkinjung LALC will be the real payer of the costs. In the respondents’ submission, this would be unfair and unjust, since Darkinjung LALC was not a party to the proceedings, did not itself act in a way which gave rise to the proceedings, and should not therefore bear the burden of the costs of the proceedings.
37. Both Mr Singleton, on behalf of the Minister, and Mr Robertson, contended that the Court’s power to order NSWALC to pay the costs out of its own funds in the circumstances of this case is to be found in s 69(2) of the Land and Environment Court Act 1979 (“the Court Act”) and in the inherent power of a court to ensure that effect is given to the orders that it makes.
38. Section 69(2) of the Court Act provides as follows:
(2) Subject to the rules and subject to any other Act -
(a) costs are in the discretion of the Court;
(b) the Court may determine by whom, and to what extent costs are to be paid; and
(c) the Court may order costs to be taxed or otherwise ascertained on a party and party basis or on any other basis.
39. Mr Robertson relied upon a passage from the judgment of Gaudron J in Knight and Anor v F P Special Assets Ltd and Ors (1992) 174 CLR 178 at 205, where her Honour said that “… a grant of a power (to a court) should be construed in accordance with ordinary principles and, thus, the words used should be given their full meaning unless there is something to indicate to the contrary”. In Mr Robertson’s submission, if s 69(2) is to construed liberally, and if the Court has power to order “by whom” costs are to be paid, it must have the power to make that order effective in a case where there is a threat that the costs might be passed on to an innocent third party.
40. I do not think, however, that the words “by whom” in sub-cl (b) in their plain meaning go beyond stating that the Court may nominate the person who is to pay the costs. To construe those words as entitling the Court, not only to nominate the payer, but to order that the payer pay the costs from a nominated source, is not justified by the plain words used. To do so would require reading the section as though it provided “by whom, from what source and to what extent costs are to be paid”. Such a construction is, in my opinion, impermissible, despite the width of the Court’s discretion as to costs.
41. Alternatively, it was submitted that the power to make the order sought is to be found in the inherent power of the Court to ensure that its orders are given effect. It was said that if the Court has jurisdiction to make an order for costs, as it does under s 69 of the Court Act, it must also have a supplementary or incidental power to make an order to ensure its costs order is not defeated. Authority for that proposition was said by Mr Robertson to derive from statements of principle made in Jackson v Sterling Industries Ltd (1987) 162 CLR 612 where, in discussing the power of the Federal Court to grant a Mareva injunction, the various judgments refer to the inherent power of a superior court to prevent an abuse of its process or to restrain a defendant from acting in a manner so as to “thwart any judgment obtained in the action” (see Wilson and Dawson JJ at p 617, and Gaudron J at p 640).
42. However, I do not think that it is necessary in this case for the Court to resort to an exercise of an inherent power in order to ensure that its costs order is not defeated. There is no suggestion on the facts that NSWALC will not comply fully with any order which may be made against it. Nor will any such order be defeated if NSWALC reimburses itself from the coffers of Darkinjung LALC. NSWALC will be the party “by whom” the costs are ordered to be paid; it will have the obligation, and that obligation will be discharged even if it reimburses itself from a source other than its own funds.
43. Of course, if NSWALC reimburses itself by way of reducing the “budget allocation” of Darkinjung LALC, it may be acting outside the scope of its authority under the Land Rights Act, or it may be taking some action for an improper purpose, but these are not matters with which this Court can, or should be concerned with, in these proceedings. If any such step is contrary to the law (and I express no opinion on that matter) Darkinjung LALC may have remedies which it may be advised to pursue. Such a case may involve the principle to which Mr Robertson also adverted, namely, that a party cannot lawfully do indirectly what it is forbidden to do directly (see Oxley County District Council v Macleay River County District Council and Anor (1964) 82 WN 12 at 24). Mr Robertson pointed out that NSWALC cannot itself obtain an order for costs of these proceedings against Darkinjung LALC. But that is not a matter which could, in my opinion, empower the Court in the present proceedings to order that NSWALC pay any costs out of its own funds.
44. However, even if I am wrong in concluding that the Court has no power to order NSWALC to pay costs from its own funds, I would not in any event exercise a discretion to do so. The evidence establishes at its highest no more than a possibility that the “budget allocation” of Darkinjung LALC will be reduced. There is nothing to establish that such a reduction is certain or imminent. In my opinion, it would be premature to make such an order, and I decline to do so.
Conclusion and orders
45. I have concluded, for the foregoing reasons, that NSWALC should be ordered to pay the costs of both respondents in these proceedings, including the costs of their respective notices of motion seeking costs orders.
46. My formal orders are as follows:
(2) The exhibits may be returned.(1) The applicant shall pay the costs of the first respondent and the second respondent of these proceedings (including the costs of the respondents’ respective applications for costs) on a party and party basis, as agreed, or as assessed.
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