Onus v Registrar of Aboriginal and Torres Strait Islander Corporations (No 2)

[2017] FCA 922

FEDERAL COURT OF AUSTRALIA

Onus v Registrar of Aboriginal and Torres Strait Islander Corporations (No 2) [2017] FCA 922

File number:

VID 638 of 2017

Judge:

O'CALLAGHAN J

Date of judgment:

11 August 2017

Catchwords:

ADMINISTRATIVE LAW – costs – where decision to appoint special administrator under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) set aside – whether applicants entitled to an order that all, or only some, of their costs be paid by the first respondent

Legislation:

Administrative Decisions (Judicial Review) Act 1977 (Cth), s 5

Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth), s 487-1

Cases cited:

Calderbank v Calderbank [1975] 3 All ER 333

Jenkins v Hope [1896] 1 Ch 278

One.Tel Ltd v Deputy Commissioner of Taxation (2000) 101 FCR 548

Oshlack v Richmond River Council (1998) 193 CLR 72

Date of hearing:

Determined on the papers

Date of last submission:

24 July 2017

Registry:

Victoria

Division:

General Division

National Practice Area:

Commercial and Corporations

Sub-area:

Corporations and Corporate Insolvency

Category:

Catchwords

Number of paragraphs:

15

Counsel for the Applicants:

Mr D M Ryan QC and Mr T Greenway

Solicitor for the Applicants:

Shayne Daley & Associates

Counsel for the First Respondent:

Mr C J Horan QC and Ms K Foley

Solicitor for the First Respondent:

Australian Government Solicitor

ORDERS

VID 638 of 2017

BETWEEN:

SANDRA ONUS

First Applicant

CHRISTINE COOKTOWN

Second Applicant

AND:

REGISTRAR OF ABORIGINAL AND TORRES STRAIT ISLANDER CORPORATIONS

First Respondent

PAUL CASE

Second Respondent

JUDGE:	O'CALLAGHAN J
DATE OF ORDER:	11 AUGUST 2017

THE COURT ORDERS THAT:

1.The first respondent pay the applicants’ costs of the proceeding, to be taxed in default of agreement.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

O’CALLAGHAN J:

1. The applicants seek an order that the first respondent pay their costs of the proceeding, following their success: see Onus v Registrar of Aboriginal and Torres Strait Islander Corporations [2017] FCA 798.

2. The proceeding concerned an application under s 5 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) for review of a decision made on 12 June 2017 by a delegate of the first respondent, pursuant to s 487-1 of the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) (CATSI Act), to place the Gunditj Mirring Traditional Owners Aboriginal Corporation RNTBC (the corporation) in special administration and to appoint the second respondent (the special administrator) as special administrator of the corporation for a period ending on 15 December 2017 (the decision).

3. The proceeding was listed for trial commencing on 13 July 2017.  On 10 July 2017, however, the Australian Government Solicitor, acting on behalf of the first respondent, wrote to the solicitors for the applicants informing them that the first respondent agreed that the decision should be set aside, effective from 25 August 2017.  The relevant part of the letter is as follows:

   1.We are instructed that the First Respondent will agree to orders setting aside the decision of the first respondent’s delegate made on 12 June 2017 to place the Gunditj Mirring Traditional Owners Aboriginal Corporation RNTBC (the Corporation) under special administration and to appoint the Second Respondent as the special administrator, with effect from 25 August 2017.  The First Respondent will also agree to an order that he pay the Applicants’ costs of the proceeding (to be taxed in default of agreement).

   2.The First Respondent understands that if such orders are made by consent, then the Second Respondent proposes to:

   Ÿexercise his power under s 499-5(3)(d) of the [CATSI Act] to appoint the Applicants, and Denise Lovett [the other director before the appointment of the Special Administrator], as directors of the Corporation; and

   Ÿtake the necessary steps to reverse the changes to the Corporation’s Rule book approved on 14 June 2017.

4. The applicants did not respond to that offer until the matter came on for hearing on 13 July 2017.

5. For the reasons that are set out in Onus v Registrar of Aboriginal and Torres Strait Islander Corporations [2017] FCA 798, and in light of certain undertakings given by the second respondent, I made orders as follows:

   (1)The decision of the first respondent of 12 June 2017 to put the corporation in special administration, and to appoint the second respondent as special administrator for a period ending on 15 December 2017, be set aside with effect from 25 August 2017.

   (2)There be no order as to the second respondent’s costs of the application.

   (3)The applicants and the first respondent each file a short outline of submission in relation to the question of costs within 7 days.

   (4)Liberty to apply to any party on the giving of 48 hours’ notice in writing.

6. The undertakings given by the second respondent were as follows:

   1.To, within a reasonable time, exercise his power under s 499-5(3)(a) of the [CATSI Act] and take the necessary steps to reverse the changes to the constitution (the “Rule Book”) of the [corporation] approved on 14 June 2017.

   2.To, within a reasonable time, exercise his power under s 499-5(3)(d) of the [CATSI Act] to appoint the applicants and Ms Denise Lovett as directors of the corporation.

   3.To make no decision on whether Mr Damien Bell will recommence as Chief Executive Officer of the corporation for the remainder of his term as special administrator of the corporation, being until 25 August 2017.

7. The applicants and the first respondent have now filed their respective outlines of submissions in relation to the question of costs.

8. The first respondent contends that the applicants should not be awarded all of their costs.  He submits that orders should be made in the following terms:

   (1)the first respondent pay the applicants’ costs of the application up to and including 11 July 2017 (to be taxed in default of agreement);

   (2)the applicants pay the first respondent’s costs of the application from 12 July 2017 (including the cost of the hearing on 13 July 2017) (to be taxed in default of agreement); and

   (3)the amount to be paid pursuant to proposed order (2) be set off against the amount to be paid pursuant to proposed order (1).

9. Alternatively, the first respondent says that there should be no order as to costs incurred after 11 July 2017.

10. In seeking one or other of those orders, the first respondent relies on his letter dated 10 July 2017, set out above at [3]. The first respondent says that the applicants acted unreasonably by not accepting what he refers to as “the settlement offer” contained in that letter. The first respondent agrees that the usual order as to costs is that the successful party is entitled to an award in its favour, but says that the order that he seeks should be made in the exercise of the Court’s discretion, because the successful applicants obtained relief which the first respondent had already offered in settlement: citing Oshlack v Richmond River Council (1998) 193 CLR 72 at 98 [69] per McHugh J, citing Jenkins v Hope [1896] 1 Ch 278. The first respondent also contended that the Court should be guided in the exercise of its discretion by authorities on the well-known principles in relation to settlement offers derived from Calderbank v Calderbank [1975] 3 All ER 333.

11. The first respondent says that taking into account the nature of his offer (which, he contends, effectively gave the applicants the principal relief that they sought), the applicants’ unexplained failure to respond to the offer, and the fact that the relief ultimately granted by the Court was substantively the same as that contained in the offer, fairness dictates that the applicants’ costs after the date of the offer should not be borne by the first respondent.  He goes further and submits that, on the contrary, the applicants should pay his costs after that date, because the real cause and occasion of those costs was the approach adopted by the applicants in not responding to the offer prior to the hearing on 13 July 2017.  It was further submitted that the applicants did not gain anything by the hearing, other than causing the expenditure of additional costs by all parties.

12. The applicants, on the other hand, contend that, because the first respondent “surrendered”, the ordinary rule that the successful party is entitled to their costs should apply.  The applicant’s counsel referred to the decision of Burchett J in One.Tel Ltd v Deputy Commissioner of Taxation (2000) 101 FCR 548, where his Honour said (at 552-553):

    The case in which one party, after litigating for some time, effectively surrenders should be distinguished from the case where a supervening event or settlement so removes or modifies the subject of the dispute that, although it cannot be said that one side has won, no issue remains except that of costs.  In the former case, there will commonly be lacking a basis for an exercise of discretion otherwise than by an award of costs of the successful party.

13. The applicants contend that the usual award of costs to a successful party should be made in this case because:

    (1)the 10 July 2017 letter was not a formal offer of compromise and in any event sought confirmation within three hours, which was said to be an unreasonably short period of time in which to obtain instructions;

    (2)the first respondent never explained why the setting aside of the decision should take effect on 25 August 2017;

    (3)no such explanation was given until the hearing before this Court on 13 July 2017;

    (4)the “settlement” offer in the 10 July 2017 letter did not address relief that was critical to the applicants’ objectives, and which the Court addressed, namely that the order that the vacating of the offices of directors by the applicants and Ms Lovett, effected by the appointment of the special administrator, be set aside;

    (5)the 10 July 2017 letter was not a settlement offer capable of being accepted, and Calderbank principles were not relevant, by analogy or otherwise, because the proposal suggested in the letter was founded upon the first respondent’s “understanding” that if the order set out in the letter were made by consent, then the second respondent (the special administrator) proposed to exercise his power in the way set out in the letter and to take the necessary steps referred to;

    (6)the hearing on 13 July 2017 also resulted in the second respondent giving a further undertaking, not previously offered or discussed, to make no decision on whether Mr Bell would recommence as Chief Executive Officer of the corporation for the remainder of the second respondent’s term as special administrator.

14. Although, on one view, it might be said that it would have been preferable if the solicitors for the applicants had endeavoured to bring about a resolution of the issues that were in dispute following the first respondent’s “surrender”, on balance I am not persuaded that their failure to do so, or any of the reasons advanced by the first respondent, are sufficient to displace the ordinary rule that the applicants are entitled to their costs of the proceeding. In my view, the matters relied upon by the applicants set out at [13] above all weight in favour of applying the ordinary rule.

15. Accordingly, I will order that the first respondent pay the applicants’ costs of the proceeding, to be taxed in default of agreement.

I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice O’Callaghan.

Associate:

Dated:        11 August 2017