Strutt and Anor v Australian Pharmacy Authority and Ors (No.2)
[2007] FMCA 393
•27 March 2007
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| STRUTT & ANOR v AUSTRALIAN COMMUNITY PHARMACY AUTHORITY & ORS (No.2) | [2007] FMCA 393 |
| ADMINISTRATIVE LAW – Application pursuant to Administrative Decisions (Judicial Review) Act 1977. PRACTICE AND PROCEDURE – Costs – whether separate costs orders should be made in favour of Respondents represented by the same firm of solicitors – whether costs order should be made in favour of Third Respondent who sought to be joined in proceedings. |
| Administrative Decisions (Judicial Review) Act 1977, s.12 Federal Magistrates Court Rules 2001, rr.11.03, 21.10, 24.10(b), sch.1 National Health Act 1953, s.90 |
| Strutt & Anor v Australian Community Pharmacy Authority & Ors [2006] FMCA 1245 Merck & Co Inc. v Sankyo Co Ltd (1992) 23 IPR 415 R v Australian Broadcasting Tribunal; Ex parte Hardiman (1980) 144 CLR 13 Wood v Australian Community Pharmacy Authority [2002] FCA 1592 |
| Applicants: | RICHARD STRUTT AND HILTON TUCKER |
| First Respondent: | AUSTRALIAN COMMUNITY PHARMACY AUTHORITY |
| Second Respondent: | SECRETARY OF DEPARTMENT OF HEALTH AND AGEING |
| Third Respondent: | MARISA ARENA |
| File number: | PEG 242 of 2005 |
| Judgment of: | McInnis FM |
| Hearing date: | Determined on written submissions |
| Date of last submission: | 12 December 2007 |
| Delivered at: | Melbourne |
| Delivered on: | 27 March 2007 |
REPRESENTATION
| Solicitor for the Applicants: | Mr P Sheiner |
| Solicitors for the Applicants: | Christensen Vaughan |
| Solicitor for the First and Second Respondents: | Mr A Dillon |
| Solicitors for the First and Second Respondents: | Australian Government Solicitor |
| Counsel for the Third Respondent: | Mr S Burley |
| Solicitors for the Third Respondent: | GD Crockett & Co |
ORDERS
The Applicants shall pay 70 per cent of the Third Respondent’s costs pursuant to Schedule 1 of the Federal Magistrates Court Rules 2001.
The Applicants shall pay costs and disbursements of the First Respondent fixed in the sum of $13,651.82.
The Applicants shall pay costs and disbursements of the Second Respondent fixed in the sum of $4,496.82.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG 242 of 2005
| RICHARD STRUTT & HILTON TUCKER |
Applicant
And
| AUSTRALIAN COMMUNITY PHARMACY AUTHORITY |
First Respondent
| SECRETARY OF DEPARTMENT OF HEALTH AND AGEING |
Second Respondent
| MARISA ARENA |
Third Respondent
REASONS FOR JUDGMENT
In this matter the Court delivered a judgment on 28 August 2006 (Strutt & Anor v Australian Community Pharmacy Authority & Ors [2006] FMCA 1245). In its judgment the Court dismissed an application made by the Applicants pursuant to the Administrative Decisions (Judicial Review) Act 1977 (the ADJR Act). It is not necessary to refer in detail to the issues raised in the substantive application as they are satisfactorily set out in the Court's earlier judgment. It is sufficient to note that the decision sought to be reviewed was a decision made by the First Respondent to recommend that approval be given for a new pharmacy. The Applicant for the new pharmacy was the Third Respondent.
When the court delivered its judgment on 28 August 2006 it made orders in the following form:
1. The Application be dismissed.
2. The Applicant shall pay the First and Second Respondent's costs.
3. The Third Respondent shall file and serve a brief outline of submissions in relation to costs on or before 4 September 2006.
4. The Applicant shall file and serve a brief outline of submissions in reply in relation to the Third Respondent's costs on or before 11 September 2006.
5. Liberty to apply is granted to the parties in relation to any matters arising out of these orders.
It would be evident from those orders that an outstanding issue remained, namely, the question of what costs order, if any, should be made in relation to the Third Respondent's costs.
In addition the Court granted liberty to apply, and it was made clear at the time of making the orders that the order for costs against the Applicants and in favour of the First and Second Respondents contemplated that there should be one set of orders treating the Respondents as one party, rather than an order for costs for each Respondent individually. Indeed, at a mention of the matter held on 17 November 2006 the Applicants submitted that because both Respondents were represented by the same solicitor and Counsel, they should only be entitled to one set of costs. On 17 November 2006 the Court then ordered that the First and Second Respondents should file submissions in relation to the amount of costs to be fixed in their favour.
Third Respondent’s costs
The Third Respondent relied on written submissions dated 4 September 2006. The Applicants then filed submissions in reply on 11 September 2006.
In the Third Respondent's submissions it was noted that the proceedings “directly and vitally” affected the interest of the Third Respondent. If the Applicants’ application succeeded, then the decision recommending approval of the pharmacy business of the Third Respondent would have been set aside.
It was argued that the application raised a number of grounds of appeal against the decision of the First Respondent. It was submitted that the original application and amended grounds of review dated 10 March 2006, "involved detailed and varied questions of fact and law, asserting that the First and Second Respondents had erred not only in relation to process and procedures, but also that there had been an error in determining the catchment of the Third Respondent's then proposed pharmacy."
It was further submitted that "the Applicants sought to review the evidence in issue in the proceeding as a part of challenging the decisions made before the (First Respondent). As the court's detailed judgment showed, such an approach warranted a review of the detailed expert evidence filed on behalf of the Third Respondent before the (First Respondent)”.
It was submitted that the role of the decision-maker in defending its own decision in cases of this kind is limited. It was submitted that as a general rule the decision-maker should not seek to present a substantive argument to support its decision whether as a party or not (see Merck & Co Inc. v Sankyo Co Ltd (1992) 23 IPR 415 at 417; R v Australian Broadcasting Tribunal; Ex parte Hardiman (1980) 144 CLR 13 (R v Australian Broadcasting Tribunal; Ex parte Hardiman) at 35-36). It was submitted that the First and Second Respondents rightly followed the principles in those cases.
The Third Respondent submitted, "that by appearing as a contradictor to the analysis of the evidence presented by the Applicants, and by adding to (but not duplicating) the legal submissions made by the First and Second Respondents, it was able to provide assistance to the court in the determination of the issues in the proceedings." It was submitted that the Third Respondent was a necessary and proper party to the litigation. Accordingly, it was submitted that it is appropriate for the Applicants to pay the Third Respondent's costs.
The Applicants submitted that no relief was sought against the Third Respondent and it was not a necessary party to the judicial review proceedings. It was noted that the Third Respondent applied to be joined to the proceedings pursuant to r.11.03 of the Federal Magistrates Court Rules 2001 (the Rules) and/or pursuant to s.12 of the ADJR Act as an interested party to the proceedings. It was submitted however that no relief was sought against the Third Respondent and that she was not a necessary party to the judicial review proceedings. Although the application of the Third Party to join the proceedings was not opposed, the Applicant's claim that the Third Respondent's participation would not duplicate that of the First and Second Respondents, and that the Third Respondent "should bear its own costs of the proceedings in any event (and would not be liable for the Applicants’ costs in the event that the Applicants were successful)."
Reference was made to the transcript of proceedings on 15 December 2005 where it was correctly stated the Court declined to make formal orders as to the conditions on which the Third Respondent was to be joined at that point in the proceedings. It was submitted that the Court gave notice to the Third Respondent that it was "highly unlikely" that regardless of the outcome of the proceedings it would succeed in obtaining an order for costs. It is relevant to set out the extract from page 12 of the transcript as follows:
“HIS HONOUR: …I don’t think at this stage, subject to there being an affidavit filed by the third respondent within seven days, there is any reason I shouldn’t allow the third respondent to be joined.
MR MACLIVER: Yes.
HIS HONOUR: I’m not inclined to impose a costs restriction. It seems to me a third respondent joins in these proceedings on the basis that it is highly unlikely that, regardless of the outcome, the third respondent would necessarily succeed in an order for costs, her own costs, and of course that is a matter for argument at a later time.
MR SHEINER: Yes.
HIS HONOUR: It might be unlikely now, but who knows, and I’m not inclined to make any orders or say anything further about it because I think that would be inappropriate.
MR SHEINER: Yes.
HIS HONOUR: Likewise, I think we should see what the material is. Mr O’Sullivan has heard what I’ve said; I can’t see any reason why the third respondent’s material should duplicate the material relied upon by the first and second respondents…”
(Transcript p.12 lines 20-41)
The Applicants submitted that there is no general rule that a decision‑maker should not seek to present substantive argument as that Rule is limited to Tribunals (see R v Australian Broadcasting Tribunal; ex parte Hardiman) and it was argued that as the First and Second Respondents are not Tribunals they properly acted as contradictors and necessary parties to the proceedings.
It was noted that the Third Respondent participated in the proceedings to support the position taken by the First and Second Respondents having regard to matters of law but did not advance matters by way of evidence or submissions peculiar to the knowledge of the Third Respondent or otherwise essential for the resolution of the proceedings. Accordingly it was submitted it would be punitive to impose the burden of costs of the Third Respondent on the Applicants in addition to those of the First and Second Respondents.
Reference was made to a decision of the Federal Court in Wood v Australian Community Pharmacy Authority [2002] FCA 1592 (Wood). In that case the Applicant was successful and without providing reasons the Court did not make a costs order against the intervening pharmacist. It was submitted that similarly in the present case there is no reason for the court to depart from the view it initially expressed in December 2005 and the Court, in the exercise of its discretion, should refuse the application of the Third Respondent.
Reasoning
In my view a proper reading of the transcript of the proceedings on 15 December 2005 reveals that the Court was concerned to ensure that the joining of the Third Respondent did not result in a duplication of submissions relied upon by the First and Second Respondents. The Court refused to impose a cost restriction as a condition of the joinder. Whilst the Court clearly referred to it being "highly unlikely" that regardless of the outcome the Third Respondent would necessarily succeed in an order for costs, the Court further stated that that "is a matter for agreement at a later time." Clearly the Court has left open the opportunity for the parties to make submissions as they have done in relation to the costs of the Third Respondent. I do not regard myself as bound by the exchange which occurred on 15 December 2005.
However, on a proper assessment of the proceedings, in my view where the Third Respondent who clearly has a direct interest in the outcome of the proceedings applies to be joined to the proceedings, and where an order is made accordingly, the Court is entitled to, in the exercise of its discretion, consider whether, upon the application being dismissed, a costs order should be made in favour of the Third Respondent against the Applicants. Whilst I accept that the involvement of the Third Respondent was not necessary in order to enable the Court to adjudicate on the claim, the fact remains that in this instance the Third Respondent did participate and the participation went beyond simply supporting submissions made for and on behalf of the First and Second Respondents. To impose a costs order against the Applicants in favour of the Third Respondent is not in my view to adopt a "punitive" approach, but rather in the exercise of the Court's discretion which must be exercised judicially to make an order which is fair and just to all parties.
In a matter of this kind it is clear to me that the outcome of the application has a direct impact upon the business of the Third Respondent, who was perfectly entitled as an interested party to be joined as a Third Respondent to these proceedings. I note the ex tempore decision of the Federal Court in Wood and in my view that case was one where the Applicant succeeded, and whilst no order was made against the Third Respondent, it does not provide an authority for the proposition that in the present case the Court should not make an order in favour of the Respondents where the application has been dismissed.
I note that in the affidavit of the Third Respondent sworn 15 December 2005, notice is given that if joined as a Respondent the orders sought by the Third Respondent would be amongst other things that "the Applicants pay my cost." Whist as indicated the Court wanted to avoid duplication of costs that does not mean that in this instance having heard argument the costs should not be awarded in favour of the Third Respondent against the Applicants. However, in the circumstances, given that on the material before me, a significant proportion of the written material relied upon by the First and Second Respondents was simply adopted by the Third Respondent, it is appropriate in the exercise of the court's discretion that the order in favour of the Third Respondent should be as follows:
·The Applicants shall pay 70 per cent of the Third Respondent's costs.
That means that the costs assessed pursuant to sch.1 of the Federal Magistrates Court Rules will be reduced by 30 per cent as I am not satisfied that the preparation of submissions for and on behalf of the Third Respondent could be regarded as significant as those costs incurred by the First and Second Respondents.
First and Second Respondents’ costs
The First and Second Respondents have submitted that they are entitled to receive separate costs awards pursuant to sch.1 of the Rules without any reduction. It is submitted that the quantum of costs set out in the schedule, referred to in the First and Second Respondent's submissions dated 30 November 2006, represents an appropriate amount of cost and disbursements for each respondent. The orders sought are:
i)That the amount of the First Respondent's party/party costs be fixed at $15,232.69.
ii)that the amount of the Second Respondent's party/party costs be fixed at $15,151.93.
iii)The Applicants are to pay the Respondents the fixed amounts set out in orders (i) and (ii) within 28 days of the date of this order.
In support of the application for those orders a chronology was provided for each respondent which clearly demonstrates that there are a number of attendances and time devoted to each file which could properly be regarded as exclusive to each respondent.
It was submitted that, "it is implausible to suggest that additional work is not required when properly representing in litigation two separate respondents who are separate legal entities in respect of separate decisions made by each of those respondents." It was argued that the First Respondent adopts a decision-making process under the National Health Act 1953 (National Health Act), and that this is significantly different to the process adopted by the Second Respondent.
It was noted that submissions were made in relation to the respective processes at the hearing on behalf of both respondents. Accordingly it was submitted that there is no proper base upon which the two respondents should be treated as one party. It was argued that unique and substantial work was completed in respect of each Respondent which was not referrable to work completed in respect to the other Respondent. Court Books, it was noted, were filed in respect of each Respondent setting out documents that the respondent's relied upon in making respective decisions. Reference was made to affidavit material and separate advice given to the parties. It was argued that cost savings were achieved for the First and Second Respondents by sharing representation.
Pursuant to Part.1 of Schedule.1 of the Rules the following items appear to be the costs applicable in a general federal law matter:
·Stage 1: initiating application up to completion of first court day, $2005
·Stage 5: preparation for final hearing for a one day matter $4505.
·Stage 6: final hearing costs for solicitor-attendance at hearing $1500.
·Stage 6: final hearing costs for counsel-attendance at hearing $2250.
·Stage 6: to take judgment and explain orders $205.
The disbursements claim by each respondent appear to be one half of the total disbursements incurred, although that is not clear for the item "travelling cost" which appears to be $420 claimed for each respondent. That appears to me, having regard to Sch.1 of the Rules, to be the agent's fees/travelling costs whereby the lump sum can be increased by the amount of $420.
The Applicants submit that whilst the Court had indicated that it was prepared to allow a single set of costs for both the First and Second Respondents, it was noted that it may be prepared to consider allowing additional costs to reflect the fact that the First and Second Respondents’ solicitors had two clients in the proceedings.
It was submitted however, that the starting point for the inquiry should be Sch.1 of the Rules and that, "No regard should be had to the actual cost incurred." It was noted the Federal Court cost regime is different and it was argued that the r.21.10 is designed to, and in this case, did influence the decision of the Applicants to commence proceedings in this court as opposed to the Federal Court. It is submitted that parties commencing proceedings in this court will have the expectation that their costs in terms of both liability and potential recovery will be capped by reference to Sch.1 of the Rules.
It was submitted the Applicants in these proceedings sought to challenge the recommendation of the First Respondent that the Second Respondent grant approval for the Third Respondent's application under the relevant provisions of the National Health Act. The Second Respondent was the only necessary party, it was argued, to the proceedings. In the event that the decision of the First Respondent was set aside, then it would follow as a matter of course the decision of the Second Respondent would also need to be set aside as the Second Respondent could not grant an approval under s. 90(1) of the National Health Act absent a valid positive recommendation from the First Respondent (see s.90(3B)).
It was submitted that at the hearing of this matter no substantive argument was directed towards the decision of the Second Respondent. It was common ground that the validity of that decision would stand or fall on the validity of the First Respondent's decision.
The Applicants helpfully have set out submissions in relation to the question of additional costs, having regard to the submissions made by the solicitors for the Respondents, and did so in relation to the following items where it is appropriate for the court to set out the submissions as made in writing by the Applicants in submissions filed 12 December 2006. Paragraph 6 of those submissions provides:
“6.As to whether any additional costs should be recoverable over and above the schedule to allow for the fact that AGS represented two different clients the applicants submit as follows:
(a)Initiating or opposing application. The applicants accept that it would have been necessary for the solicitors for the first and second respondent to obtain instructions from two different clients. Having regard to the substantial similarity in the interests of both clients and the fact that only one court appearance was made on behalf of both parties, the applicants submit that an additional cost of only 25%of the scheduled fee (ie $501.25) should be allowed.
(b)Preparation for final hearing. The applicants accept that some additional costs were incurred in preparing appeal documents for and on behalf of the second respondent. The applicants note however that the papers prepared and submitted went well beyond what was actually required for and relevant to the appeal. As no substantive challenge was made to the decision making process of the second respondent, the only document that was in fact required, having regard to the grounds of appeal, was a copy of the decision of the second respondent approving the application. Further, in so far as this item includes getting up cost for trial, no extra allowance should be made for getting up for the second respondent having regard to the submissions filed and argued. Accordingly the applicants submit that an additional cost of only 25% of the scheduled fee should be allowed (ie$1126.25).
(c)Final Hearing costs – solicit/Final Hearing costs-counsel. No additional costs should be allowed in respect of these items. For the reasons set out above no substantive argument was directed to the second respondent’s decision. There is no reason to believe that costs were reasonably incurred over and above those that would have been incurred in any event for and on behalf of the first respondent.
(d)Take judgment and explain orders. The applicants accept that an additional cost could be allowed for 25% of the scheduled fee ($102.50) to account for the fact that, while there was a single appearance, the solicitors had to report back to two different clients.
(e) Disbursements.
i. Travel. No allowance should be made for either respondent for any travel related costs or agency fees. This matter was filed in the WA registry and was to be hear in Perth by video-link. No objection was taken by any party to the hearing being conducted in this way. It was entirely a matter for the first and second respondents that they chose to retain solicitors in Canberra, brief counsel in Perth and then fly the solicitors and counsel to Melbourne for the hearing in person. It is relevant to note that the applicants briefed counsel in Melbourne who appeared without an instructing solicitor.
ii. Photocopying. The amount claimed for photocopying is excessive having regard to the length of the appeal book, the copying of unnecessary documents for the purpose of the second respondent’s appeal book (see para 6b above) and the rate allowed. The claimed photocopying costs should be reduced by 70% (ie total costs for both parties should be $1142.62)
(f)Directions hearing in relation to costs. The applicants submit a maximum of $600 reflecting 2 hours work should be allowed in respect of the directions hearing and the submissions on costs.”
In my view the court has a discretion in relation to the issue of costs which must be exercised judicially.
Reasoning
The submissions made for and on behalf of the Applicants in relation to the various items claimed, in my view accurately reflect the matters which the court should take into account. The costs set out earlier in this judgment for the various stages of schedule 1 should not be simply duplicated where there are two respondents in an application of this kind. I accept that in this instance it is appropriate however, to allow an additional amount of costs which for convenience will be allowed in favour of the Second Respondent. Whilst an additional amount of costs will be allowed having regard to the fact that there are two Respondents, I do not accept that that requires the court to automatically impose two sets of costs to the full amount allowed in the schedule. To do so would be to fail to recognise the reality of the proceedings where there was considerable overlap with the First and Second Respondent's submissions and indeed a common interest.
It is also relevant to note that to some extent it may be argued that the Second Respondent was the only necessary party to the proceeding, though for reasons advanced earlier I accept that both the First and Third Respondents were appropriate parties entitled to be represented and participate. That does not mean however, that full costs should be allowed for both the First and Second Respondents.
For the First Respondent I am prepared to allow costs as follows:
·Stage 1: initiating or opposing the application up to completion of first court day, $2,005.
·Stage 5: preparation for the final hearing for a one day matter $4,505.
·Stage 6: final hearing costs for solicitor-attendance at hearing $1,500.
·Stage 6: final hearing cost for counsel- attendance at hearing $2,250.
·Stage 6: to take judgment and explain orders $205.
·Total $10,465.
For the Second Respondent I am prepared to allow the following:
·Stage 1: initiating or opposing the application up to completion of first court date 25 per cent of $2,005 =$501.25
·Stage 5: preparation for the final hearing for a one day matter 25 per cent of $4,505 = $1,126.25
·Stage 6: final hearing costs for solicitor-attendance at hearing $0
·Stage 6: final hearing cost for counsel-attendance at hearing $0
·Stage 6: to take judgment and explain orders, 50 per cent of $205, is $102.50
·Total $1,730.
I have allowed 50 per cent of the last item as I am satisfied that half that item could properly be regarded as an amount to be paid where a report back was necessary to two different clients.
Disbursements
In relation to the question of photocopying, it is noted that r.21.10(b) applies and the Court needs to be satisfied that the disbursements are "properly incurred". For photocopying schedule 1 appears to introduce a slightly different test, namely, "to the extent that they have been reasonably incurred," and allows an amount of 57 cents photocopying per page. Without analysing in detail the number of pages claimed which in this instance totals 6,682 pages, it seems to me that in the exercise of the Court's discretion some reduction should be made to the volume of that photocopying, and doing the best I can on the limited material available a reduction of 20 per cent should be made. I do not accept the submission of the Applicants that 70 per cent reduction should apply. Hence for convenience each respondent should receive 80 per cent of the amount for photocopying claimed.
Whilst I have some sympathy for the submission of the Applicants in relation to travel having regard to the fact that the hearing was conducted in Melbourne and the Respondents chose to brief Counsel in Perth and incur the costs of travel of Counsel and the solicitors to Melbourne for the hearing, it is clear that if the hearing had been conducted by video-link, significant other expenses would have been incurred in any event payable by the Applicants. In the circumstances, I do not regard it as appropriate to make any reduction for the disbursements divided equally between the Respondents in relation to airfares for Counsel and the solicitor, and for travel to and from the hearing or travelling costs.
Accordingly the amounts allowed are as follows, First Respondent disbursements:
·Photocopying, 80 per cent of $1904.37, is $1523.50.
·One half of economy airfares for counsel for travel to and from the hearing $579.16.
·One half of economy air fares for solicitors for travel to and from the hearing $260.51.
·Part taxi charges for solicitor to travel to and from hearing $103.65.
·Travelling costs $420.
·Total $2886.82
The amounts allowed for the Second Respondent’s disbursements:
·Photocopying, 80 per cent of $1,904.37, is $1,523.50.
·One half of economy airfares for counsel for travel to and from the hearing $579.16.
·One half of economy air fares for solicitors for travel to and from the hearing $260.51.
·Part taxi charges for solicitor to travel to and from hearing $103.65.
·Total $2,466.82
The total of costs and disbursements therefore payable to the First Respondent is $13,351.82
The total of the costs and disbursements payable by the applicant to the Second Respondent is $4,196.82
The formal orders of the Court for the reasons given shall be:
(1)The Applicants shall pay 70 per cent of the Third Respondent’s costs pursuant to Schedule 1 of the Federal Magistrates Court Rules 2001.
(2)The Applicants shall pay costs and disbursements of the First Respondent fixed in the sum of $13,651.82.
(3)The Applicants shall pay costs and disbursements of the Second Respondent fixed in the sum of $4,496.82.
The court has taken into account correspondence dated 15 December 2006 forwarded on behalf of the First and Second Respondents in making its assessment of costs and allowing an additional amount of costs for the Second Respondent. The Court accepts that a date should be fixed for the payment of the costs as ordered as a result of this decision.
I certify that the preceding forty-five (45) paragraphs are a true copy of the reasons for judgment of McInnis FM
Associate:
Date: 27 March 2007
4
3