Sullivan v Secretary, Department of Defence

[2005] FCA 786

FEDERAL COURT OF AUSTRALIA

Sullivan v Secretary, Department of Defence
[2005] FCA 786

PRACTICE AND PROCEDURE – leave to discontinue proceeding – costs – applicant sought order that respondent pay the applicant’s costs – reasonableness of respondent’s conduct in the circumstances of the proceeding – no order as to costs.

Administrative Decisions (Judicial Review) Act 1977 (Cth)
Criminal Code Act 1995 (Cth)
Federal Court of Australia Act 1976 (Cth), s 43(2)
Financial Management and Accountability Act 1997 (Cth)
Federal Court Rules, O 22 r 2(1)(d)

Harvey Norman Holdings Limited v Fels [2002] FCA 13 referred to
Inground Constructions Pty Ltd v Federal Commissioner of Taxation (1994) 27 ATR 513 cited
Mineralogy Pty Ltd v National Native Title Tribunal [1998] FCA 1700 referred to
O’Neill v Mann [2000] FCA 1680 referred to
Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1998) 186 CLR 622 applied

RALPH SULLIVAN v SECRETARY, DEPARTMENT OF DEFENCE
ACD 5 OF 2005

STONE J
20 JUNE 2005
SYDNEY (HEARD IN CANBERRA)

IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY	ACD 5 OF 2005

BETWEEN:	RALPH SULLIVAN APPLICANT
AND:	SECRETARY, DEPARTMENT OF DEFENCE RESPONDENT
JUDGE:	STONE J
DATE OF ORDER:	2 JUNE 2005
WHERE MADE:	SYDNEY (HEARD IN CANBERRA)
DATE OF PUBLICATION OF REASONS:	20 JUNE 2005

THE COURT ORDERS THAT:

1.The applicant has leave to discontinue the proceeding.

2.There be no order as to costs.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY	ACD 5 OF 2005

BETWEEN:	RALPH SULLIVAN APPLICANT
AND:	SECRETARY, DEPARTMENT OF DEFENCE RESPONDENT

JUDGE:	STONE J
DATE OF ORDER:	2 JUNE 2005
PLACE:	SYDNEY (HEARD IN CANBERRA)
DATE OF PUBLICATION OF REASONS:	20 JUNE 2005

REASONS FOR JUDGMENT

1. In this matter I made orders in Canberra on 2 June 2005 and stated that written reasons for those orders would be provided at a later time.  These are my reasons for the orders made on that date.

2. On 1 February 2005, the applicant filed an application for review of a decision made by a delegate of the respondent, Mr Stephen Skelly, to suspend him from his duties as an employee of the respondent effective from 14 January 2005.  The decision arose from suspicions that the applicant may have breached the Australian Public Service (‘APS’) Code of Conduct.  The applicant now seeks the leave of the Court to discontinue the proceeding and an order that the respondent pay his costs of the application.

   BACKGROUND

3. It is necessary to set out briefly the background that led to the filing of the application for review in this Court. 

4. On 29 November 2004, the Assistant Director, Investigations of the Department of Defence (‘the Assistant Director’) advised the applicant that he had a reasonable suspicion that the applicant may have committed offences under the Commonwealth Criminal Code (see the Criminal Code Act 1995 (Cth)) and the Financial Management and Accountability Act 1997 (Cth), and that he proposed to interview the applicant formally. 

5. On 2 December 2004, the Assistant Director informed the applicant that the allegations would be reported to the Commonwealth Director of Public Prosecutions.  For present purposes it is sufficient to note that the applicant was suspected of engaging in conduct in breach of the above legislation in relation to procurement and management of assets.  The basis for the suspicion, and the truth or otherwise of these allegations, are not issues before this Court. 

6. On 13 January 2005, Mr Skelly notified the applicant in writing that he had formed the view that the applicant may have committed breaches of the APS Code of Conduct and that he was suspended from his duties on full pay from 14 January 2005 for a period of 30 days.  Mr Skelly stated that if the applicant wished him to review this decision he should make a written request providing any explanation and material he would like Mr Skelly to consider.  In a minute dated 14 January 2005 Mr Skelly set out in detail the allegations made against the applicant.  On 17 January 2005, the applicant requested a review of Mr Skelly’s decision. 

7. On 21 January 2005, the applicant’s solicitor wrote to the respondent.  Relevantly, the letter stated:

   ‘Clearly you are placing our client in this dilemma: if he does not respond to the invitation to defend himself, then he may well be dismissed.  But if he does defend himself, whatever he writes may be used against him in the possible forthcoming criminal proceedings.  Adding to the dilemma is the fact that our client’s employer, the Australian Government is also responsible for criminally prosecuting her [sic].

   Our client’s right to silence is effectively being adversely affected or negated by actions on behalf of the Department of Defence and that action is both an abuse of power and interference with the proper conduct of the criminal proceedings.

   The importance of the right against self-incrimination is protected in Australia by the authority of the High Court of Australia in Reid v Howard (1995) 184 CLR 1.

   We are instructed that our client does wish to respond but only:

   1.If an undertaking is given by the Department of Defence that this matter is not being criminally prosecuted by the Commonwealth Director of Public Prosecutions or the Department of Defence.  Or, if a criminal prosecution is launched;

   2.After the criminal aspect of his matter is dealt with in the Canberra Magistrates Court and his right against self-incrimination is not removed by the Department of Defence.  Also, we would have considered it more appropriate for our client to respond to all material, including any comments made by a Magistrate.

   …

   If, in the absence of any response from Mr Sullivan, Mr Skelly decides to make a final determination as to whether or not our client has breached the [APS] Code of Conduct the [sic] we request that the following occur:

   1.Advise us of that decision.

   2.Extend the time for our client’s response to 18 February 2005.

   3.The extension of time will allow us to seek an injunction in the Supreme Court of the Australian Capital Territory or seek an administrative decision judicial review and an injunction in the Federal Court of Australia.’

8. On 27 January 2005, Ms Vella, an employee of the Department of Defence and the delegate in relation to the applicant’s APS Code of Conduct action, replied to that letter in the following terms:

   ‘…Please be advised that I am the delegate in relation to Mr Sullivan’s APS Code of Conduct action. …

   You have asserted the possibility of prejudice (on the basis that you believe that your client’s right to silence is being adversely affected or negated by actions that Defence is undertaking) but asserted it on the assumption that the mere conjunction of possible future criminal charges with the Code of Conduct process will give rise to prejudice.  I do not accept that this is the case. I do not dispute that the principle of the right to silence or the privilege against self-incrimination is important to our system of justice, and that in this respect there is no substantial difference between criminal proceedings and a Code of Conduct investigation.

   I note that Mr Sullivan is prepared to provide comments in response to the allegation but only if Defence guarantees either that criminal charges will not be pressed, or that the disciplinary proceedings are suspended until the criminal proceedings are resolved.  Defence cannot guarantee that criminal charges will not be pressed, as it is now a matter for the Director of Public Prosecutions.

   I accept that in some circumstances it might be appropriate for me to suspend the investigation of Mr Sullivan’s suspected breach of the Code of Conduct, for example, if by asking Mr Sullivan to respond to the allegations Mr Skelly put to him in his minute dated 14 January 2005, my investigation would be likely to substantially prejudice Mr Sullivan in any criminal proceedings that might be instigated.  The mere fact that parallel criminal proceedings may arise is not, in my view, sufficient cause for me to suspend the Code of Conduct investigation.

   Mr Skelly’s minute of 14 January 2005 does not require Mr Sullivan to do anything.  No sanction will attach to his failure or refusal to respond to the correspondence in any respect.  The minute is part of an administrative process in which Defence has an obligation to afford to Mr Sullivan procedural fairness.  Mr Sullivan has, through Mr Skelly’s minute of 14 January 2005, been offered an opportunity to provide comments in relation to the events concerned, or they might be relevant to the imposition of a sanction, in the event that I determine that Mr Sullivan breached the Code of Conduct.

   I am aware of the constraints operating on Mr Sullivan by reason of the possibility that he may be charged with criminal offences.  I would view any response by Mr Sullivan to the minute dated 14 January 2005 in that light.

   The Australian Public Service Commissioner’s Directions require that my investigation be conducted with as much expedition as a proper consideration of the matter allows.  There is also a public interest in the continuance of the Code of Conduct process, in that it is desirable to promptly address suspected misconduct by public servants.

   …

   My conclusion is that nothing in your letter dated 21 January 2005 has established that interfering with the continuance of the Code of Conduct investigation is warranted.

   …Your letter requests an extension until 18 February 2005 so legal action can be instituted.  Based on this fact I do not agree to your request.  However I recognise that Mr Sullivan may have refrained from making comment whilst the issues raised in your letter of 21 January 2005 were being considered.  Based on this consideration I have decided to allow Mr Sullivan until 5pm on Thursday, 3 February 2005 to make any response he cares to make to the matters raised in Mr Skelly’s minute of 14 January 2005. I intend to make a decision after that time, and will do so on the basis of the material available to me at the time.’

9. On 1 February 2005, the applicant filed in this Court an application for review of Mr Skelly’s decision seeking urgent interlocutory relief.  The jurisdictional basis for the application is not expressly referred to, however it does make reference to sections of the Administrative Decisions (Judicial Review) Act 1977 (Cth). On this date, Sackville J made the following orders:

   ‘1.Leave is granted for the applicant to serve the application (or amended application) and supporting affidavit by 12 noon on 2 January 2005.

   2.        The application is returnable on 3 January 2005 at 9:30 a.m.

   3.        Leave to apply.’

10. On 3 February 2005, Sackville J stood the matter over and noted that through the respondent’s counsel, Ms Vella made undertakings in relation to the continuation of the Code of Conduct investigation.  His Honour also reserved costs.  The form of the undertakings was contained in a letter from the respondent’s solicitors to the applicant’s solicitor dated 2 February 2005.  Counsel for the applicant, Mr Purnell SC, stated from the bar table that this letter was not received by the applicant’s solicitor until the morning of 3 February 2005, as it was not faxed to the applicant’s solicitor until approximately 6.30pm on 2 February 2005.  This statement from the bar table was not challenged by counsel for the respondent.

11. The form of the undertakings is as follows:

    ‘Ms Vella is prepared to undertake to the Court to refrain from making any decision as to whether the Applicant has breached the APS Code of Conduct in relation to the matters set out in a Minute from Mr Stephen Skelly to the Applicant dated 14 January 2005…and in a letter from Ms Vella to you dated 27 January 2005…, until the following:

    -the Respondent receives advice from the Commonwealth Director of Public Prosecutions that no criminal charges will be laid against the Applicant in relation to the matters referred to above; or

    -the Applicant pleads guilty to one or more or any charges laid in relation to the matters referred to above; or

    -the Applicant is convicted or acquitted of one or more or any charges laid in relation to the matters referred to above; or

    -any criminal proceedings are otherwise disposed of,

    providing that:

    -the Applicant acknowledges that a delegate of the Secretary authorised to make decisions in relation to the Applicant’s suspension from duty may review the Applicant’s suspension at any time and make any further decision consistent with the Public Service Act 1999 and associated Regulations that the delegate sees fit (which includes the possibility of a decision that the applicant be suspended without pay); and

    -the Applicant agrees to withdraw his request dated 17 January 2005 …for a review of the suspension decision dated 13 January 2005 …

    -; and

    -the Applicant agrees not to make any further request for a review of the suspension decision dated 13 January 2005, or any further decision made by a delegate in relation to that matter; and

    -the Court adjourns the matter sine die, with either party having liberty to apply on three days’ notice.’

    CONSIDERATION

12. A party making a claim for relief may discontinue a proceeding at any time with the leave of the Court: O 22 r 2(1)(d) of the Federal Court Rules.  Whilst leave is not granted as a matter of course, see Harvey Norman Holdings Limited v Fels [2002] FCA 13 (‘Harvey Norman’), in the present circumstances I am satisfied that it is proper to grant leave to the applicant to discontinue the proceeding.  The respondent does not oppose this course.

13. The award of costs is in the discretion of the Court: s 43(2) of the Federal Court of Australia Act 1976 (Cth). When, as is the case here, a proceeding is discontinued with leave pursuant to O 22 r 2(1)(d), the respondent is not automatically entitled to have the applicant pay his or her costs. Rather, costs are in the discretion of the Court: Inground Constructions Pty Ltd v Federal Commissioner of Taxation (1994) 27 ATR 513. In O’Neill v Mann [2000] FCA 1680, Finn J commented at [13] that ‘[t]he conduct of the parties in the matter and the reasons for the discontinuance can bear heavily on the exercise of the discretion as to costs’.

14. In Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1998) 186 CLR 622, (‘Ex parte Lai Qin’), McHugh J at 624-625 stated:

    ‘…Ordinarily, the power [to order costs] is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. 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.

    In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action.  The court cannot try a hypothetical action between the parties. … In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action.  In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation. …

    Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. … But such cases are likely to be rare.

    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. …’

    [Footnotes omitted]

    See also, Mineralogy Pty Ltd v National Native Title Tribunal [1998] FCA 1700 and Harvey Norman.

15. Counsel for the applicant submitted that in the circumstances of the present proceeding, the Court should order that the respondent pay the applicant’s costs.  As I understood him, Mr Purnell did not submit that this was a case where the applicant was almost certain to have succeeded in the application for review.  Rather, he contended that the respondent has acted so unreasonably that the applicant should obtain his costs. 

16. Counsel for the applicant pointed to the fact that the applicant’s solicitor had sought undertakings from the respondent in the letter of 21 January 2005, and that an extension of time was sought during which the applicant could seek interlocutory relief; see [7] above.  According to Mr Purnell, by refusing to give the undertakings proposed in the applicant’s letter of 27 January 2005, the respondent effectively forced the applicant to file the application for review in this Court; see [8] above.  Further, it was submitted that the unreasonableness of the respondent’s attitude was demonstrated by the fact that it eventually agreed to give undertakings in the form agreed on 3 February 2005.  Those undertakings negated the need for a hearing before Sackville J but, in the applicant’s submission, it was unreasonable of the respondent not to give them at an earlier stage, in response to the applicant’s solicitor’s letter of 21 January 2005.  Had this occurred there would have been no need for the applicant to commence the present proceeding in this Court.

17. The respondent opposed the costs order sought by the applicant.  Counsel for the respondent, Mr Dubé, submitted that the respondent had acted reasonably in the circumstances and that the parties should bear their own costs.  Mr Dubé referred to the difference between the undertakings sought in the letter of 21 January 2005, which were resisted by the respondent, and those ultimately entered into before Sackville J on 3 February 2005.

18. In their submissions both parties emphasised the unreasonableness of the other.  In considering this issue it is important to remember that, as McHugh J pointed out in Ex parte Lai Qin, the basic position is that, where there has been no hearing on the merits, the court is ‘necessarily deprived of the factor that usually determines whether or how it will make a costs order’; see [14] above.  In the absence of that factor the appropriate course would be to make no order as to costs, unless there is some other factor, such as unreasonable behaviour of one of the parties, that points to the appropriateness of that party bearing the costs.

19. In my view the applicant has been unable to demonstrate that the respondent has acted so unreasonably in the circumstances of this case that it should be ordered to pay the applicant’s costs.  Indeed, I am satisfied that the respondent has acted reasonably throughout the course of the proceeding and during the period prior to the filing of the application for review in this Court.

20. It is true that the respondent resisted the undertakings sought by the applicant as a condition to responding to allegations raised against him in respect of potential breaches of the APS Code of Conduct.  However, there is no requirement for a party to give undertakings and the respondent was entirely within its rights to refuse to do so.  The first undertaking sought by the applicant’s solicitor on 21 January 2005 was plainly one that the respondent could not give.  Further, there was no obligation on the respondent to attempt to negotiate a different form of undertakings once they had rejected those offered in the letter from the applicant’s solicitor of 21 January 2005.  There was nothing to stop the applicant, or his solicitor on his behalf, attempting to negotiate different forms of undertakings. 

1. Moreover, I agree with the respondent’s contention that there is a significant difference between the undertakings sought by the applicant in the letter of 21 January 2005 and those ultimately given on 3 February 2005.  The undertakings ultimately given can accurately be described as mutual undertakings. Significantly, they involve an acknowledgement by the applicant that a delegate of the respondent may review the applicant’s suspension from duties at any time, including the making of a decision that the applicant be suspended without pay.  In addition, the applicant agreed on 3 February 2005 to withdraw his request for a review of Mr Skelly’s decision. 

2. Counsel for the applicant also put forward a number of arguments in relation to the merits of the applicant’s case and the importance of the proceeding for the applicant in circumstances where his integrity was the subject of challenge.  If the respondent were to claim that the applicant should pay the respondent’s costs, these matters might be relevant to the reasonableness or otherwise of the applicant’s conduct in commencing and conducting the proceeding although not in so far as would involve the Court making an assessment of the merits of a claim that an applicant has chosen not to pursue.  However, the respondent has not sought an order of this nature. They are not relevant to the conduct of the respondent, except in so far as they are part of the overall circumstances of the proceeding.  Apart from that they have no bearing on the applicant’s argument that the respondent’s should pay his costs because it has acted unreasonably in the circumstances. 

3. For the above reasons, I am not satisfied that the circumstances of this proceeding are such as to warrant the respondent to pay the applicant’s costs.  I will therefore grant leave to the applicant to discontinue the proceeding.  There will be no order as to costs.

I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stone.

Associate:        

Dated:             20 June 2005

Counsel for the Applicant:	Mr FJ Purnell SC
Solicitor for the Applicant:	Porters Lawyers
Counsel for the Respondent:	Mr B Dubé
Solicitor for the Respondent:	Australian Government Solicitor
Date of Hearing:	2 June 2005
Date of Orders:	2 June 2005
Date of Publication of Reasons:	20 June 2005