The Northern Territory of Australia v Sangare

[2019] HCATrans 68

[2019] HCATrans 068

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Darwin  No D11 of 2018

B e t w e e n -

THE NORTHERN TERRITORY OF AUSTRALIA

Appellant

and

SOULEYMANE SANGARE

Respondent

KIEFEL CJ
BELL J
GAGELER J
KEANE J
NETTLE J

TRANSCRIPT OF PROCEEDINGS

AT BRISBANE ON THURSDAY, 11 APRIL 2019, AT 10.00 AM

Copyright in the High Court of Australia

MS S.L. BROWNHILL, SC, Solicitor‑General for the Northern Territory:   May it please the Court, I appear with my learned friend, MR L.S. PEATTIE, for the appellant.  (instructed by Solicitor for the Northern Territory)

MR M.A. CRAWLEY, SC:   May it please the Court, Crawley, with my learned friend, MR M.J.M. LITTLEJOHN, as amicus.  (instructed by Miles Crawley, SC)

KIEFEL CJ:   Thank you.  Yes, Ms Solicitor.

MS BROWNHILL:   Your Honours, before I address the error of the Court of Appeal in relation to the decision, may I first address an error that appears in the amicus submissions at paragraph 5.  That paragraph submits that there is no statutory provision granting the Supreme Court of the Northern Territory the power to award costs.  With the oral outline provided to your Honours’ associates is a copy of some statutes, which set out the statutory foundation for that power, if I could just take your Honours through those.

The first in the bundle is the Northern Territory Supreme Court Act 1961 (Cth). That Act was enforced commencing on 13 May 1961. Your Honours will see at section 4(1) that it abolished the Supreme Court of the Northern Territory existing immediately prior to that date. Then in section 6(1) established the:

superior court of record to be known as the Supreme Court of the Northern Territory of Australia.

And in section 18(1) was conferred:

The Supreme Court or a Judge has jurisdiction to award costs in all matters brought before the Court –

And subsection (2):

Subject to Rules of Court and to any law in force in the Territory, the costs of and incidental to all proceedings in the Supreme Court . . . are in the discretion of the Court or Judge, and the Court or Judge has full power to determine by whom and to what extent the costs are to be paid.

Now, that Act was in force until it was repealed by the next Act in the bundle, the Northern Territory Supreme Court (Repeal) Act 1979 (Cth). Your Honours will see section 4 repeals, amongst other things, the 1961 Supreme Court Act. That Act commenced on 1 October 1979, and on the same date, the next Act in the bundle, which is the Supreme Court Act 1979 (NT), commenced operation.

Now, section 10 of that Act established the Supreme Court of the Northern Territory.  Section 10 is on page 801, your Honours.  So it established the Supreme Court of the Northern Territory of Australia, which your Honours will see there, reference to section 51(2).  That section provided that when exercising appellate jurisdiction, the court was known as the Court of Appeal of the Northern Territory of Australia.

Then in section 14, your Honours, over the page, subsection (1), paragraph (c), the court:

has such jurisdiction . . . as was, immediately before the commencement of this Act, vested in or conferred on the former Supreme Court or is from time to time vested in or conferred on the Court by any law in force in the Territory –

The “former Supreme Court” phrase is defined in section 9 to mean the court that was in existence under the Commonwealth 1961 Act.  So lastly, your Honours, section 55(1), in paragraph (a):

the Court of Appeal –

(a)may exercise every power, jurisdiction and authority of the Court –

So those provisions together provide – sorry, I should add that that Act, the 1979 Act and those provisions, are still in force and current.  They provide the jurisdiction and the power for the court to make an order about costs.  The rules contain various rules relating to costs, but Supreme Court Rule 63.03 is the rule that provides that:

Subject to these Rules and any other law in force in the Territory, the costs of a proceeding are in the discretion of the Court. 

Your Honours, the error of the Court of Appeal is set out in the Court’s reasons, paragraphs [47] to [48], contained in the core appeal book at 134.  We say the error comprises an error of principle within the well‑known passage in House v The King (1936) 55 CLR 499 at 505. It is an error which vitiates the exercise of the discretion. The error, we say, is that the court failed to apply the principle that impecuniosity of the unsuccessful party is not a sufficient basis to deprive the successful party of its costs.

Your Honours, consistent with the broad discretionary nature of the power to award costs as an unfettered power, an unconfined discretion properly understood, what exists are general principles or guidelines which guide the exercise of the discretion rather than absolute or hard rigid legal rules or inflexible requirements. 

If I can take your Honours briefly to what Justice McHugh observed in Oshlack v Richmond River Council (1998) 193 CLR 72. It is in the joint book of authorities at tab 18. And if your Honours could turn please to paragraph 65, and I will just ask your Honours to read the entirety of that paragraph, including the extract from the reasons of Chief Justice Mason in Latoudis.

His Honour Justice Mason – sorry, Justice McHugh, was in the minority in the decision, but his observations there did not differ from those of the other members of the Court.  For example, Justices Gaudron and Gummow at paragraphs 34 to 35, including the extracts from Justice Dawson’s reasons in Latoudis and the observations of Justice Brennan in Norbis v Norbis, if I could ask your Honours to read those.  And Justice Kirby made observations to similar effect.  I will not take your Honours to them, but it is at paragraph 134.3 and 134.4. 

So, what is clear is that there are various general principles or guidelines which guide the exercise of the discretion as to costs, and we say that the principle as we have outlined it in relation to impecuniosity, is a similar principle.  It is the equivalent to, and consistent with, other principles in relation to costs, such as the compensatory principle, that is, that orders for costs are to compensate the successful party, not punish the unsuccessful party, or the general rule as to costs, that costs follow the event, or the principles relating to when it may be – when the general rule as to costs may be departed from.  So a successful party may be deprived of its costs due to factors connected with, or leading up to the litigation. 

We say that this principle regarding impecuniosity has been endorsed at the Court of Appeal level in all Australian jurisdictions, and I would like to take your Honours on a quick tour of those cases, if I may.   If we could begin with the ACT Court of Appeal in the decision of GJ v AS No 4 unreported, it is [2017] ACTCA 7 and it is in the bundle at tab 11.

In the case, the appellant sought a personal protection order in the ACT Magistrates Court and the order was refused.  The appeals to the Supreme Court and to the Court of Appeal failed.  The appellant resisted a costs order in favour of the successful respondent.  At paragraph 102, the court’s reasons on this point are set out.  The court observed that:

If it was a suggestion that [the appellant] was impecunious or would have difficulty in meeting a costs order, that has never been a basis for declining to make an order for costs –

The court there cites seven authorities from four different jurisdictions.  One of those is the decision of the Full Court of the Federal Court, which is the next authority I wanted to take your Honours to, in Scott v Secretary, Department of Social Security.  It is in the joint book of authorities at tab 21.

In that case, persons in receipt of social security benefits brought actions against a Commonwealth officer.  They failed at trial and on appeal and Justices Beaumont and French, as his Honour then was, at paragraph 4 referred to the ground relied on as relating to “the financial position of the appellants” being “litigants in person” who were “impecunious” and:

not able to satisfy any costs order made against them.  However sympathetic one may personally be to arguments of this kind, inability to meet a costs order or the fact that the losing party has limited financial means has never been a sufficient reason to deny a successful party his costs ‑

Their Honours set out some authority there.  Another of the seven authorities referred to in the ACT decision GJ v AS was the Victorian Court of Appeal’s decision in Board of Examiners v XY [2006] VSCA 190. It is in the book at tab 5.

KIEFEL CJ:   Ms Solicitor, in your outline you point out that the amicus accepts the principles stated in these cases.

MS BROWNHILL:   Yes, your Honour.

KIEFEL CJ:   So the issue comes down then to the question of whether or not this matter lies somehow outside the principle.

MS BROWNHILL:   That is the way we see it, your Honours.  The reason to take your Honours through these cases was to address the amicus’ submissions at paragraph 10, which take issue with or seek to detract from the force or effect of those authorities. 

I do not need to take your Honours to all of them.  They are dealt with in our reply.  May I take your Honours to the next case, the Board of Examiners Case, because it does contain some observations in relation to the policy foundation for the principle.  It is at tab 5, Board of Examiners v XY.  XY sought to be certified as a fit and proper person to be a legal practitioner.  The Board refused.  XY succeeded on an appeal to the Supreme Court, which was a hearing de novo.  The Supreme Court ordered the Board to pay her costs, taking into account her financial stress due to having to pay for her legal representation, and the Board appealed from that costs order to the Court of Appeal.

In the reasons of Justice of Appeal Chernov, at paragraph 31 and following, his Honour held that XY’s financial stress was an irrelevant factor, vitiating the exercise of the costs discretion or, alternatively, even if it was relevant, too much weight was given to it.  In paragraph 32 his Honour says that there is no authority for the proposition that makes financial stress relevant.  In paragraph 33, his Honour identified a number of problems and it is these that are the policy foundation underpinning the principle:

a number of problems would arise if it were accepted that the impecuniosity of a party is relevant to the exercise of the costs discretion.  Thus, the question would arise whether the court should also have regard to the material position of the other party.  Importantly, on what basis would the court determine the level of impecuniosity or wealth of a litigant that would justify it having regard to that factor in the exercise of the costs discretion?

And also, in the following paragraph, his Honour identifies the idea of:

the financial stress of a litigant may be a relevant consideration –

is also:

inconsistent with principle –

And, the principle his Honour identifies is:

the reason that, as a general rule, a successful party is entitled to have a reasonable expectation of recovering its proper costs is that it is just and reasonable that it be compensated for such expenses because it was brought to court by the losing party.

His Honour goes on to say that the financial circumstances of neither the successful party nor the unsuccessful party are a relevant matter.  They do not play any part in underpinning the “rationale underpinning the general rule”.  So, at paragraph 34 is the thrust of it.  His Honour says:

the fact that the party is in straitened circumstances would ordinarily be equally irrelevant.

His Honour refers to:

There may be exceptional circumstances that make a particular party’s financial position relevant . . . For instance –

And gives the example of the situation in Oshlack which was public interest litigation brought pursuant to legislation evincing:

the intention of redressing, by way of an appropriate costs order, any serious inequality in resources between –

parties.  I also note, your Honours, in that decision, the reasons of your Honour Justice Nettle at paragraphs 40 and 41, particularly 41:

The notion that a litigant should be accorded special consideration in relation to costs on the grounds of poverty or financial disadvantage has nothing to commend it.

So, each of the authorities that we have referred to, from the various jurisdictions in our reply, speak with one voice.  I would have said, all jurisdictions in the country, except the Northern Territory, save to note that yesterday the Court of Appeal – differently constituted – delivered reasons which – it is the matter of JB v The Northern Territory [2019] NTCA 3.

The Court held that the Court’s discretion in this case was “inconsistent with a well‑established line of authorities” and noted that this Court was sitting to hear this matter today.  So, there is now some inconsistency between the Court of Appeal and the judges sitting on it.  But, noting that, all other jurisdictions in the country certainly speak with one voice and they adopt and accept the principle as we have identified it.

We say that the principle should now be endorsed by this Court.  It has a sound policy basis, being the reasons that were identified by Justice of Appeal Chernov, that I took your Honours to.  The amicus submissions seem to suggest that those reasons were mere practical difficulties but, we say, they have a much more substantive foundation than that.  As your Honour the Chief Justice notes, the amicus has indicated that it accepts the principle but then the amicus goes on to submit that the respondent’s impecuniosity was a relevant matter which the Court could properly take into account.

What is lacking from that submission, we say, is any factor or element of the case that takes this case outside the principle and makes impecuniosity relevant – what Justice of Appeal Chernov termed “exceptional circumstances” or “special circumstances”.  We say there is nothing about this case which makes it exceptional or special.  The Court of Appeal’s decision turned on the futility of a costs order.  So, the Court held

that a costs order would most likely be futile to compensate the appellant.  But, futility is nothing more than the corollary of impecuniosity.  It is not a separate or discrete matter.  It is the same thing.  So, that is not a matter that takes it outside of the principle.

KIEFEL CJ:   It is also used in other areas of the law to explain why a court will not make an order, for instance, in the areas of equity, specific performance, and the like.  It has a particular meaning in those areas.  It probably does not transpose well to an area like costs.

MS BROWNHILL:   Yes.  I accept that entirely, your Honour.  That is the thrust of the submission we made in our reply, that, in equity, the discretion is exercised differently where there is a futility issue but relief is not denied.  It is just that you get different relief in the equitable situation.  Whereas, here, the suggestion is that futility should mean you do not get the costs you would otherwise be entitled to.

KIEFEL CJ:   Yes.  Ms Solicitor, we might hear from the amicus at this point.

MS BROWNHILL:   Yes, thank you, your Honour.

KIEFEL CJ:   Thank you.  And I should have added for the record that the respondent has entered a submitting appearance.  Mr Crawley, you are the amicus.

MR CRAWLEY:   If your Honour pleases.  The amicus does not cavil with the concept that the general rule, or the general principle, is that impecuniosity as such and with no more is not a basis for departing from the usual rule that a successful party is entitled to their costs.  And the amicus equally agrees with what has been said by the appellant in terms of the status of a general rule as being not an absolute rule, but a guideline for the assistance of the Court.

My learned friend took the Court to Oshlack and I also do so – and in fact commend to the Court the passage in the judgment of Justice Kirby, which is in the consolidated bundle of cases at page 316 of the bundle – this is behind tab 18.

My learned friend made reference to it, without taking the Court to it.  This is part of his Honour’s paragraph 134 where his Honour makes a number of general remarks about the cost discretion, and paragraph 3 on page 316, and to a lesser extent paragraph 4 thereafter, and I would invite the Court to read particularly paragraph 3 because it sets out what the amicus says is the appropriate description.

KEANE J:   That is simply saying that you cannot fetter the discretion.

MR CRAWLEY:   Yes.

KEANE J:   Everyone accepts the discretion is not fettered.  On the other hand, it is a judicial discretion, which means that it has to be exercised by reference to relevant considerations.

MR CRAWLEY:   Yes, absolutely.  It is just confirming the fact that it remains ‑ ‑ ‑

KEANE J:   Otherwise it is not the exercise of judicial power, is it, if it is just arbitrary?

MR CRAWLEY:   Precisely.  If it is not, yes.  As Justice Kirby says, that it cannot be exercised arbitrarily or inconsistently.  And it is certainly the inconsistent aspect, I suspect, which is the thrust of my learned friend’s submissions that there is an inconsistency between the Court of Appeal decision in this case and the general approach adopted in other jurisdictions, which my learned friend has taken the Court to.

I do not disagree with that, that the general thrust of the case has certainly been to that effect, and the question then is, was there something in this case which took it outside the ordinary?  Now, my learned friend was taking the Court through XY.  Again, it is a helpful exposition of the law on a number of fronts.  But even in relation to XY, one must always bear in mind that it was not a case of ordinary litigants.  The Board has a particular status and function that was addressed by the Court of Appeal.

At paragraph 12 of their reasons, which appears on page 21 of the bundle, this is behind tab 5, at about the middle of paragraph 12, this passage appears:

For present purposes it is sufficient to note that it was claimed for the Board that, in exercising the costs discretion, his Honour effectively treated the proceeding before him as if it were an ordinary civil proceeding without giving any or any due weight to the special position of the Board and the role it played in the appeal.

So the facts underpinning that decision involved a party which was not a litigant, in the classic sense of the word.  I take it no further; I just simply refer to that.  So we are concerned with looking at, well, what was it about this case that would justify the decision taken by the Court of Appeal so as not to describe it as being arbitrary or inconsistent with authority?

The reasons provided by the Court of Appeal were very brief and say very little, as indeed were the submissions made by the parties, as the Court will have seen from the transcript, but the facts that were apparent from the decision of the court and underpinned it.

If I can take the Court to my outline of oral submissions which was handed up this morning ‑ costs discretion, we have addressed that.  Impecuniosity, just to understand the basis on which impecuniosity is generally considered not of itself to interfere with the general approach to costs ‑ there are three main bases for that. 

Costs orders are intended to be compensatory, not punitive.  There is not a dispute in relation to that issue.  Costs orders should be based upon matters connected with the proceedings.  There can be room for a debate about the degree of connection.  I think my learned friend, in her submissions, referred to it being a direct connection.  What that amounts to is ‑ we would embark upon another question of semantics.  I will not go into it for present purposes. 

And practically, it can be difficult to determine the financial position of the unsuccessful party, as my learned friend referred to in XY, not just the financial position, but what is the threshold.  At what point do you say that they are impecunious so the general rule may or may not apply?  How do you assess relativity of impecuniosity between the parties, litigation and so on?  So that would be a practical difficulty in a court exercising its powers in that way. 

Now, the outline goes on to suggest that the costs order in this case was not arbitrary.  There was a basis for it.  The impecuniosity that the respondent had was related to the proceedings in this way.  He was impecunious because he was unemployed and unemployable.  That came about in the circumstances such that the respondent had been employed by the Department of Infrastructure, one of the limbs of the Northern Territory of Australia, and he had been seeking a support visa to continue to work for them.  His status as a – his presence in Australia was subject to serious and ongoing challenge with the Department of Immigration. 

He sought the – he had been refused a temporary work visa and was challenging that, and he sought Ministerial intervention from his employer directed with the Commonwealth Minister responsible to assist in his challenge.  The Minister of Infrastructure organised for a ministerial briefing to be obtained.  The ministerial briefing was obtained and that ministerial briefing included material which was the subject of the defamation proceedings. 

It was admitted by the Northern Territory and found by the court that that ministerial briefing included three defamatory imputations, but the various defences raised by the Northern Territory were successful.  The thrust of the ministerial briefing was that the Minister should not support – he should not intervene in relation to the visa proceedings and that was followed by the Minister. 

The consequence of that was that the temporary visa that Mr Sangare was working under was due to come to an end on 17 December 2014; without any intervention from the Minister that was going to follow.  As a consequence, the Northern Territory Government terminated his employment effective from that date.  As a consequence of that he became unemployed and unemployable because he no longer had a visa that enabled him to work within Australia. 

So that is the financial basis – that is the factual basis upon which his impecuniosity arose.  And, so that is the extent to which there can be found to be any connection between his impecuniosity and the proceedings that were involved. 

KEANE J:   The decision of the court, both at trial and on appeal, was that the appellant was not liable for any wrong, or the consequences of that wrong. 

MR CRAWLEY:   Yes, that is right.  So, as I say, notwithstanding the defamatory imputations within it, the defences were upheld. 

KEANE J:   Mr Crawley, there are some cases, some old cases, that recognise that where a defendant has invited an action or suggested to the plaintiff that the plaintiff might have an action, that that might be a reason for departing from the usual rule, but this is a very long way away from any such ‑ ‑ ‑

MR CRAWLEY:   Absolutely. 

KEANE J:   There is no doubt that in this case the appellant had no choice about being sued and was entirely vindicated.

MR CRAWLEY:   I do not suggest otherwise, your Honour.  I am trying to identify anything which may justify a decision of the court purely other than the financial position of the respondent.

KEANE J:   We appreciate your assistance.

MR CRAWLEY:   It was in the setting of an employment relationship with that background as I provided it.  The only other issue then is this

relationship – sorry, whether the costs order is compensatory or punitive.  In all matters of impecuniosity this issue arises of course because if the unsuccessful party has no means of paying a costs order, then how can the costs order be seen to be compensatory in that sense, and certainly it can be seen as being punitive both in the sense of causing further angst and difficulty for the unsuccessful party, but also in a sense – and this was touched upon in our substantive submissions – in the sense of creating a Damoclesian sword over that person, that there is an order made against them which may modify or control their future behaviour and conduct, and that is something which would be of concern, we would say, and may well have been of concern to the Court of Appeal in this matter.

That is really all I can say in relation to it.  It is difficult when the Court of Appeal gives very brief reasons, which they obviously did in terms of the tightness of the timeframe.  The submissions were made of a morning, the decision was delivered on that aspect that same afternoon and only very briefly touched upon it and based upon the very brief submissions that were put to them as well.  But, essentially, then those are the points, that it is a guide, not absolute, and the question is whether it is being exercised arbitrarily, and all I can say in relation to the arbitrary or otherwise nature of it are the points that I have made to the Court.  May it please the Court.

KIEFEL CJ:   Thank you for submissions.  Do you have anything in reply, Ms Solicitor?

MS BROWNHILL:   Just briefly, your Honours.  Your Honour Justice Keane’s question about the success or otherwise of the defamation action; your Honours will recall, of course, that the Court of Appeal characterised the respondent’s case as having no merit and doomed to fail.  So the idea that somehow there is a link between the admissions made in relation to publication and so on in the defamation case and the situation or consequence for the respondent of a costs order is just unfounded in this proceeding.

My learned friend made something of the idea that there was potentially a punitive effect because of the effect of the consequences of the costs order, but that is again nothing more than a corollary of the fact that there is impecuniosity.  It flows from the fact of impecuniosity.  And none of the authorities that we have referred to in our submissions take into account that kind of effect, the consequence for – none of the authorities recognise that as a relevant factor.  It is what comes along with the idea of impecuniosity which is not regarded as a relevant matter.  Thank you, your Honours.

KIEFEL CJ:   Thank you.  The Court reserves its decision in this matter and adjourns until 9.30 am tomorrow in Brisbane and in Sydney.

AT 10.33 AM THE MATTER WAS ADJOURNED