Varnhagen v The State of South Australia (No 2)
[2022] SASC 118
•21 October 2022
Supreme Court of South Australia
(Civil: Application)
VARNHAGEN & ORS v THE STATE OF SOUTH AUSTRALIA & ANOR (No 2)
[2022] SASC 118
Judgment of the Honourable Justice Hughes
ADMINISTRATIVE LAW - JUDICIAL REVIEW - PROCEDURE AND EVIDENCE - COSTS
On 14 December 2021 the applicants filed an application seeking judicial review of various decisions by the Governor approving extensions of a declaration of major emergency and of various directions issued by the State Co-ordinator under the Emergency Management Act 2004 (SA) in response to the COVID-19 pandemic.
On 22 February 2022, at the request of the applicants, the Court made an order determining the manner in which costs would be dealt with in the event that the application for judicial review was granted, or dismissed.
On 27 September 2022, the Court made orders granting the respondents’ application for summary dismissal of the proceedings and dismissing the action. The respondents applied for an order that the applicants pay the respondents’ costs in the sum of $50,000 in accordance with an order made by the Court on 22 February 2022. The applicants opposed the application for costs and submitted that the parties should bear their own costs of the proceedings, except that they conceded that an order for costs in favour of the respondents should be made in respect of the applicants’ unsuccessful interlocutory application challenging the validity of the South Australian Public Health (COVID-19) Amendment Act 2022 (the Amendment Act).
Several events were relevant to the determination of costs. The applicants had sought and obtained an order in relation to costs at the commencement of the trial. The revocation of the decisions under review was always within the parties’ contemplation. Despite extra-curial events during the proceedings, the applicants made various forensic elections including to not revisit the order for costs. Further, they were unsuccessful in their challenge of the validity of the Amendment Act.
Held, granting the respondents’ application for costs:
1. The costs order made on 22 February 2022 is the starting point for the exercise of the Court’s discretion, and there is no basis upon which to disturb this order.
2. The application of 14 December 2021 was not determined on its merits in its original form. However, the applicants made a decision to challenge the validity of the Amendment Act within the proceedings, and were unsuccessful.
3. The forensic elections of the applicants ought not have the effect of depriving the respondents of their costs where the proceedings are dismissed, even though the original issues were not determined on their merits.
South Australian Public Health (COVID-19) Amendment Act 2022 (SA); Uniform Civil Rules 2020 (SA) r 194.2, r 194.5(2), referred to.
Chattaway v Minister for Health & Ors (No 2) [2021] SASC 89, applied.
Palace Gallery Pty Ltd v Liquor and Gambling Commissioner (No 2) (2014) 120 SASR 299; Re the Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; ex parte Lai Qin (1997) 186 CLR 622, distinguished.Northern Territory v Sangare (2019) 93 ALJR 959, considered.
VARNHAGEN & ORS v THE STATE OF SOUTH AUSTRALIA & ANOR (No 2)
[2022] SASC 118HUGHES J:
Civil
On 27 September 2022, the Court made orders granting the respondents’ application for summary dismissal of these proceedings and dismissing the action. Those orders followed the provision of answers to questions of law the effect of which was to render futile the determination of the original questions raised by the proceedings.
The respondents applied for an order that the applicants pay the respondents’ costs in the sum of $50,000 in accordance with an order made by the Court on 22 February 2022.[1]
[1] FDN 32.
The applicants oppose such an award and submit that the appropriate order is that the parties bear their own costs of the proceedings, except that they concede that an order for costs in favour of the respondents should be made in respect of the applicants’ unsuccessful interlocutory application challenging the validity of the South Australian Public Health (COVID-19) Amendment Act 2022 (the Amendment Act).
The parties agreed that the Court should determine the dispute about costs on the basis of written submissions without an oral hearing. The respondents provided submissions dated 4 October 2022. The applicants provided submissions dated 6 October 2022. The respondents declined to exercise their right of reply.
This decision addresses the respondents’ application for costs.
Consideration
There were several events relevant to the determination of the costs application.
Firstly, the applicants sought and obtained an order in relation to costs at the commencement of the trial.
Secondly, extra-curial events, being the revocation on 24 May 2022 of the declaration of a major emergency in respect of the outbreak of COVID-19 within South Australia on 22 March 2020 which was thereafter extended by approvals on various occasions, and the passage of the Amendment Act on 24 May 2022, led to the primary application for relief not being determined on its merits.
Thirdly, the applicants made various forensic elections during the proceedings including a decision not to seek to have the Court revisit the costs order of 22 February 2022, and a decision to challenge the validity of the Amendment Act within the proceedings rather than by separate action.
Fourthly, the applicants were unsuccessful in their challenge to the validity of the Amendment Act.
I have had regard to the submissions and the evidence filed in relation to the issue of costs and in particular the affidavits of Loretta Polson affirmed on 16 February 2022 and of Loretta Foran affirmed on 4 October 2022.
The order regarding costs
At the outset of the hearing, the applicants proposed and the respondents consented to an order in the following terms:
Pursuant to r 194.2 of the Uniform Civil Rules 2020 (SA), order that, in the event that the Application filed on 14 December 2021 is:
1.1. allowed and costs follow the event: the Applicants’ costs of the proceedings other than any appeal of the Application on a party-party basis be fixed in the sum of $50,000;
1.2. dismissed and costs follow the event: the Respondents’ costs of the proceedings other than any appeal of the Application on a party-party basis be fixed in the sum of $50,000.
I made an order in those terms.
The application of 14 December 2021 referred to in the costs order is the originating application for judicial review.
An extra-curial event was involved
The events of 24 May 2022 changed the course of the proceedings. On that day the Amendment Act received assent and the Emergency Declaration was revoked. Whilst these events occurred outside of the proceedings, the declaration was only ever liable to endure for its stated length or its revocation by the State Coordinator, whichever was the earlier. The length of each of the declarations was 28 days. On an application for judicial review, a fresh decision made by the decision-maker that renders the proceedings inutile is always a possibility.
The Amendment Act was introduced into Parliament on 4 May 2022 and passed both Houses on 24 May 2022. It was the subject of various exchanges with counsel on 18 May 2022, when the applicants foreshadowed their challenge to the validity of the legislation when it passed both Houses.
Neither the revocation nor the Amendment Act were intervening events that can be said to have come as a bolt out of the blue.
The application of 14 December 2021 was not determined on its merits
The parties agree that there has been no substantive determination of the issues raised by the application of 14 December 2021. Those issues are set out at paragraph [56] of the Court’s judgment dated 27 September 2022.
After the Bill was introduced but before it passed both Houses, the applicants asked the Court not to reserve judgment on the proceedings as originally brought but to allow them to mount their challenge to the validity of the Amendment Act within the current proceedings.[2] It was put to the Court that in the event of a successful challenge there would be an application to amend the grounds of judicial review. This can be understood as an election to adopt a particular course of action with respect to the proceedings. I do not suggest that it was an unreasonable course of action; there was however a choice to keep the issues together and, potentially, the benefit of the costs order.
[2] Transcript of Proceedings, 18 May 2022, 367 (S Ower KC).
There was no determination of the questions posed by the application for judicial review prior to the revocation of the declaration and the passing of the Amendment Act; there was no suggestion that those questions should be determined irrespective of the outcome of the challenge to the validity of the Amendment Act.
Forensic elections
Against that background, the applicants made certain forensic choices. When the Bill was about to pass, the applicants sought to keep the proceedings on foot notwithstanding that the evidence had closed, to preserve their ability to apply for the proceedings to take a different course.[3]
[3] Transcript of Proceedings, 18 May 2022, 366 (S Ower KC).
The applicants did not seek to bring separate proceedings regarding the validity of the legislation. Neither party applied to vary or set aside the costs order made on 22 February 2022 to reflect the changed circumstances.
The applicants declined to negotiate with the respondents about costs after the extra-curial events occurred, despite an invitation to do so. Ms Foran’s affidavit of 4 October 2022[4] discloses an invitation to the applicants by the respondents for the applicants to discontinue on the basis that the parties bear their own costs.[5] The correspondence put the applicants on notice that the respondents may, if the offer is not acted on by a particular date, rely on the correspondence in respect of any dispute about costs.
[4] FDN 111
[5] LMF 1 of the affidavit of L M Foran affirmed on 4 October 2022.
The applicants were unsuccessful in their challenge to the validity of the legislation
The challenge to the validity of the legislation was undertaken within the proceedings. It was determined on its merits, with the applicants being unsuccessful.
Consideration
The determination of an award of costs is a matter for the Court’s discretion, to be exercised judicially and with the starting point that the successful party is entitled to be indemnified for the cost of the action.[6]
[6] UCR 2020, r 194.5(2). See also Northern Territory v Sangare (2019) 93 ALJR 959 at [24]-[25] per the Court.
In Re the Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; ex parte Lai Qin,[7] the applicant unsuccessfully applied for costs in her proceedings against the Minister. She had been refused a protection visa and had commenced proceedings to challenge that decision. Part way through the proceedings, the Minister granted the applicant a visa. She sought costs to the date the visa was granted. The High Court (McHugh J) held that in the absence of a party acting unreasonably in the bringing or maintaining of proceedings, but where there has been no hearing on the merits, there will usually be no order as to costs.[8]
[7] (1997) 186 CLR 622.
[8] At 625.
However, the application of that authority to the current circumstances is doubtful. There are two significant distinguishing and relevant factors. The first is that there is a costs order in place secured on the application of the applicants, which was not sought to be re-visited when the extra-curial events became likely to occur. The second is that an aspect of the proceedings was determined on its merits: the challenge to the validity of the legislation.
The fact that a costs order is in place does not fetter the Court’s discretion to set aside the order if the circumstances warrant it; for example, because of the unreasonable conduct of a party. I do not consider the conduct of either of the parties to have been unreasonable. However, the general proposition set forth in Lai Qin did not arise in circumstances of an order that has already been made, but rather where the discretion is considered for the first time.
The question is not, as the applicants put it, whether the applicants have been shown to have acted unreasonably so as to warrant a departure from the proposition that the parties bear their own costs, if the merits of the dispute have not been determined. By virtue of the order made on 22 February 2022 being the starting point for the Court’s discretion, and the applicants’ subsequent choices and the respondents’ order having the proceedings dismissed, the question is whether there is any reason not to act in accordance with the order of 22 February 2022. In my view, there is not.
In light of the fact that the applicants had an opportunity to apply to revisit the order prior to the hearing of the challenge to the validity of the Amendment Act, and did not take it, I do not consider that the applicants have established a basis for making an order that departs from the terms of the order made on 22 February 2022.
The circumstances of this case are also distinguishable from those that faced the Full Court of the Supreme Court of South Australia in Palace Gallery Pty Ltd v Liquor and Gambling Commissioner (No 2).[9] The plaintiff’s judicial review proceedings required the Court to determine the proper construction of a provision of the Liquor Licensing Act 1997 (SA). Just prior to the hearing, a Bill was introduced in the Parliament that rendered the proceedings otiose. Although the hearing of the judicial review was vacated, the Court heard and determined the issue of validity. The Court determined that each party should bear their own costs. The Court said:
The defendants are manifestations of the executive government of the State who have had the benefit of legislation which was calculated, in the objective sense, to support their case in litigation before the court. The ultimate question in issue in this action was the validity of the Code of Practice made by an executive agency in the purported exercise of a statutory power. In enacting the Amending Act, Parliament moved to remedy legislatively a perceived defect in the legislative foundation for that executive action. The rights of citizens to invoke the judicial review jurisdiction of this court, to pass on the validity of executive acts made pursuant to a statutory power, is a fundamentally important constitutional right. As a general rule, litigants who act reasonably in bringing proceedings in that jurisdiction should not suffer a costs penalty for bringing an action which is subsequently denied any utility because the alleged deficiency in the statutory support for the impugned executive action is retrospectively remedied in anticipation of an adverse declaration by the court. If that general rule is not applied, the threat of Parliamentary action would unduly inhibit the invocation of the jurisdiction of this court to ensure that the executive does not act beyond the scope of its statutory authority.[10]
[9](2014) 120 SASR 299.
[10] At [12] per Kourakis CJ, Blue and Stanley JJ.
However, in the present case, the revocation or expiry of the emergency declaration – an event that was always liable to occur – was key to the conclusion that the issues in the judicial review proceedings ceased to have utility. Further, the applicants denied, and there was no finding that, the Amendment Act was directed at remedying a “perceived defect in the legislative foundation for that executive action”. It is to be borne in mind that the Amendment Act created a wholly different scheme.
The circumstances for consideration more closely resemble those in Chattaway v Minister for Health & Ors (No 2),[11] in which the applicant’s proceedings for judicial review were interrupted by a case stated to the Full Court as to the interpretation of the legislation governing the exercise of the administrative decision. The construction argument was answered in favour of the respondents and a remaining issue to be tried was not prosecuted by the applicant. The Court granted the respondents’ claim for costs, observing that the decision to state a case and the steps taken after the resolution of the issue of construction were forensic choices of the applicant. Stanley J observed that the forensic strategic decisions of the applicant ought not have the effect of depriving the respondents of their costs where the proceedings are dismissed, even if an aspect of the proceedings becomes moot.[12] His Honour concluded that the circumstances should be distinguished from those in Lai Qin. In my view, the present case shares more similarities with the circumstances in Chattaway than it does with Lai Qin. However, in the present case, the argument in favour of an award of costs in the terms sought by the respondents is further reinforced by the existence of the order of 22 February 2022.
[11] [2021] SASC 89.
[12] At [12].
The applicants accept that their unsuccessful challenge to the validity of the legislation should attract an order for costs in the respondents’ favour. In my view, there is no basis to disturb the order that was made on 22 February 2022 with respect to any aspect of the proceedings.
The applicants should pay the respondents’ costs of the proceedings in the sum of $50,000.
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