Australian Firearms and Munitions Pty Ltd v Attorney-General

1. The applicant pay 80% of the respondent's costs of the proceeding. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

RANGIAH J: 1 On 21 September 2018, I ordered that the principal proceeding be dismissed: Australian Firearms and Munitions Pty Ltd v Attorney-General [2018] FCA 1442. I upheld the respondent's notice of objection to competency, holding the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the ADJR Act) did not apply to the relevant decision. I indicated that I would hear the parties as to costs. 2 The parties have made submissions as to costs.. The applicant submits that there should be no order as to costs, or that it should be ordered to pay only a portion of the respondent's costs. The respondent submits that there is no adequate reason to depart from the usual order that the applicant pay the whole of its costs. 3 The applicant advances six submissions in support of its position as to costs, which may be summarised as follows: (1) The respondent did not comply with the Civil Dispute Resolution Act 2011 (Cth) (the CDR Act) because he failed to give an explanation of why he considered that the ADJR Act did not apply and did not file a genuine steps statement. (2) In failing to give that explanation, the respondent did not act consistently with ss 37M and 37N of the Federal Court of Australia Act 1976 (Cth) (the FCA Act). (3) The respondent did not act consistently with the respondent's Legal Services Direction 2017, which requires litigation to be conducted in accordance with the Commonwealth's model litigant obligations. (4) The applicant had suggested that the notice of objection to competency should be dealt with before the substantive application, but the respondent did not agree to that course, resulting in the applicant incurring additional costs. (5) The respondent provided incorrect information as to the identity of the decision-maker, resulting in the applicant incurring unnecessary costs. (6) The respondent provided incorrect information as to what material the decision-maker took into account, resulting in the applicant incurring unnecessary costs. 4 The first and second submissions are related. Prior to the proceeding being commenced, a delegate of the respondent wrote to the applicant solicitors saying, "We would not consider this a decision within the meaning of the ADJR Act". The applicant's solicitors replied saying, "we would be interested to read the basis of your contention that the ADJR Act does not apply". The respondent's delegate did not provide any explanation for her position. Proceedings were then commenced. 5 Sections 6(1) of the CDR Act required the applicant to file a "genuine steps statement", which, relevantly, sets out the steps taken to try to resolve the issues in dispute. Section 7(1) required the respondent to file a genuine steps statement. 6 Section 4(1A) of the CDR Act provides that a person takes genuine steps to resolve a dispute if the steps taken constitute "a sincere and genuine attempt to resolve the dispute, having regard to the person's circumstances and the nature and circumstances of the dispute". The examples given in s 4(1) of genuine steps include notifying the other person of the issues in dispute; and offering to discuss them and providing relevant information to enable the other person to understand the issues. 7 The applicant filed a genuine steps statement, but the respondent did not. Under s 12(1)(a) of the CDR Act, the Court may, in exercising its discretion to award costs, take account of whether a person filed a genuine steps statement and whether genuine steps were taken. 8 Section 13 of the CDR Act provides that the powers in that Act are available in addition to any powers the court has under other legislation. Section 37N(4) of the FCA Act provides that in exercising the discretion to award costs in a civil proceeding, the Court must take account of any failure to comply with the duty imposed by, relevantly, subsection (1). That subsection requires the parties to conduct the proceeding (including negotiations for settlement of the dispute) in a way consistent with the overarching purpose. The overarching purpose is described in s 37M of the FCA Act as the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible. 9 The respondent submits that the delegate made her position clear to the applicant that there was no decision for the purpose of the ADJR Act and that she was under no obligation to explain her view. The respondent argues that there was never any real potential for the matter to be resolved in circumstances where his delegate considered the application to be incompetent and the applicant disagreed with that position. The respondent also submits that no costs would have been saved by either party if he had filed a genuine steps statement. 10 I find that the respondent failed to file a genuine steps statement and failed to take all necessary genuine steps to attempt to resolve the dispute. While the respondent took a genuine step to resolve the dispute by stating that his position was that the ADJR Act did not apply, he should have gone further by explaining the basis of that position in response to the applicant's request for an explanation. The respondent's failures may be taken into account pursuant to s 12(1)(a) of the CDR Act. 11 Further, the obligation under s 37N(1) of the FCA Act required the respondent to explain his position that the ADJR Act did not apply. The respondent was not excused from complying with his obligation merely because the lawyers representing the applicant were seeking an explanation of a proposition of law. That conduct might have been considered appropriate at a time before ss 37M and 37N commenced, but is no longer acceptable. The respondent has provided no satisfactory excuse for its failure to provide the explanation. 12 However, the Court retains a discretion under s 43(2) of the FCA Act to make the costs order it considers appropriate. It is relevant to consider whether the applicant incurred costs as a result of the respondent's failure to comply with s 7(1) of the CDR Act and s 37N(1) of the FCA Act. There is no evidence that it did. The respondent's argument that the ADJR Act did not apply was eventually explained in the respondent's notice of objection to competency and, later, in his outline of submissions. The applicant did not then discontinue the proceeding, but instead proceeded to a hearing, unsuccessfully arguing that the ADJR Act did apply. The obvious inference is that the applicant would have taken the same course even if the explanation had been given prior to the commencement of proceedings. The applicant has provided no evidence to the contrary. 13 The respondent's failures to comply with s 7(1) of the CDR Act and s 37N(1) of the FCA Act had no material consequence. The purpose of awarding costs is compensatory, not punitive. Those failures provide no adequate reason to depart from the usual position that costs should follow the event. 14 The applicant's third submission is that the respondent's failure to explain why the ADJR Act did not apply was a contravention of the Legal Services Direction authorised by the respondent, which requires litigation to be conducted in accordance with the Commonwealth's model litigant obligations. Those obligations are identified as including limiting the scope of litigation wherever possible and keeping the costs of litigation to a minimum. The applicant's submissions have not explained how and why the discretion to award costs is affected by a contravention of the Legal Services Direction. In any event, I am not satisfied that any such contravention resulted in the applicant incurring additional costs, and, for that reason, I would not depart from the usual position as to costs. 15 The applicant's fourth submission is that it had suggested that the notice of objection to competency should be dealt with before the substantive application, but that the respondent did not agree to that course. It submits that the consequence was that the notice of objection to competency could not be considered until the applicant had been put to the expense of setting out all of its material on its case. 16 In response, the respondent points out that at the first case management hearing, the applicant's counsel handed up draft programming orders to the Court and indicated that they were agreed between the parties. The Court made orders in accordance with the draft. Those orders provided for the notice of objection to competency to be filed following the filing of the applicant's material. I accept the respondent's submission that the applicant acceded to the course that it now complains of. There is no substance in the applicant's submission. 17 The applicant's fifth submission is that the costs it is ordered to pay should be reduced because of the misleading way in which the author of an email of 14 September 2017 was identified. The email indicated that it was from "Leanne". Consequently, the applicant proceeded on the basis that "Leanne" had made the relevant decision. The applicant understood this to be Leanne Loan. The respondent subsequently clarified that the decision-maker was not Ms Loan, but Mr Stephen Kiley. This was explained in two affidavits of Mr Kiley. The applicant submits that it incurred additional costs as a result of these matters. 18 The respondent submits that upon determining that Mr Kiley was the author of the September email, he immediately notified the applicant. He submits that no reduction of costs should be ordered. 19 I accept that the applicant did incur some unnecessary costs as a result of the respondent's inaccurate identification of the person who made the "decision". The respondent must have also incurred costs in clarifying the identity of the decision-maker. The applicant should not be required to pay that part of the respondent's costs incurred as a result of the respondent's own conduct. 20 The applicant's sixth submission is that after it was discovered that Mr Kiley and not Ms Loan was the author of the 14 September 2017 email, the respondent indicated that Mr Kiley had not relied on any material other than the material contained in a bundle of documents filed by the respondent. This led to the applicant filing submissions and an amended originating application which asserted that the respondent did not consider material provided by the applicant. The respondent then filed and served a further affidavit of Mr Kiley which indicated that he had considered further material. The applicant submits that this put it to considerable expense. It submits that no costs should be awarded for time spent by the respondent engaging in relevant correspondence, preparing Mr Kiley's further affidavit and dealing with submissions in respect of the applicant's amended originating application. 21 The respondent submits that there should be no reduction of costs because the correspondence and actions simply reflect an ordinary occurrence between parties in the ordinary course of litigation. Further, the applicant chose to amend the originating application to include a new ground. 22 I accept the applicant's sixth submission. Again, the applicant should not be required to pay that part of the respondent's costs incurred as a result of the respondent's own conduct. 23 No precise calculation of the extent to which the respondent incurred costs as a result of the matters described in paras [17] and [20] can be made on the available material. The best that can be done is to make a broad-brush assessment. Doing so, I consider that it is appropriate to reduce the order for costs that would otherwise be made against the applicant by 20%. 24 I will order that the applicant pay 80% of the respondent's costs of the proceeding. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rangiah.