Australian Securities Commission v Aust-Home Investments Limited

Legal issues in the appeal The appeal which came before the Court on 20 July 1998 was against part of a decision of Carr J given on 10 December 1997. The issue raised by the appeal was whether Carr J had erred in law in deciding that a proposed extension of exploration licence 08/118 ("the tenement") is or will be a "future Act" under the Native Title Act 1993 (Cth) ("the NTA"). The significance of the issue was that the answer to it would determine whether the "right to negotiate" provisions in the NTA would apply to the grant of the extension of the tenement. If so, compliance with such provisions would have been a condition precedent to the validity of the grant of the extension of the tenement. The Native Title Amendment Act 1998 ("the Amendment Act") received royal assent on 27 July 1998. Relevant parts came into operation on 30 September 1998 and the balance on 30 October 1998. The appellant claims it wishes to discontinue the appeal because it considers the enactment of the Amendment Act has made the issues raised by the appeal otiose.

Appellant's contentions For the appellant it is contended that the appropriate order, in the exercise of the Court's discretion, is that there should be no order as to costs. In support of this, reliance is placed upon what was said by McHugh J in Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Quin (1998) 186 CLR 622 at 624-626: "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. This approach has been adopted in a large number of cases. See, eg, Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194; Seventh Mingcourt Pty Ltd v Lawrence (unreported; Federal Court of Australia; 1 August 1996), per Branson J; Coleman v City of Melville (unreported; Supreme Court of WA; 22 September 1994), per Scott J; Compadres Australia Pty Ltd v Waterfront Place No 2 Pty Ltd (unreported; Supreme Court of Q; 15 August 1995), per MacKenzie J; Inprint Ltd v K & D Media Pty Ltd (unreported; Federal Court of Australia; 22 December 1995), per Einfeld J; Australian Securities Commission v Berona Investments Pty Ltd (1995) 18 ACSR 772." McHugh J prefaced that statement by reference to the fact that the power to order costs is a discretionary power and that ordinarily where the power is exercised after a hearing on the merits, the successful party will be entitled to costs (at 624). He said that absent a hearing on the merits, the above test applies. However, in applying the test it is not the function of a court to make a prediction as to the outcome of a hypothetical case (at 626). Furthermore, the fact that a party was being legally aided does not put it in any better position for an order for costs than if it was paying its own costs (at 629).

The appellant submits that in applying the test as enunciated by McHugh J, the following factors support the making of no order as to costs: (1) it cannot have been unreasonable for the appellant to pursue the appeal; (2) the issue raised by the appeal was of national public importance and essential to the proper administration and maintenance and good standing of mining tenements throughout Australia; (3) the appeal raised an issue of public interest to all parties and governments and was a test case of public importance; (4) the second respondent will not by its individual or collective nature bear any cost burden, even if no costs order is made, because its costs are met from public funds; (5) the appellant will have to meet any costs order in favour of the second respondent from its own funds; (6) the circumstances which occasioned the appellant not to proceed with the appeal, namely the passing of the Amendment Act, were beyond the appellant's control; and (7) all parties to the appeal, other than the second respondent, do not seek any costs order. For the appellant it is also submitted that it should not be responsible for any costs incurred by the second respondent in respect of issues raised by a notice of contention filed on behalf of the third respondent. That notice was filed on 9 March 1998 and withdrawn on 13 July 1998 based on a belief on behalf of the third respondent that the Amendment Act would be proclaimed and render otiose the issue addressed in the notice. In relation to the fourth and fifth factors, the second respondent, in our view correctly, takes the point that these are assertions of evidentiary positions unsubstantiated by appropriate evidence. Second respondent's submissions For the second respondent issue is taken with the assertion on behalf of the appellant that the appeal has been rendered otiose in the circumstances of the case. This is supported by a further submission that the appellants themselves, at the hearing of the matter before the Full Court, did not take that position in their written submissions. The original submission was that the original grant of the exploration licence was merely arguably invalid. But that subsequently was changed to an argument the original grant was invalid either because of the extinguishing effect of the grant of the exploration licence or because the holders of native title had been treated less favourably than the owners or occupiers of private land in relation to the grant of the original expiration licence or in the carrying out of mining pursuant to the exploration licence. It is submitted it was this change of argument before the Full Court which necessitated the notice under the Judiciary Act (1903) (Cth). Accordingly, this is not to be seen as a case where the issue of the notice had emerged previously and the point was taken on behalf of the second respondent only close to the Full Court hearing. The requirement to deliver the notice was a matter for the appellant. We accept this last submission. It is submitted for the second respondent that the Court should decide the appeal is not otiose. It is said this is supported by examination of the schedules to the NTA. For reasons which will emerge, it is unnecessary to canvass the argument in detail by examination of those schedules. In subsequent written submissions it is made clear on behalf of the second respondent that it does not submit this Full Court should finally determine whether the hearing of the appeal would be otiose or not. What is contended is that the hearing of the appeal is, at the very least, arguably not otiose so that the appellant can be seen as having made a tactical decision, based on the opinion of its solicitors, in seeking leave to discontinue the appeal. Consequently, it is said such leave should be conditional upon the payment of the second respondent's costs. For the second respondent it is accepted that it is arguable whether the listing judge had authority to grant leave to discontinue the appeal. Accordingly, the second respondent does not oppose such leave being granted by this Court. Nevertheless, it is submitted that if such leave is granted it ought to be conditional upon the appellant paying the costs of the appeal or, alternatively, the appellant and the third respondent paying the second respondent's costs of the appeal. In support of the alternative submission that the third respondent should bear some liability for the costs of the second respondent, it is acknowledged for the second respondent that the third respondent had no control over whether discontinuance occurred or leave is granted for it. However, the written submissions of the third respondent had raised a number of legal issues additional to those raised by the appellants themselves and the second respondent had had to deal with these in responding to the appeal. Furthermore, the third respondent had filed and then withdrawn a notice of contention which occasioned costs to the second respondent. There had been a further issue on whether the third respondent had standing to participate in the appeal. In the result the case for the second respondent seeks, firstly, that costs of the appeal be paid by the appellant; alternatively by the appellant and the third respondent; alternatively by the third respondent; and that the costs of the notice of motion be paid by the appellant. The second respondent also seeks an order against the appellant for at least the second respondent's costs occasioned by the adjournment on 20 July 1998. Third respondent's submissions The third respondent does not seek any costs order against the appellant or any other party and consents to an order that each party bears its own costs upon discontinuance. It is submitted the third respondent should not be ordered to pay alone or jointly the second respondent's costs of the appeal. This is supported by three factors: (1) the third respondent did not bring the appeal nor is it the party proposing to discontinue it; (2) the appeal is to be discontinued by the appellant as a consequence of an event outside the control of the parties, namely the changes to the law introduced by the Amendment Act; (3) the third respondent cannot be said to have been unsuccessful in the submissions it was to make in the appeal nor can the second respondent be said to have been successful; and in any event it is not appropriate for the Court to determine the merits of the parties submissions for the purpose of determining costs. In respect of the issue of whether the third respondent was entitled to participate in the appeal it is submitted that this is an issue which was not determined, remains undetermined and need not be determined for the purpose of determining costs. In relation to the second respondent's contention that the appeal is not otiose, the third respondent makes submissions purporting to answer those made for the second respondent so far as they interpret the provisions and schedules relied upon by the second respondent.

With regard to the third respondent's notice of contention it is accepted it raised the question whether the Tribunal had jurisdiction to determine whether the Act was a future Act or not. As a consequence of the Amendment Act the third respondent considered that question became otiose. The notice was promptly withdrawn. It is submitted it was withdrawn for reasons beyond the fault of the third respondent or any other party and was withdrawn to save costs. No order for costs should be based upon it. Furthermore it is submitted neither the appellant in submissions filed on 13 July 1998 nor the second respondent in submissions filed on 16 July 1998 dealt with the issue raised by the notice. It is said the third respondent should be seen to have acted reasonably so that, it being futile to proceed with the application, there should be no order as to costs.

Discretionary considerations The power to award costs is a discretionary power to be exercised judicially: Federal Court of Australia Act (1976) (Cth) ss 43(1) and (2); Federal Court Rules O 62 r 3(1). There is a provision in O 52 r 19(3) of the Federal Court Rules that a party filing a notice of discontinuance under subr (1) shall be liable to pay the costs of the other party or parties occasioned by the appeal. Sub-rule (1) provides that an appellant may at any time file and serve a notice of discontinuance of the appeal and upon its being filed the appeal should be abandoned. It is common ground that here the notice of discontinuance was not filed although notice of it was given to the Court. There is therefore no scope for application of O 52 r 19(3). It is the appellant which seeks leave to discontinue and that falls for consideration in accordance with Federal Court Rules O 22 r 2(1)(d). We accept the submission for the appellant that the appropriate test to apply is that enunciated by McHugh J in Lai Quin at 625. The application of that test makes it appropriate to consider whether the further prosecution of the litigation became futile. The appellant and the third respondent are united in maintaining that such was the case. The second respondent argues to the contrary and says the matter is at least arguable. It is apparent from the reasons of McHugh J it is not appropriate in the determination of an issue of costs to make a prediction as to the outcome of the hypothetical case. Bearing that in mind, we consider that we should not seek to decide whether the issue remained arguable after the Amendment Act. To do so would be in fact to consider whether the case brought by the second respondent in the proceeding which will not continue by way of appeal is arguable. For the purposes of the application of the test of whether the parties have acted reasonably it is sufficient to consider whether the party acting did so on reasonable grounds. It is apparent the appellant reasonably considered that the appeal was otiose. It therefore acted reasonably in seeking leave to discontinue the appeal. Against that it may be noted that this was not an instance where the discontinuing party had already demonstrated the merit of its case by obtaining interim relief in the proceeding at an earlier stage, nor was it a case where the party seeking costs had acquiesced in non-prosecution of the litigation before leave to discontinue was sought: Australian Securities Commission v Aust-Home Investments Limited (1993) 44 FCR 194. This is not a matter where both parties have lost heart in the litigation and the only question between them is one of costs: J T Stratford & Son Ltd v Lindley (No 2) [1969] 1 WLR 1,547. Furthermore, the second respondent has the benefit of a judgment under which the rights of the parties under the Act have been determined at law. Notwithstanding that fact, it has been occasioned additional cost by reason of the appeal. If a decision on costs were restricted to the foregoing considerations, the second respondent would be entitled to an order for costs of the appeal upon discontinuance by the appellant. However, given that it is at least arguable that the amendments to the NTA have altered the effect on the appellant's position of the judgment appealed against, it was reasonable for the appellant to seek to discontinue its appeal. There is an element of public interest in bringing litigation to an end promptly when it is arguable that the litigation would serve no purpose, and certainly the parties should not be required to prosecute the litigation to determine where the costs thereof should fall. In relation to the third respondent, it is apparent the third respondent acted reasonably in withdrawing its notice of contention as soon as it had formed an opinion in relation to the effect of the Amendment Act. Again the opinion which was formed was that the point raised by the notice of contention was otiose so that further prosecution of the notice would be futile. Prompt withdrawal was a reasonable act based on that opinion. In the end an order for costs on discontinuance of a proceeding is a matter of judgment to be exercised on the particular facts of each case but in this case we are satisfied that the proper order is that the appellant be granted leave to discontinue on terms that the appellant pay the second respondent's costs of the day on which the appeal came on for hearing, that hearing not proceeding because the appellant had failed to serve notices under s 78B of the Judiciary Act (1903) (Cth) as the nature of its case required, but otherwise each party bear its own costs. I certify that this and the preceding eight (8) pages are a true copy of the Reasons for Judgment of the Court.

Counsel for the Appellant: C P Stevenson

Solicitor for the Appellant: Mallesons Stephen Jaques

Counsel for the First Respondent: No appearance

Solicitor for the First Respondent: Australian Government Solicitor

Solicitor for the Second Respondent: Aboriginal Legal Service of WA

Solicitor for the Third Respondent: Crown Solicitor's Office

Date of Hearing: 3 September 1998

Date of Judgment: 23 December 1998