BDR21 v Australian Broadcasting Corporation

Introduction 1 On 17 August 2021, I made orders striking out paragraphs and for summary judgment with respect to causes of action sought to be advanced by the applicant in an amended statement of claim (ASOC). I also made orders on that date providing that in the absence of a consent position, the parties file written submissions with respect to the payment of costs and any evidence in support, and the issue of costs would then be determined on the papers unless either party sought an oral hearing. 2 The parties have now filed written submissions on costs. 3 The respondent seeks an order that the applicant pay its costs that it alleges were thrown away by the late service of the ASOC in a gross sum amount of $3,375 (excluding GST) (Gross Sum), or alternatively as agreed or assessed. 4 The applicant opposes the making of any costs order, and submits that if costs were to be awarded, those costs should be either "assessed or a substantially lower lump sum". 5 The respondent relies on affidavits of Jonathon Hutton affirmed 27 August 2021 and 30 August 2021 that set out the relevant factual background and the basis upon which the Gross Sum amount was calculated. 6 Neither party requested an oral hearing. 7 I have concluded that no costs order should be made because I am not satisfied that in all the circumstances the conduct of the applicant was sufficiently unreasonable to enliven the discretion to award costs against the applicant pursuant to s 18(2)(b) of the Public Interest Disclosure Act 2013 (Cth) (PID Act).

Background 8 On 19 May 2021, the applicant served a statement of claim in the proceedings (SOC). 9 On 1 June 2021, the respondent wrote to the applicant contending that aspects of the SOC were the subject of parliamentary privilege, requesting further particulars and advising that unless the SOC was amended to address these issues the respondent would file an application seeking orders for summary dismissal or the striking out of the offending aspects of the SOC (1 June 2021 letter). It also stated that it would rely on the letter on the question of costs. 10 On 2 June 2021, the respondent emailed proposed short minutes that it had inadvertently omitted to include as an annexure to the 1 June 2021 letter. 11 On 5 June 2021, the applicant responded to the 1 June 2021 letter, advising that the applicant disagreed that parliamentary privilege applied to any of the allegations in the SOC or that it was necessary to provide any further particulars. 12 On 8 June 2021, the respondent emailed a letter to the applicant enclosing a copy of a proposed interlocutory application seeking summary dismissal of, or to strike out, substantive parts of the SOC (interlocutory application) and on 9 June 2021 provided the interlocutory application and a supporting affidavit to the Court. 13 On 9 June 2021, the Court made orders requiring the respondent to file and serve submissions in support of the interlocutory application by 4.30 pm on 16 June 2021. 14 On 15 June 2021, at or about: (a) 6.30 am, the solicitor for the respondent received draft submissions from counsel for review; (b) 8.38 am, the applicant served an unsealed copy of the ASOC on the respondent by email; (c) 1.27 pm, the applicant served a sealed copy of the ASOC on the respondent by email; (d) 6.06 pm, the respondent emailed the applicant noting that given the ASOC, of which it only had notice from 8.38 am that morning, it would need to reconsider which aspects of the interlocutory application it would press, that it would need to redraft its submissions and stating that it reserved its position with respect to the costs thrown away by the late service of the ASOC. 15 Between 16 June 2021 and 24 June 2021, the parties corresponded in relation to the ASOC. 16 On 25 June 2021, the respondent filed a second interlocutory application (second interlocutory application) and supporting affidavit seeking orders for summary disposal or striking out of substantive parts of the ASOC. 17 The respondent seeks to recover its costs incurred in the period between 6 June 2021 and 15 June 2021 but only for those costs that were incurred for work that was not also relevant to the second interlocutory application.

Relevant statutory provisions and legal principles 18 Section 18(1) of the PID Act provides: (1) In proceedings (including an appeal) in a court in relation to a matter arising under section 14, 15 or 16, the applicant for an order under that section must not be ordered to pay costs incurred by another party to the proceedings, except in accordance with subsection (2). (2) The applicant may be ordered to pay the costs only if: (a) the court is satisfied that the applicant instituted the proceedings vexatiously or without reasonable cause; or (b) the court is satisfied that the applicant's unreasonable act or omission caused the other party to incur the costs. 19 The PID Act does not provide any definition of what might constitute an "unreasonable" act or omission. 20 The Revised Explanatory Memorandum to the Public Interest Disclosure Bill 2013 (Cth) states that the legislative intention was to establish a scheme to investigate allegations of wrongdoing in the Commonwealth public sector and to "provide robust protections to current or former public officials who make qualifying public interest disclosures under the scheme". 21 The objects of the PID Act are stated in s 6 in these terms: The objects of this Act are: (a) to promote the integrity and accountability of the Commonwealth public sector; and (b) to encourage and facilitate the making of public interest disclosures by public officials; and (c) to ensure that public officials who make public interest disclosures are supported and are protected from adverse consequences relating to the disclosures; and (d) to ensure that disclosures by public officials are properly investigated and dealt with. 22 The restrictions on the award of costs against a person making a public interest disclosure in s 18 of the PID Act reflect both the legislative intention and objects of the Act. An exposure to costs could well provide a significant disincentive to any prospective "whistleblower" from making a public interest disclosure. Costs should only be awarded in exceptional circumstances. The Court's discretion to award costs is only enlivened if it is satisfied that proceedings were commenced "vexatiously or without reasonable cause" or an applicant's "unreasonable act or omission caused the other party to incur the costs". 23 The respondent submitted that there might be a question as to whether s 18(1) of the PID Act applied to the entirety of the proceedings because some of the relief sought by the applicant was not "under section 14, 15 or 16" of the PID Act. Nevertheless, for the purposes of its application for costs in this instance the respondent was prepared to accept that s 18(1) was relevantly engaged. 24 There does not appear to be any judicial consideration of s 18(2)(b) of the PID Act. In the course of addressing a claim for costs pursuant to s 18(2)(a) of the PID Act, in Hutchinson v Comcare (No 5) [2019] FCA 1665 (Hutchinson) at [3], Bromberg J observed that s 18 of the PID Act is relevantly in identical terms to s 570 of the Fair Work Act 2009 (Cth) (FW Act) and there was no reason why the principles applicable to s 570 should not be applied to s 18 of the PID Act. 25 As Bromberg J stated at [4]: The discretion to award costs under s 18 of the PID Act in an otherwise no-costs jurisdiction is one that must be exercised with caution and the case for its exercise should be clearly demonstrated: Trustee for the MTGI Trust v Johnston (No 2) [2016] FCAFC 190 at [8] (Siopis, Collier and Katzmann JJ) citing Saxena v PPF Asset Management Ltd [2011] FCA 395 at [6] (Bromberg J) and Ryan v Primesafe [2015] FCA 8 at [64] (Mortimer J); see also Construction, Forestry, Mining and Energy Union v Clarke (2008) 170 FCR 574 at [29] (Tamberlin, Gyles and Gilmour JJ). 26 The following principles emerge from the authorities with respect to the application of s 570(2)(b) of the FW Act: (a) the occasions on which costs will be awarded under s 570 of the FW Act are likely to be exceptional: Mutch v ISG Management Pty Ltd (No 2) [2020] FCA 954 (Mutch) at [8] (Bromberg J); (b) the touchstone for the exercise of the power is unreasonableness, not negligence or inefficiency: Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 3) [2017] FCA 810 (Grouped Property Services) at [26] (Katzmann J); Tucker v State of Victoria [No 2] [2021] VSCA 182 (Tucker) at [32(h)] (Kyrou, McLeish and Sifris JJA); (c) the fact that a party has conducted litigation inefficiently, made belated concessions, or adopted a misguided approach may be relevant to, but will not be conclusive of, the question of unreasonableness: Mutch at [8] (Bromberg J) citing Construction Forestry, Mining and Energy Union v Clarke (2008) 170 FCR 574; [2008] FCAFC 143 (Clarke) at [29] (Tamberlin, Gyles and Gilmour JJ) and Hutchinson v Comcare (No 2) [2017] FCA 370 (Comcare (No 2)) at [8] (Bromberg J); Tucker at [32(h)]; (d) the term "unreasonableness" is not conducive to precise definition, rather it is to be understood as controlling the extent of the limitation on the making of a costs order pursuant to s 570 of the FW Act and it takes much of its meaning from the underlying reason for that limitation: Mutch at [7]; (e) unreasonableness is to be determined objectively, it is a question of impression and degree and is to be assessed by reference to the particular circumstances of a given case: Tucker at [32(g)] citing PIA Mortgage Services Pty Ltd v King [No 2] [2020] FCAFC 53 at [15] (Rangiah, Charlesworth and Snaden JJ); (f) it is well settled that the limitation imposed by s 570 of the FW Act seeks to provide access to justice by ensuring that the fear of an adverse costs order does not discourage litigants from pursuing good claims: Mutch at [7] citing Trustee for The MTGI Trust v Johnston (No 2) [2016] FCAFC 190 at [8] (Siopis, Collier and Katzmann JJ); Ryan v Primesafe [2015] FCA 8 at [64] (Mortimer J); Comcare (No 2) at [8] (Bromberg J); (g) if the power to make an order pursuant to s 570 of the FW Act is enlivened then in determining whether to exercise its discretion to make an order, the Court is bound by s 37M(3) of the Federal Court of Australia Act 1976 (Cth) (FCA Act) to exercise that discretion in the way that best promotes the overarching purpose of any statutory provision on a matter of practice and procedure referred to in s 37M of the FCA Act: Grouped Property Services at [26] (Katzmann J). 27 A costs order was made against the applicant in Hutchinson because Bromberg J was satisfied that the applicant had commenced the proceedings without reasonable cause within the meaning of s 18(2)(a) of the PID Act. Specifically, his Honour found that at the time the proceedings were instituted, the applicant had no reasonable prospect of demonstrating at trial an essential element of s 13 of the PID Act, namely that the impugned persons held the requisite belief which formed the reason, or part of the reason, for the detrimental conduct: Hutchinson at [18] to [20]. 28 The Court made orders in Grouped Property Services pursuant to s 570(2)(b) of the FW Act that the respondent pay 95% of the applicant's costs of the first hearing, other than costs of preparing affidavits (the 5 % discount to reflect that the applicant failed to prove four of the alleged contraventions), and 75% of the applicant's costs of the second hearing (the 25% discount to reflect costs relevant to penalty that would have been incurred in any event): Grouped Property Services at [1], [2], [51] and [53]. 29 As to the first hearing, Katzmann J concluded that first, it was unreasonable for the respondent to deny that any of the 51 individuals in question was an employee and that the applicant was the employer where the evidence "was all one way and the legal principles not in dispute" and "only one conclusion was reasonably open". Second, her Honour held that the respondent's unreasonable denials caused the applicant "to incur the costs of proving these matters and of persuading the Court to make the findings". Third, in failing to challenge the applicant's evidence or offer any evidence of its own, it was also unreasonable for the respondent to put the applicant "to the costs of preparing for and conducting a trial": Grouped Property Services at [49]-[50]. 30 As to the second hearing, Katzmann J concluded that the respondent's failure to offer any evidence or submissions, or to agree on the arithmetic or point out any error in the applicant's calculations, was unreasonable and "productive of increased costs and inefficiencies" with respect to the applicant's costs. In doing so, the respondent put the Court to excessive time and effort that intruded into "both its available judicial and administrative resources and interfer[ed] with the efficient and timely disposition of this and other cases": Grouped Property Services at [52]. 31 In Fair Work Ombudsman v Foot & Thai Massage Pty Ltd (in liquidation) (No 2) [2020] FCA 348 (Foot & Thai Massage), Justice Katzmann granted leave to the second respondent to amend his defence and serve evidence but made a costs order against him pursuant to s 570(2)(b) of the FW Act. This was by reason of his repeated failures to comply with Court orders, his delays in filing an amended defence and his filing of an interlocutory application to amend a defence late and shortly before the hearing was to resume (at [76]). Further, the second respondent had failed to respond to numerous reminders to prepare his defence and evidence from the applicant in a two month period and had failed to attend, without explanation, a case management hearing, thereby acting inconsistently with the overarching purpose of the civil practice and procedure provisions: Foot & Thai Massage at [17] to [36], [63], [74], [76]. 32 In Tucker, the Court of Appeal of the Supreme Court of Victoria found that s 570(2)(b) was enlivened in circumstances where documents were sought in a further evidence application that were "simply irrelevant to the issues to be resolved". The Court found that the contrary was not reasonably arguable and the application represented a "concerted attempt" to widen the scope of the dispute between the parties (at [38]). The appellant had also made an application for a stay of proceedings for which there was "no conceivable basis", which was unnecessary and caused the respondent to incur the costs of defending it (at [42]). The appellant had further sought copies of invoices in respect of costs orders where it was "fanciful to suppose that orders of the kind sought would have made any difference to the prospects of resolving the various proceedings by consent" (at [44]). 33 Section 570(2)(b) has been found not to have been enlivened in circumstances where a jurisdictional matter that was contested, but was ultimately unsuccessful, raised novel and difficult questions and there was a refusal to engage in mediation or accept settlement offers: Tucker at [34]. Nor was it enlivened where, first, evidence was filed in the ordinary way in support of a cross claim that was not otherwise shown to be unreasonably brought, or second, where there was a refusal to accept an offer of compromise as it was "not a sufficiently clear case to deviate from the ordinary operation of s 570": Tran v Kodari Securities Pty Ltd (No 2) [2020] FCA 1819 (Tran) at [27], [30]-[31].

The submissions of the parties 34 The respondent submits that the applicant's failure to give it early notice of their intention to amend the SOC to address the parliamentary privilege issue and to provide further particulars constituted an "unreasonable act or omission" for the purposes of s 18(2)(b) of the PID Act and caused it unnecessarily to incur the costs of preparing an application and supporting affidavit, and submissions in relation to the SOC. It submits that the failure to provide early notice was "unreasonable" given that on 1 June 2021 it had put the applicant on notice that allegations in the SOC breached parliamentary privilege and lacked particularity. It further submits that the unreasonableness was highlighted by the fact that the applicant later elected to amend the SOC. Further, the ASOC was served only the day before its submissions and interlocutory application were due to be filed and served. 35 The applicant sought to rely on my statement in BDR21 v Australian Broadcasting Commission Limited (2021) FCA 960 at [6] that the respondent's interlocutory application raised novel issues concerning the relationship between the Parliamentary Privileges Act 1987 (Cth) (PP Act) and the PID Act. The applicant submits that, in these circumstances, it was not unreasonable to take some time to consider the implications of the respondent's interlocutory application and that a period of seven days should not be considered unreasonable for a self-represented litigant to prepare, file and serve amendments to a 52 page statement of claim. 36 The applicant further submits that their letter dated 15 June 2021 serving the ASOC provides the following reasonable explanation for their conduct: Given the circumstances referred to, and in light of the timetable in the Court's 9 June 2021 orders, I now believe that amending the SOC - as permitted by Rule 16.51(1) - is the course of action most likely to minimise litigation costs, to identify and narrow the issues in dispute (including at interlocutory stage) and to ensure that only the critical points in issue are taken to trial with minimal interlocutory disputes/hearings. 37 The applicant contends that they were entitled to proceed upon the basis that admissions that might shortly be made in response to their Notice to Admit dated 9 June 2021 that would materially affect the issues raised in the interlocutory application and it was reasonable to wait for a notice disputing facts or the elapsing of the 14 day period from the service of the notice. I have not given this submission any weight because the ASOC was served prior to the receipt of any notice disputing facts or the expiry of this period. 38 Finally, the applicant submits that in assessing the reasonableness of their conduct over a limited period in early to mid- June 2021 it is relevant to have regard to the fact that although the proceedings were commenced on 8 March 2021, the parliamentary privilege issue was only first raised by the respondent on 1 June 2021. 39 In its reply submissions, the respondent submits that it is not suggested that the applicant should have amended the SOC immediately on receiving the 1 June 2021 letter, observing: Rather, the unreasonable conduct which caused the respondent to incur costs unnecessarily was the fact that the applicant informed the respondent on 5 June 2021 that they did not intend to amend the Statement of Claim and then, 10 days later and without notice, served an Amended Statement of Claim which attempted to address the very matters raised in the 1 June 2021 letter. In the meantime, the respondent had incurred costs in preparing an interlocutory application, supporting evidence, and submissions responding to the original Statement of Claim, some of which were wasted.

Consideration 40 I accept that the respondent incurred costs by reason of the applicant's 5 June 2021 response that were ultimately thrown away by reason of the subsequent decision of the applicant to serve the ASOC and the applicant's delay in informing the respondent of their decision to amend the SOC. 41 The critical question is not when the ASOC was provided but when notice was given of the decision to amend the SOC to seek to address the matters raised in the 1 June 2021 letter. A legal practitioner could readily be expected to have appreciated that any delay in providing notice of an intention to provide an amended pleading, particularly in circumstances where an opponent had earlier been advised that it was not proposed to amend the pleading, would likely lead to costs being unnecessarily incurred. 42 On balance, I consider that the "unreasonableness" of the conduct of the applicant complained of by the respondent fell between the impugned conduct that gave rise to the costs orders under the equivalent provisions of the FW Act in Grouped Property Services, Foot & Thai Massage and Tucker (at [38], [42] and [44]) and the impugned conduct that was not held to enliven s 570(2)(b) in Tucker (at [34]) and Tran. 43 The change in position of the applicant between their 5 June 2021 response and the service of the ASOC on 15 June 2021 might well be fairly characterised as conducting litigation inefficiently, making belated concessions, or adopting a misguided approach. Each of these matters may be relevant to but, as explained above, not conclusive of, the question of unreasonableness: Mutch at [8]; Clarke at [29]; Comcare No 2 at [8]; Tucker at [32(h)]. 44 However, as I have previously found, the matters raised in the 1 June 2021 letter were relatively novel, the SOC was lengthy and the applicant was a litigant in person. The time taken by the applicant to recognise that it was necessary to prepare an amended statement of claim and to prepare the amended pleading to address the issues in the 1 June 2021 letter was not disproportionate for a litigant in person or otherwise inconsistent with the overarching purpose of civil practice and procedure. The notice of the decision to seek to rely on the ASOC was ultimately provided to the respondent before the commencement of business on the day prior to the date on which the respondents' submissions were due to be filed (effectively providing two business days' notice). 45 It is unfortunate that the applicant did not give earlier notice to the respondent of their decision to amend the SOC. However, the delay was, at worst, only several days. It is true that the claim for costs is relatively modest, but on one view that only emphasises the relatively confined scope of the alleged unreasonableness and the potential difficulty in the Court being satisfied that, in isolation from any consideration of other acts of the applicant in the proceedings, the applicant's conduct was in this particular aspect sufficiently unreasonable to enliven s 18(2)(b) of the PID Act. 46 Further, I consider that it is generally not desirable to seek to make a determination of unreasonableness by reference to a limited step in the context of the resolution of a substantive issue in which it is not possible to isolate and quantify with precision the specific costs thrown away. 47 The substantive issue in the present context was the interrelationship between the PID Act and the PP Act, and the impact of that relationship on the claims that the applicant was seeking to pursue under the PID Act. 48 As acknowledged by the respondent, not all costs incurred in connection with the preparation of submissions and associated work in support of the interlocutory application directed at the SOC were thrown away. Any attempt to quantify the proportion of costs thrown away would necessarily be imprecise, not least because many of the underlying principles and much of the analysis relied upon by the respondent was likely relevant to both the challenge to the SOC and the subsequent challenge to the ASOC. 49 For the reasons outlined above, I am not persuaded that the conduct of the applicant relied upon by the respondent was sufficient to enliven an entitlement to the costs order sought by the respondent pursuant to s 18(2)(b) of the PID Act.

Disposition 50 There is to be no order as to costs as the respondent has not satisfied me that s 18(2)(b) of the PID Act has been enlivened. I certify that the preceding fifty (50) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Halley.