Supreme Court Civil Procedure Act 1932, ss 44 and 45.

Procedure - Civil proceedings in State and Territory courts - Costs - Indemnity costs - Relevant considerations generally.

Zibara v Ultra Management (Sports) Pty Ltd [2021] FCAFC 4, 387 ALR 48 referred to.

Judgment Number: [2022] TASFC 3

BOB BROWN FOUNDATION INC v SUSTAINABLE TIMBER TASMANIA TRADING AS FORESTRY TASMANIA

BOB BROWN FOUNDATION INC v SUSTAINABLE TIMBER TASMANIA TRADING AS FORESTRY TASMANIA

1 On 4 March 2021 Martin AJ granted leave to the appellant to discontinue proceedings it had commenced against the respondent. At the hearing the appellant sought an order against the respondent for indemnity costs, or alternatively party and party costs in its favour. His Honour declined to make such an order and instead made no order as to costs, leaving the parties to bear their own costs.

2 The appellant has appealed against that decision on five grounds set out its notice of appeal, acknowledging that those grounds are to be determined on the bases specified in ss 44(1)(c) and 45(1)(b) of the Supreme Court Civil Procedure Act 1932 (SCCPA) for an appeal against the exercise of a discretion, including in relation to costs. The learned primary judge granted leave to appeal under s 44(1)(a) on 7 April 2021.

3 I do not stay to set out the grounds of appeal. They are variations on a theme. In essence the grounds assert that the learned primary judge erred in failing to find the respondent's conduct relevantly unreasonable, in failing to explicitly refer to the Tasmanian Model Litigant Guidelines (the Guidelines) and in misapprehending the facts, and proceeding on a wrong principle in, apparently, drawing a distinction between unreasonable conduct based on "actively misleading" the appellant as opposed to "passively misleading".

4 I am grateful to the appellant's counsel from whose written submissions the following history to this appeal is essentially drawn.

5 The appellant is a foundation which seeks to protect and enhance the natural environment. The respondent is a Tasmanian State instrumentality with various responsibilities under, in particular, the Forest Management Act 2013 (FMA).

6 The appellant wished to conduct an ultramarathon event on 20 March 2021, the route of which included parts of the forests of an area known as takayna or the Tarkine. Those forests are located, in part, in what is known as a permanent timber production zone (PTPZ). PTPZ land is managed by the respondent, and the appellant applied to the respondent for a permit to conduct the event insofar as it was to be conducted on the PTPZ land. The respondent replied that it did not "provide land manager's consent for this event to occur on permanent timber production zoned land". [Emphasis added.]

7 The respondent also provided a statement to the Mercury newspaper which was published on 11 February 2021. The statement claimed that the appellant was:

"... currently conducting and has a history of conducting unsafe and unauthorised activity on Permanent Timber Production Zone land. The publicly advertised primary purpose for the event is to raise money to support activities hindering the management of [PTPZ] land and therefore is not supported by Sustainable Timber Tasmania." [Emphasis added.]

8 On 18 February 2021 the solicitor for the appellant wrote to the respondent's solicitors stating that their client was of the view that the respondent was obliged to allow the appellant to have access to the relevant PTPZ land for the conduct of the event. The letter stated that the reasons advanced by the respondent in the media were not valid reasons to refuse access and invited the respondent to reconsider its position and grant permission for the event to be conducted on the relevant land.

9 By that letter the appellant's solicitors gave the respondent's solicitors notice that, if consent was not forthcoming, he had instructions to commence proceedings in the form of an originating application sent with the letter. That application raised questions of construction and sought declarations concerning the appellant's right of access to PTPZ land for the conduct of the event in accordance with s 13 of the FMA, and an injunction. The letter concluded:

"If your client provides the consent proposed above, in writing, my client will not pursue its Application and the parties can pay their own costs. If it is necessary for my client to commence the foreshadowed proceeding and relief is obtained in the terms as sought, my client will seek payment of its costs by your client on an indemnity basis."

10 Section 13 of the FMA provides as follows:

"Access to permanent timber production zone land

(1) The Forest Manager must perform its functions and exercise its powers so as to allow access to permanent timber production zone land for such purposes as are not incompatible with the management of permanent timber production zone land under this Act."

11 The questions of construction set out in the draft originating application sent with the letter were:

"1 Is the purpose for which the Applicant wishes to access the Relevant Land, being the purpose of conducting the Event, a purpose that is 'not incompatible with the management of permanent timber production zone land under this Act' within the meaning of s 13 of the FMA?

2 Under s 13 of the FMA is the Applicant entitled to have access to the Relevant Land for the purpose of conducting the Event, except to the extent that the powers conferred under ss 21, 22 and/or 23 of the FMA are lawfully exercised?"

12 The substantive relief claimed in the originating application was:

"1 A declaration that the Applicant is entitled to have access to the Relevant Land for the purpose of conducting the Event, subject to the lawful exercise of the powers conferred under ss 21, 22 and 23 of the FMA.

2 An injunction restraining the Respondent, whether by its servants, agents or howsoever otherwise, from preventing the Applicant from having access to the relevant land for the purpose of conducting the Event save and except where that prevention has occurred as a result of the lawful exercise of the powers conferred under ss 21, 22 and/or 23 of the FMA."

13 Sections 21, 22 and 23 of the FMA provide as follows:

(a) on or in respect of forest roads; or

(b) on permanent timber production zone land -

for the purposes of discharging its responsibilities or in the interests of safety.

(2) The Forest Manager, wherever practicable, is to erect signs stating that a particular road is a forest road.

(3) A person must not, without lawful excuse, undertake an activity or engage in conduct on a forest road or other land in permanent timber production zone land contrary to the directions of the Forest Manager expressed on a sign authorised by the Forest Manager.

(4) In any proceedings under subsection (3), a certificate purporting to be signed by a person authorised, in writing, by the Forest Manager stating that at a particular time a sign was authorised by the Forest Manager for the purposes of this section is admissible as evidence that, at that time, the sign was so authorised.

(5) A police officer who reasonably considers that a person is offending against subsection (3) may direct that person to leave the forest road or other land in permanent timber production zone land.

(6) A person who is given a direction by a police officer under subsection (5) must comply with that direction.

(7) A police officer may arrest, without warrant, any person who fails to comply with a direction under subsection (5).

22 Request to leave, &c., permanent timber production zone land

authorised officer means a person appointed as an authorised officer under subsection (2).

(2) The Forest Manager may appoint any of its employees to be an authorised officer for the purpose of this section.

(a) not to enter permanent timber production zone land or a forest road; or

(b) to leave permanent timber production zone land or a forest road; or

(c) to cease to undertake an activity conducted, or to cease to engage in conduct, on that land or road -

if the authorised officer is of the opinion that the entry or presence of that person, or the activity conducted, or the conduct engaged in, by that person on the land or road is preventing, has prevented or is about to prevent the Forest Manager from effectively or efficiently performing its functions.

(4) An authorised officer may prohibit a person from entering, or remaining in, an area of permanent timber production zone land -

(a) that has been declared under section 68 of the Fire Service Act 1979 to be an area of extreme fire hazard; or

(b) that is an area in respect of which another person has a right of exclusive possession; or

(c) in the interests of a person's safety.

(5) A person who fails to comply with a request from an authorised officer under subsection (3) or (4) is guilty of an offence.

(6) A person must not, without lawful excuse, undertake an activity or engage in conduct on permanent timber production zone land or a forest road contrary to the directions of a police officer.

(7) A police officer may arrest, without warrant, any person who fails to comply with a direction under subsection (6).

(8) In any proceedings under subsection (5), a certificate purporting to be signed by a person authorised, in writing, by the Forest Manager stating that at a particular time a person was an authorised officer is admissible as evidence that, the person was, at that time, an authorised officer.

artificial barricade includes a gate or chain;

prescribed sign means a sign that clearly indicates that the forest road, or the section of forest road, in respect of which it is erected is closed to all traffic or to a class of traffic;

traffic means pedestrian or vehicular traffic.

(2) The Forest Manager may close a forest road or any section of forest road either permanently or temporarily to all traffic, or to a class of traffic, if the Forest Manager considers that the closure is necessary or expedient -

(a) for the purposes of discharging its responsibilities; or

(b) in the interests of safety.

(a) a prescribed sign; or

(b) a prescribed sign in conjunction with an artificial barricade; or

(c) a prescribed sign in conjunction with an earthen barricade; or

(d) a prescribed sign in conjunction with a trench -

(a) drive or use a vehicle on; or

(b) be on or otherwise use -

a forest road or a section of forest road that has been closed in accordance with this section or in contravention of the regulations.

(5) In any proceedings under subsection (4), a certificate purporting to be signed by a person authorised, in writing, by the Forest Manager and stating that, at a particular time, a forest road or a section of forest road was closed to all traffic, or to a class of traffic, and that the closure was effected in accordance with this section, is admissible as evidence that, at that particular time, the forest road or section of forest road was so closed."

14 On 19 February 2021, the respondent's solicitors replied to the appellant's solicitors' letter as follows:

"... I confirm that we are instructed to act for Sustainable Timber Tasmania ('STT').

I am instructed that STT will not provide its consent to your client conducting the takayna Trail event on Permanent Timber Production Zone Land ('PTPZ Land') (as referred to in Map 1, pages 4-5 of your client's unfiled Originating Application).

If your client files its Originating Application, please ensure that service is effected in a timely manner." [Emphasis added.]

15 The appellant's solicitors then filed the originating application on that same day, and the Court listed the matter for a directions hearing before Brett J to be heard on 25 February 2021. Late on 24 February, the respondent served its list of authorities which went to the requirement in proceedings for there to be a justiciable controversy.

16 At the directions hearing, counsel for the appellant explained the issues in relation to s 13 of the FMA that were expected to arise on the hearing of the application, and indicated that it appeared from the respondent's list of authorities that it wished to contest whether there was a justiciable controversy arising in the proceedings. Counsel for the respondent then stated that the respondent did not accept that the proceeding was properly brought because:

"Sustainable Timber Tasmania has not said and does not say that it can lawfully prevent the conduct of this event unless it exercises power under ss 21, 22 and 23 ...".

17 After a short adjournment Brett J indicated that the matter could be fixed for hearing on an estimate of half a day on 4 March 2021. After the hearing, the appellant's solicitors sought clarification of the respondent's position from its solicitors. They confirmed that the respondent's position was that it had never asserted that the conduct of the event was incompatible within the meaning of s 13 of the FMA and that it accepted that, subject to the exercise of the specific powers in ss 21, 22 and 23 of that Act, members of the public have a right to access the PTPZ land if the purpose of access is not incompatible within the meaning of s 13 of the Act. The respondent's solicitors also advised that the respondent did not say it had power to prevent the conduct of the event, save if there were proper grounds to exercise the powers in ss 21, 22 or 23 of the Act.

18 The respondent then, as already noted, sought leave to discontinue on terms that the respondent pay the appellant's costs on an indemnity basis, or alternatively on a party and party basis. The application came on before Martin AJ on 4 March 2021. The appellant contended that the respondent had acted unreasonably and in breach of the Guidelines in forcing the appellant to commence proceedings to establish its right of access. Again as already note the learned primary judge made no order as to costs, leaving each party to pay its own costs. He found the circumstances "finely balanced" and concluded as a result that such an order was the appropriate order to make.

19 The appellant's counsel rely on the following factual findings made by the learned primary judge which they set out in their written submissions as follows:

"(a) The respondent's wording when corresponding with the appellant in relation to the respondent's refusal to grant a permit, as well as in its statement to the media about the appellant's application for a permit, 'were careful or were carefully chosen'.

(b) The respondent was 'aware that there was potentially, a view within the [appellant] that the respondent was denying access' and that it 'must have been obvious to the respondent that the organiser behind the event believed that access was being denied' [emphasis added].

(c) The respondent 'knew that the [appellant] did not require a permit and knew it had no grounds for exercising its powers to deny access or impede access for the planned event' [emphasis added]

(d) Aware of the view of the appellant, 'it was the respondent who chose words carefully and chose not to disabuse the [appellant] of its apparent misunderstanding' and 'made no effort to correct this misapprehension choosing carefully the words it used in correspondence and publicly' [emphasis added].

(e) Aware of the misunderstanding, it 'would have been very easy for the respondent to state plainly that while the respondent would not grant a permit, it would not deny the [appellant] access for the purpose of running the event and it would not seek to interfere or impede the running of the event on the land unless circumstances changed that required it to exercise its powers' [emphasis added].

(f) If the solicitors for the respondent had stated plainly the matters set out above to the appellant, 'there would have been minimal costs and no proceedings in this court' [emphasis added]." [Appeal book references omitted.]

20 After finding that "the issues were finely balanced" the learned primary judge said there were "some aspects of the respondent's conduct which are open to being viewed with disfavour", but concluded that the respondent "did not actively mislead the [appellant] and overall, did not behave unreasonably. The respondent maintained [its] position and was entitled to do so without explicitly undertaking not to hinder the running of the event or exercise any powers in that direction".

21 The appellant submits that the substantive issue before the learned primary judge, and on appeal, is whether the costs orders sought by the appellant should be made because, in all the circumstances of the case, the respondent's conduct should be regarded as unreasonable. The appellant's counsel rely on the recent decision of the Full Court of the Federal Court in Zibara v Ultra Management (Sports) Pty Ltd [2021] FCAFC 4, 387 ALR 48 at [168]- [178], in particular upon the following passages, at [176] and [177]:

"176 In Clifton (Liquidator) v Kerry J Investment Pty Ltd trading as Clenergy (No 2) [2020] FCAFC 112, Besanko, Markovic and Banks-Smith JJ addressed briefly the relevant principles in relation to an award of indemnity costs at [30]-[31]:

In Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 801; (1993) 46 FCR 225, Sheppard J said (at 233-234):

4 In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. ... Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at p 8) in Tetijo, 'The categories in which the discretion may be exercised are not closed'. Davies J expressed (at p 6) similar views in Ragata (supra).

5 Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp (supra)); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal); Crisp v Keng (unreported, Court of Appeal, NSW, Kirby P, Priestley JA, Cripps JA, No 40744/1992, 27 September 1993) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records (supra)). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.

... We also refer to the discussion by Kenny J in Morad v El-Ashey (No 2) [2017] FCA 1612 at [6]-[10] and the detailed discussion of the relevant principles in Dal Pont at 16.46 and following. The point which we wish to emphasise is that to justify a special costs order, there must be conduct deserving of criticism and resulting in greater expense to the innocent party ... [Emphasis added.]

177 Their Honours referred to the discussion by Kenny J in Morad v El-Ashey (No 2) [2017] FCA 1612 at [6]-[10]. Kenny J stated at [9]-[11]:

The principles relevant to an award of indemnity costs are well-established. In broad terms costs will be payable on a party and party basis, unless the circumstances of the case justify a departure from the normal course: see Colgate-Palmolive Company v Cussons Pty Limited [1993] FCA 536; (1993) 46 FCR 225 (Colgate-Palmolive) at 233 (Sheppard J). The question is always whether the facts and circumstances of a particular case justify the making of an order for the payment of costs other than on a party and party basis.

Plainly enough, the categories in which indemnity costs may be ordered are not closed. Reference to some of the circumstances in which costs on an indemnity basis have been ordered is illustrative, however, of the occasions that have been thought capable of attracting such an award of costs. It has been held, for example, that indemnity costs may be awarded where 'the applicant, properly advised, should have known that he had no chance of success' (Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 (Fountain Selected Meats) at 401; where an application is wholly untenable and misconceived (Henke v Carter [2002] FCA 492 at [22] (Goldberg J)); and where there is 'evidence of particular misconduct on the part of a party that causes loss of time to the Court and to other parties' (Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd [1991] FCA 225 at [22] (French J)).

The purpose of indemnity costs was explained in Hamod v State of New South Wales [2002] FCAFC 97; 188 ALR 659 (Hamod) at [20] by Gray J (with whom Carr and Goldberg JJ agreed) as follows:

Indemnity costs are not designed to punish a party for persisting with a case that turns out to fail. They are not awarded as a means of deterring litigants from putting forward arguments that might be attended by uncertainty. Rather, they serve the purpose of compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs."

22 The appellant also relies on three cases that they submit "bear some analogy to the present case". They are Verna Trading Pty Ltd v New India Assurance Co Ltd [1991] VicRp 12; [1991] 1 VR 129; Nadinic v Cheryl Drinkwater as trustee for the Cheryl Drinkwater Trust [2020] NSWCA 2 and Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563. I do not find them particularly helpful in the resolution of this appeal.

23 The appellant submits that the learned primary judge's discretion miscarried in relation to the factual findings as set out in [19] above because he fell into appellable error, within the limited framework set by ss 44(1)(c) and 45(1)(b) of the SCCPA, in not finding on the material before him that:

"(a) the respondent's conduct was deserving of criticism and resulted in greater and unnecessary expense to the appellant as the innocent party; and

(b) that it was unreasonable for the respondent to have subjected the appellant as the innocent party to the expenditure of costs."

24 The appellant contends in support of that submission as follows:

"In that regard the appellant contends that the primary judge's findings established that:

(a) at all material times the respondent, by maintaining its stated position that a permit from it was required for the Event, knowingly induced the appellant to believe, wrongly as it knew (the appellant's misapprehension), that it was denying to the appellant any right of access to the PTPZ land for the conduct of the Event unless it granted a permit for the Event, which it had refused to do;

(b) at all material times the respondent was in agreement with the legal position asserted to it on 18 February 2021 by the appellant that:

(i) the respondent did not have the power to lawfully prevent the conduct of the Event unless it exercises powers under ss 21, 22 and 23 of the Forest Management Act 2013 (Tas) (FMA); and

(ii) the conduct of the Event on the respondent's PTPZ land was not incompatible with management of a permanent timber production zone within the meaning of s 13 of the FMA;

(c) at all material times prior to the disclosure of the respondent's position during the latter part of the first directions hearing in the appellant's proceeding on 25 February 2021, and in its solicitor's letter dated 25 February 2021, the respondent was aware of the appellant's misapprehension but took no step to disabuse or otherwise inform the appellant about that misapprehension thereby leaving the appellant with no other realistic option but to commence the proceeding foreshadowed in the appellant's letter of 18 February 2021 to the respondent;

(d) acting reasonably and responsibly, the respondent ought to have disclosed its position in its correspondence on 19 February 2021 (prior to the action commencing) rather than after the proceeding had commenced, thus eliminating the need for the proceeding." [Original emphasis.]

25 As to the grounds of appeal concerning the model litigant obligations of the respondent, counsel for the appellant argues that the learned primary judge did not refer to the Guidelines in terms or in substance. This it said is a failure to consider a material fact or a relevant consideration, which falls within the scope of s 44(1)(b) of the SCPA, as well as proceeding on a wrong principle or otherwise contrary to law and/or misapprehending the facts.

26 On this issue the appellant submits as follows in its written outline:

"It is difficult to see how a model litigant who was, on the primary judge's findings, aware of the appellant's misapprehension did not take the 'readily and easily taken steps' necessary to correct it. The respondent failed to fulfil its duties as model litigant at multiple stages of the process. When initially asked for reasons why no consent was given, the respondent did not answer and instead communicated its reasons to the media. When the appellant foreshadowed the proceeding to the respondent, the respondent did not disabuse the appellant of its misapprehension. Once the proceeding was commenced, the respondent again said nothing to the appellant or to the Court to inform it of the respondent's position. The respondent delivered a list of authorities on the evening prior to the first directions hearing suggesting a challenge to whether there was a justiciable controversy but provided no correspondence or information as to the basis for its argument. It was only at the directions hearing that the respondent acknowledged that it accepted that the appellant's position on the construction of the FMA was correct.

Had the respondent taken the 'readily and easily taken steps' to inform the appellant of its position at one of many earlier opportunities presented to it, those steps would have avoided the need for litigation. Failure to do so does not accord with the Guidelines set out above. It is not at all clear how the primary judge's conclusion that the respondent was entitled to 'maintain its position' (AB328 L 12-15) (ie its position of refusing a permit and saying nothing about its position of accepting the appellant's right of access) is in keeping with the respondent's Model Litigant obligations. It did not deal with the matter efficiently or expeditiously. Its position created and sustained a justiciable controversy knowing that there was none when its true position was disclosed. That was exacerbated by the respondent's solicitor's letter which, in requiring prompt service of process when notified of the foreshadowed litigation, was an indication the respondent proposed to contest the litigation that it knew to be unnecessary."

27 As to the grounds of appeal concerning whether the respondent "actively misled" the appellant and, overall, did not behave unreasonably, the appellant submits as follows:

"Further, the primary judge proceeded on a wrong principle and contrary to law by relying on a concept of 'actively misleading' conduct as opposed to misleading conduct, which concept and distinction has no basis in principle or the law. The primary judge simply did not ask, but should have asked, whether, in all of the circumstances, the respondent's conduct was misleading ...

The primary judge's finding that the respondent did not actively mislead the appellant was central to his Honour's finding that the respondent did not, overall, behave unreasonably. If the primary judge had found, as he ought to have done, that the respondent had misled the appellant that would or ought to have led to the conclusion that the respondent had acted unreasonably. That is particularly so in light of the primary judge's acknowledgment that 'some aspects' of the respondent's conduct were 'open to being viewed with disfavour'.

Further, the primary judge's conclusion that the respondent did not actively mislead the appellant also demonstrates the primary judge's misapprehension of the facts. As set out above, in circumstances where the respondent was aware of the appellant's misapprehension and chose words carefully in response, instead of disabusing the appellant of its misapprehension when invited to do so, the respondent's actions were, as a matter of fact, misleading." [Appeal Book references omitted.]

28 In my view, neither the grounds of appeal directed to unreasonable conduct deserving of criticism which subjects an innocent party to the expenditure of costs, nor the grounds of appeal directed to the learned trial judge's failure to explicitly mention the Guidelines, nor the grounds of appeal directed to an apparent erroneous distinction drawn by his Honour between "actively misleading" and "passively misleading" are made out.

29 The arguments advanced in support of those grounds do not establish error of the kind required by s 45(1)(b) of the SCPA, and certainly do not establish error that would vitiate the exercise of his Honour's discretion, based on his unchallenged factual findings, to decline to make an order for indemnity costs, but to nonetheless benefit the appellant with a modified outcome. That modified outcome was to make no order for costs, which resulted in each party bearing their own costs, as opposed to the more usual order that discontinuing parties bear their opponent's costs as "[t]he price that applicants would usually pay in those circumstances ..." (see Elevate Brandpartners Ltd v Hammond (No 4) [2020] FCA 421 at [24], per Stewart J) .

"45 Appeals from judgments given in exercise of discretionary jurisdiction

(1) A Full Court, on the hearing of any appeal from any judgment, order, or other determination (whether final or otherwise) of a judge, shall not reverse or vary any adjudication of the judge which is, or purports to be, only the exercise of a discretion which the judge was entitled by law to exercise, unless it appears to the Full Court that ...

(b) the judge has proceeded on a wrong principle or otherwise contrary to law, or on irrelevant or insufficient materials, or has misapprehended the facts or has failed to consider any material fact; ...".

31 The learned primary judge did not in my view proceed on any wrong principle. Reading his Honour's reasons as a whole it is clear that he was acutely aware of what the appellant submits was the question for him, and what is the question for this Court. That is, "whether the costs orders sought by the appellant should be made because, in all the circumstances of the case, the respondent's conduct should be regarded as unreasonable." Of course, the unstated but necessary corollary to that is that such conduct must be sufficiently unreasonable as to warrant an order for indemnity costs against it.

32 The learned primary judge evaluated the circumstances of the case, and, while noting that there were some aspects of the respondent's conduct which were "open to being viewed with disfavour", he concluded that overall it did not behave unreasonably. His Honour said:

"Notwithstanding those findings, I am not persuaded that the respondent should bear any of the applicant's costs. Similarly, I'm not persuaded that the applicant should bear any of the respondent's costs. There are some aspects of the respondent's conduct which are open to being viewed with disfavour. However, the respondent did not actively mislead the applicant and overall did not behave unreasonably. The respondent maintained a position and was entitled to do so, without explicitly undertaking not to hinder the running of the event or exercise any powers in that direction.

Having balanced all this material, in my view, the appropriate result is that there be no order as to costs, leaving the parties to bear their own costs."

That finding was open to his Honour. It was well within the bounds of his discretion.

33 So, although unsuccessful in securing an order for indemnity costs, the appellant nonetheless received a favourable exercise of his Honour's discretion to the extent noted above. Accordingly, the appellant's complaint at its core may be said that his Honour erred because he did not find the criticised conduct sufficiently unreasonable as to warrant indemnity costs but rather only viewed it with disfavour to the extent that the respondent was denied its costs, which would ordinarily follow on discontinuance.

34 I apprehend no error in his Honour's qualitative judgment so exposed. The exercise of his discretion in the way his Honour did is not something that should be interfered with absent patent error. That is particularly so on an appeal against an order made on a procedural application: (see In Re the Will of FB Gilbert [1946] NSWStRp 24; (1946) 46 SR (NSW) 318 at 323 and Adam P Brown Male Fashions Pty Ltd v Philip Morris Ltd [1981] HCA 39; (1981) 148 CLR 170 at 176-177.)

35 As to the question of the respondent having misled the appellant, his Honour is not, in my view, to be taken to have applied a single criterion of "actively misleading" to interrogate the question of unreasonable conduct sufficient to warrant an award of indemnity costs. His Honour said:

"There are some aspects of the respondent's conduct which are open to being viewed with disfavour. However, the respondent did not actively mislead the applicant and overall did not behave unreasonably. Having balanced all this material, in my view, the appropriate result is that there be no order as to costs, leaving the parties to bear their own costs." [Emphasis added.]

His Honour is there basing his conclusion on his assessment of the respondent's conduct "overall", not solely on the basis of his view that the respondent's conduct fell short of actively misleading the appellant. No wrong principle, misapprehension of facts or irrelevant consideration is evident to my mind as a result of his Honour so concluding.

36 As to the Guidelines, it is clear that they apply to the respondent either as an instrumentality, agency or authority of the State in that it is a statutory corporation whose directors are appointed by the Governor pursuant to s 11 of the Government Business Enterprises Act 1995. It is equally clear that the guidelines were referred to briefly by the appellant before the learned primary judge, and that his Honour did not explicitly refer to them in his reasons.

37 The Guidelines required the respondent to deal with the dispute "efficiently and expeditiously, settling legitimate claims promptly without resort to litigation, to avoid resort to litigation and to keep the costs of litigation to a minimum".

38 I am not satisfied that the learned primary judge fell into error by failing to mention the Guidelines by name. The real question is whether he considered the obligations of the respondent embodied in the policy, in determining whether the respondent's conduct was sufficiently unreasonable as to warrant an order against it for indemnity costs. It is, in my view, highly unlikely that he failed to do so. And, in any event, I accept the submission of counsel for the respondent in their written outline that a review of his Honour's reasons demonstrates that he took into account "the substance of the relevant obligations". That submission makes the following points:

(a) Correctly understood the appellant's contention to the effect that if the respondent had said from the outset that it would not prevent access, the need for the proceeding would have been avoided;

(b) Made findings adverse to the respondent as to the use of carefully chosen words in its correspondence with the appellant;

(c) Made findings adverse to the respondent that it knew the appellant did not require a permit and that it had no grounds for exercising its powers to deny access;

(d) Found that the respondent did nothing and said nothing to the appellant to the effect that it might seek to hinder or prevent the event; and

(e) At the first opportunity when the interlocutory application was mentioned before this Court, openly stated through its counsel that it would not take steps to prevent access." [Appeal Book references omitted.]

39 On the basis of those matters the respondent submits, and I agree:

"Thus in the conduct of the litigation (which is to be distinguished from the general administration of the Act), it is plain that the respondent dealt with the litigation efficiently and expeditiously, formed an early assessment of the prospects and then promptly notified the appellant, and the Court, that there was no justiciable issue to be resolved by the originating application. On these findings the appellant cannot demonstrate that the technical error of failing to mention the Guidelines was a material error by the primary judge that vitiates the discretion: Minister for Aboriginal Affairs v Peko Wallsend Ltd (1986) 162 CLR 24 at 48; Cummings v Lewis [1993] FCA 190; (1993) 41 FCR 559 at 604." [Emphasis added.]

40 For the foregoing reasons I am of the view that there is no merit in any of the five grounds of appeal, and I would dismiss the appeal.

BOB BROWN FOUNDATION INC v SUSTAINABLE TIMBER TASMANIA TRADING AS FORESTRY TASMANIA

41 I agree with Estcourt J that the appeal should be dismissed. I am in substantial agreement with his Honour as to why that is so but would add some comments of my own. I gratefully adopt his Honour's summary of the evidence, and the contentions of the parties to the primary judge and to this Court.

42 The appellant relies on five grounds. The first ground asserts that the primary judge, in assessing the reasonableness of the respondent's conduct, failed to consider, have regard to or give any, or sufficient, weight to the fact that the respondent was an instrumentality of the State of Tasmania that was to act in accordance with the principles applicable to a model litigant, as set out in the Tasmanian Model Litigant Guidelines, and did not act in accordance with the guidelines.

43 In this State the Model Litigant Guidelines are stated in a document published by the Solicitor-General dated 14 May 2019. They reflect the common law as enunciated in cases such as Dyson v Attorney-General [1910] UKLawRpKQB 203; [1911] 1 KB 410, Melbourne Steamship Company v Moorehead [1912] HCA 69; (1912) 15 CLR 333, Mahenthirarasa v State Rail Authority of New South Wales (No 2) [2008] NSWCA 201, 72 NSWLR 273 and Australian Securities and Investments Commission v Hellicar [2012] HCA 17, 247 CLR 347. The respondent does not dispute that the guidelines applied to it, and it was thereby to "act as a model litigant in the conduct of civil litigation." It was required to:

• deal with matters efficiently and expeditiously;
• make an early assessment of the prospects of any claim or defence;
• settle claims promptly without resort to litigation;
• avoid resort to litigation; and
• keep the costs of litigation to a minimum.

44 Before the primary judge the appellant submitted, in support of its costs application:

"The STT is a government authority bound by the model litigant guidelines and we say that that is an added factor, not standing alone, but an added factor that suggests that its conduct should meet with the disapproval of the court."

45 To the extent that this ground asserts that the primary judge failed to consider or give any weight to the status of the respondent as a model litigant it cannot succeed. His Honour did not mention the guidelines in his reasons but that does not mean that he did not have regard to the submissions which had just been made to him. His reasons were given orally, and immediately after having heard the oral submissions made, in addition to the written contentions filed prior to the hearing. He did not state that he had excluded the guidelines from his consideration. It is obvious from his Honour's reasons that his focus was on whether the conduct of the respondent was unreasonable, and in that process his Honour took into account the aspects of the respondent's conduct by reference to the considerations referred to in the guidelines, even though he did not make specific reference to them. In Whisprun Pty Ltd v Dixon [2003] HCA 48, 200 ALR 447, the Court of Appeal in New South Wales ordered the new trial of a personal injury damages claim, finding that the primary judge had in effect overlooked relevant parts of the evidence. By a majority in the High Court, the decision was reversed. At [62], the majority said:

"... it should not be accepted that [the primary judge] failed, at least in a general way, to consider the matters to which the Court of Appeal referred. The fact that his Honour did not refer to these matters in his judgment is not decisive. A judge's reasons are not required to mention every fact or argument relied on by the losing party as relevant to an issue. Judgments of trial judges would soon become longer than they already are if a judge's failure to mention such facts and arguments would be evidence that he or she had not properly considered the losing party's case."

46 As to the contention that the primary judge did not give sufficient weight to the Model Litigant Guidelines, that question can only be answered in favour of the appellant when all matters relevant to the exercise of his Honour's discretion are considered and it is determined that the exercise of the discretion miscarried.

47 The remaining grounds may conveniently be dealt with together. Ground 5, pursuant to the Supreme Court Civil Procedure Act 1932 (the SCCP Act), s 44(1)(a), required leave which was granted by the primary judge on 7 April 2021. In short summary the grounds assert:

• by ground 2, that the primary judge erred by finding that the respondent did not actively mislead the appellant, applied the criterion of "actively misled" rather than "misled", and by finding the respondent did not behave unreasonably;
• by ground 3, that the primary judge erred by failing to find that the respondent did not act reasonably, or alternatively acted unreasonably;
• by ground 4, that by reason of the matters referred to in the first three grounds that the primary judge proceeded on a wrong principle or otherwise contrary to law, proceeded on irrelevant or insufficient materials, or failed to consider material facts;
• by ground 5, that by reason of the matters referred to in the first three grounds, the primary judge misapprehended the facts.

48 The power to award costs is a discretionary power. The primary judge's power is derived from the SCCP Act, s 12, and the Supreme Court Rules 2000 (the SCR), r 57. Because the appeal concerns costs only, and is from the exercise of discretion, the SCCP Act, ss 44 and 45 apply. No appeal lies except by leave, or where the judge has declined or failed to exercise the discretion, or unless the judge has proceeded on a wrong principle or otherwise contrary to law, or on irrelevant or insufficient materials, or has failed to consider any material fact: s 44(1)(a), (b) and (c). Even where leave is granted, s 45 operates such that this Court is not to vary or reverse the decision unless satisfied that the primary judge proceeded on a wrong principle or otherwise contrary to law, proceeded on irrelevant or insufficient materials, misapprehended the facts or failed to consider any material fact, or founded his adjudication wholly or in part on an erroneous finding of fact or an erroneous determination in point of law.

49 The SCR, r 377, provides that a party who discontinues a proceeding is to pay the respondent's costs "subject to any order to the contrary." It may be accepted without detailed analysis that the rule does not create a presumptive entitlement to costs or otherwise fetter the exercise of the costs discretion: Fordyce v Fordham [2006] NSWCA 274, 67 NSWLR 497 at [78]. The discretion derives from s 12 of the SCCP Act and r 57 of the SCR. It is unfettered but "must be exercised judicially, by reference only to considerations relevant to its exercise and upon facts connected with or leading up to the litigation": Northern Territory v Sangare [2019] HCA 25, 265 CLR 164 at [24] per Kiefel CJ, Bell, Gageler, Keane and Nettle JJ. The facts connected with or leading up to the litigation are relevant not only to which party should pay the costs of the proceedings, but also to whether the circumstances justify departure from the usual position that costs be paid on a party and party basis, by a special order for solicitor and client costs or indemnity costs. An order for indemnity costs can properly be made where "there is some special or unusual feature in the case to justify the court exercising its discretion in that way": Preston v Preston [1982] 1 All ER 41 at 58. In Re Wilcox; Ex parte Venture Industries Pty Ltd (No 2) [1996] FCA 1942; (1996) 72 FCR 151 at 152, Black CJ stated the principles applicable to a claim for indemnity costs in these terms:

"... it is well established that the starting point for any consideration of an application for indemnity costs is that in the ordinary case costs will follow the event and the Court will order the unsuccessful party to pay the costs of the successful party, on a party and party basis, a basis which will fall short of complete indemnity. Nevertheless, the Court has an absolute and unfettered jurisdiction in awarding costs, although the discretion must be exercised judicially. So indemnity costs may properly be awarded where there is some special or unusual feature in the case justifying the Court in exercising the discretion in that way."

50 In Hamod v State of New South Wales [2002] FCAFC 97, 188 ALR 659, Gray J, with whom Carr and Goldberg JJ agreed, stated at [20]:

"Indemnity costs are not designed to punish a party for persisting with a case that turns out to fail. They are not awarded as a means of deterring litigants from putting forward arguments that might be attended by uncertainty. Rather, they serve the purpose of compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the Court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs."

51 In Clifton (Liquidator) v Kerry J Investment Pty Ltd trading as Clenergy (No 2) [2020] FCAFC 112, in the context of a failure by a party to make discovery, the Court stated at [31]:

"The point which we wish to emphasise is that to justify a special costs order, there must be conduct deserving of criticism and resulting in greater expense to the innocent party."

52 A ground of appeal which contends that the primary judge erred by failing to find that the respondent acted unreasonably is, in my opinion, directed only to the primary judge's characterisation or description of the conduct, and is not of itself indicative of the type of error falling within the operation of s 44 or s 45. The appellant contends that the primary judge's discretion miscarried because:

"(a) the respondent's conduct was deserving of criticism and resulted in greater and unnecessary expense to the appellant as the innocent party; and

(b) it was unreasonable for the respondent to have subjected the appellant as the innocent party to the expenditure of costs."

53 The submission should be rejected. Both contentions refer to matters relevant to the exercise of the discretion. They were contentions made to the primary judge. It is quite a different matter however to contend that the failure of the primary judge to accede to those contentions justifies appellate intervention as within the terms of ss 44 and 45. In his reasons the learned primary judge sufficiently and accurately summarised the factual background and the relevant statutory provisions. His Honour made some findings of fact in favour of the appellant. They are set out in Estcourt J's reasons at [19]. His Honour made some criticisms of the respondent's conduct.

54 The appellant placed particular reliance on three cases as "analogous" to the situation before the primary judge. In Verna Trading Pty Ltd v New India Assurance Co Ltd [1991] VicRp 12; [1991] 1 VR 129, the Supreme Court of Victoria Court of Appeal dealt with an appeal against an order awarding indemnity costs to the first day of trial against a successful defendant. In making the order the judge at first instance took into account that the defendant, a marine insurer, did not disclose to the plaintiff, despite repeated requests, the real basis on which it intended to contest its claim until the first morning of the trial. Kaye J, with whom McGarvie J agreed, found that the circumstances leading up to the commencement of the proceedings formed a proper basis for the exercise of the trial judge's discretion. One aspect of the defendant's conduct referred to by Kaye J was that it may have induced in the plaintiff's mind a reasonable belief that the insurer did not have a valid defence to the claim for indemnity under the policy, and also that it would not satisfy the claim unless compelled to do so by a judgment of the court. However, the case is authority for no more than that the conduct of a successful defendant is relevant to the exercise of the discretion, and may justify an adverse costs order. That principle was not in controversy before the primary judge. There is nothing in the reasoning of Kaye J which binds another court to exercise the discretion in the same manner, even in circumstances which may be comparable.

55 The remaining two cases are relevant to the ground of appeal asserting that the primary judge erred in fact when determining that the respondent did not, prior to the commencement of the proceedings, mislead the appellant. Neither case concerns the exercise of the costs discretion. In Nadinic v Cheryl Drinkwater as trustee for the Cheryl Drinkwater Trust [2020] NSWCA 2, the respondent successfully sought, under the Australian Consumer Law, to set aside a settlement deed she had entered into following the breakdown of a commercial venture. She alleged misleading and deceptive conduct by failure to disclose the unavailability of previously claimed GST input tax credits. The New South Wales Court of Appeal considered the circumstances in which silence can be misleading and deceptive. The case was cited by the appellant in support of the contention that the respondent's failure to correct the appellant's misapprehension that access to the area it managed would be denied, was misleading and led to the unnecessary commencement of proceedings. The other case relied on by the appellant was Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563. It was cited as authority for the proposition that concealment of a fact may cause a true representation to be misleading or untrue. As it applies to this case, the appellant contended that "the primary judge's reliance on the literal truth of the respondent's careful choice of words without hinting it would deny access" supported the contention that the appellant's conduct was misleading and unreasonable. I do not find either case to be of assistance. His Honour's careful and accurate analysis of the factual circumstances which gave rise to the proceedings included consideration of the extent to which the appellant had been led to the proceedings by the respondent's position. His Honour took into account that the "organiser behind the event believed that access was being denied and the respondent made no effort to correct this misapprehension choosing carefully the words it used in correspondence and publicly". Conversely, his Honour took into account that prior to institution of proceedings the appellant's legal advisors were aware of the correct position. The earlier remarks made by his Honour made clear what he intended to convey by the phrase "actively mislead". No error of fact or principle is demonstrated.

56 It is to be accepted that the factors relied on by the appellant, together with the status of the respondent as a model litigant, were relevant to the exercise of the costs discretion. However it is not for this court to re-exercise the discretion. The appellant criticises his Honour's conclusion, but there was no erroneous finding or misapprehension of fact. His Honour took into account the material facts. The material before him was sufficient. No immaterial facts were taken into consideration. He did not act on a wrong principle or otherwise contrary to law. I agree with Estcourt J that no circumstance permitting appellate intervention within the terms of ss 44 and 45 has been demonstrated.

BOB BROWN FOUNDATION INC v SUSTAINABLE TIMBER TASMANIA TRADING AS FORESTRY TASMANIA

57 The appellant wanted to conduct an ultra-marathon event on 20 March 2021. The course included land located within a "permanent timber production zone" (the zone) managed by the respondent. It sought the respondent's permission to conduct the event on that land.

58 Permission was not required because the respondent had no legal right to exclude the appellant from the zone, but in its public statements and in correspondence with the appellant it had suggested otherwise. In the past it had enforced such "requirement".

59 The respondent did not concede the appellant's right to conduct the event in the zone. After attempting to resolve the impasse, the appellant sought a declaration from the court as to its rights.

60 By the time the respondent conceded the point, the appellant had incurred legal costs. On the basis of the respondent's conduct in the litigation, it sought an order the respondent pay its costs on an indemnity basis, and in the alternative, on a solicitor/client basis.

61 It was unsuccessful before the primary judge, who ordered each party to bear its own costs.

62 It appeals that order. The grounds of appeal appear in the judgment of Estcourt J.

63 For the reasons which follow I would allow the appeal and make an order requiring the respondent to pay the appellant's costs on an indemnity basis.

"Over a number of years, the respondent has publicly promoted the position that if anyone if planning an activity on the timber production zone land a permit is required. The current website of the respondent contains at page, headed 'Forest Activity Permit' and poses the question 'When do you need a permit?' and the following statement is made on the website:

'If you are planning an activity or project on permanent timber production zone land, such as collecting seeds or plants, conducting a research project, or organizing a mountain bike race, you need a sustainable timber - forest activity permit'."

On 15 January 2021, the respondent wrote consenting to access for the purpose of a scoping exercise. And in referring to the need for an application in relation to the event, having said that consent was given for access for the scoping exercise, the email continued:

'This is subject obviously to an application being made to utilise PTPZ for the event. If you wish to proceed - planned route. Any application for the conduct of the event should be directed to Ms Marshall and will require the approval of other adjacent land managers.'

Mr McKenzie has made it plain in his affidavit that they were treating this correspondence as an application for a permit. An exchange of correspondence followed, which began with the applicant asking what was required and receiving a response with information required by the respondent in an application for a permit. It was genial and helpful correspondence. The applicant then provided very detailed information about the event, including a risk management plan, which contained measures to protect participants from the environment. Everything seemed to be proceeding cordially and without any difficulty until the 18th February 2021 when Mr McKenzie abruptly brought the application to a halt after writing to say, thank you for supplying the information concerning the event through another officer. Mr McKenzie wrote:

'On behalf of Sustainable Timber Tasmania, I can advise that we do not provide land manager's consent for this event to occur on permanent timber production zoned land'."

65 On 10 February 2021, the appellant wrote to the respondent asking it to explain its refusal to consent to giving access to the zone.

66 On 18 February 2021 the appellant wrote to the respondent's solicitors asserting that the respondent was obliged to allow it access to the land for the event. It claimed that the reasons for the refusal were not valid and invited the respondent to reconsider its position. It gave notice that if consent was not forthcoming, it would commence proceedings seeking a declaration concerning its rights of access over the land[1]. It was foreshadowed that if it was necessary to commence proceedings, and such proceedings were successful, costs would be sought on an indemnity basis. It further proposed that if consent was given, a costs order would not be pursued, and each party could bear its own costs up to that point.

67 Accompanying the letter was an unfiled originating application articulating questions of construction for the court and the relief sought. It was in these terms:

"1 Is the purpose for which the Applicant wishes to access the Relevant Land, being the purpose of conducting the Event, a purpose that is 'not incompatible with the management of permanent timber production zone land under this Act' within the meaning of s 13 of the FMA?

2 Under s 13 of the FMA is the Applicant entitled to have access to the Relevant Land for the purpose of conducting the Event, except to the extent that the powers conferred under ss 21, 22 and/or 23 of the FMA are lawfully exercised?

The substantive Relief claimed in the Originating Application was:

'1 A declaration that the Applicant is entitled to have access to the Relevant Land for the purpose of conducting the Event, subject to the lawful exercise of the powers conferred under ss 21, 22 and 23 of the FMA.

2 An injunction restraining the Respondent, whether by its servants, agents or howsoever otherwise, from preventing the Applicant from having access to the relevant land for the purpose of conducting the Event save and except where that prevention has occurred as a result of the lawful exercise of the powers conferred under ss 21, 22 and/or 23 of the FMA'." [Footnote omitted.]

68 The respondent's solicitors replied on 19 February 2021. The solicitor, Mr Curtis, did not concede the point in relation to accessing the zone, choosing to restate the respondent's refusal to give consent. He wrote as follows:

"I am instructed that STT will not provide its consent to your client conducting the Takayna Trail event on Permanent Timber Production Zone Land ...

If your client files its Originating Application, please ensure that service is effected in a timely manner."

69 In the result the foreshadowed application for a declaration was made to the court. Ultimately the respondent, through its counsel, Mr McElwaine SC, conceded the point. That concession was inevitable, and overdue.

70 Thereupon the appellant sought leave to discontinue the court proceedings. It sought its costs as it had foreshadowed in its correspondence on 18 February.

71 In the course of his reasons for making an order that each party bear its own costs, the primary judge made a number of findings of fact. Most significant perhaps, at least in terms of the reasonableness of the respondent's conduct, he found that "... the respondent knew that the applicant did not require a permit and knew it had no grounds for exercising its powers to deny access or impede access for the planned event ...". He concluded that, "Objectively, it was not unreasonable for the applicant to believe that there was a significant risk that the respondent might seek to impede the event in some way given the history including the culmination of events of the correspondence and in light of the size of the proposed event and including the cost and the responses of the respondent ...", and, "in my view, the issue of the proceedings was not unreasonable and the action possessed reasonable prospects of success. There was at that time a justiciable issue."

72 Those findings of fact, and the observations based upon them, are undoubtedly correct.

73 The appellant identifies additional findings of fact upon which it relies for its appeal to this Court. I reproduce them from its written submissions, italicised to differentiate them from the submission accompanying them:

"The relevant factual findings of the primary judge concerning the respondent's conduct included:

a) The respondent's wording when corresponding with the appellant in relation to the respondent's refusal to grant a permit, as well as in its statement to the media about the appellant's application for a permit, 'were careful or were carefully chosen'.

b) The respondent was 'aware that there was potentially, a view within the [appellant] that the respondent was denying access' and that it 'must have been obvious to the respondent that the organiser behind the event believed that access was being denied' [emphasis added].

c) The respondent 'knew that the [appellant] did not require a permit and knew it had no grounds for exercising its powers to deny access or impede access for the planned event' [emphasis added].

d) Aware of the view of the appellant, 'it was the respondent who chose words carefully and chose not to disabuse the [appellant] of its apparent misunderstanding' and 'made no effort to correct this misapprehension choosing carefully the words it used in correspondence and publicly' [emphasis added].

e) Aware of the misunderstanding, it 'would have been very easy for the respondent to state plainly that while the respondent would not grant a permit, it would not deny the [appellant] access for the purpose of running the event and it would not seek to interfere or impede the running of the event on the land unless circumstances changed that required it to exercise its powers' [emphasis added].

f) If the solicitors for the respondent had stated plainly the matters set out above to the appellant, 'there would have been minimal costs and no proceedings in this court' [emphasis added]." [Original emphasis.]

74 These findings were open to the court and are not challenged by the respondent.

The discretion as to the terms of discontinuance

75 When leave to discontinue proceedings is sought, the "default" position in relation to costs is that the discontinuing party will pay the respondent's costs: r 378(1) of the Supreme Court Rules 2000.

76 That does not constrain the discretion to make a costs order which is appropriate in the circumstances: Fordyce v Fordam [2006] NSWCA 274, 67 NSWLR 497 at [78] per McColl JA. In that regard the Court is possessed of a broad discretion; it may grant leave on any terms as may be just: r 377.

77 It was open to the Court in the exercise of its discretion to make an award of indemnity costs, solicitor/client costs, an order that each party bear its own costs, or the default order. A default order is no less an exercise of discretion than the other types of costs order mentioned, because r 377 makes the terms of the grant of leave discretionary. In not making the default order the court exercised its discretion to make an order more favourable to the appellant. The question is whether in those circumstances this Court can interfere?

78 I accept that an appellate court should "exercise particular caution in reviewing" the exercise of a discretionary power: Williams v Director General of National Parks and Wildlife Service [2002] NSWCA 176, [36]. The Full Court of the Federal Court in Samsung Electronics Co Ltd v Apple Inc [2011] FCAFC 156, 217 FCR 238 at [39] summarised the High Court authorities to this effect:

"... in respect of appeals against decisions involving discretionary judgment, there is a strong presumption in favour of the correctness of the decision appealed from and that that decision should be affirmed unless the appeal Court is satisfied that it is clearly wrong ...".

79 Two bases for intervention are recognised at common law. The first is where an explicit error occurs, by reason of the court acting on a wrong principle: mistaking the law or the facts, failing to take into account a relevant consideration or having regard to an irrelevant matter. The second arises when there is an implied error. In such situation the error is inferred from the result: House v The King (1936) 55 CLR 499 at 505. In that case Dixon, Evatt and McTiernan JJ said:

"If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred. Unlike courts of criminal appeal, this court has not been given a special or particular power to review sentences imposed upon convicted persons. Its authority to do so belongs to it only in virtue of its general appellate power. But even with respect to the particular jurisdiction conferred on courts of criminal appeal, limitations upon the manner in which it will be exercised have been formulated."

80 Sections 44 and 45 of the Supreme Court Civil Procedure Act 1932 give statutory force to those principles.

81 Section 44 of the Act identifies the circumstances in which an appeal to the Full Court from a costs order will lie:

"44 Appeals as to costs only, and appeals by a person admitted to sue or defend as a poor person

(1) No appeal shall lie to a Full Court from any judgment or order given or made by a judge, whether sitting in court or in chambers, as to costs only, which are by any statute or any Order or Rule of Court left to the discretion of the judge, except -

(a) by leave of the judge giving such judgment or making such order;

(b) in cases in which the judge has declined or failed to exercise the discretion; or

(c) in cases in which the judge has proceeded on a wrong principle or otherwise contrary to law, or on irrelevant or insufficient materials, or has failed to consider any material fact."

82 Section 45 provides:

"45 Appeals from judgments given in exercise of discretionary jurisdiction

(1) A Full Court, on the hearing of any appeal from any judgment, order, or other determination (whether final or otherwise) of a judge, shall not reverse or vary any adjudication of the judge which is, or purports to be, only the exercise of a discretion which the judge was entitled by law to exercise, unless it appears to the Full Court that -

(a) the judge has, in fact, declined or failed to exercise the discretion;

(b) the judge has proceeded on a wrong principle or otherwise contrary to law, or on irrelevant or insufficient materials, or has misapprehended the facts or has failed to consider any material fact;

(c) the adjudication is founded wholly or in part on an erroneous finding of fact or an erroneous determination in point of law; or

(d) by reason of further evidence received by the Full Court in exercise of the powers conferred by section 48, or some special circumstance, the adjudication should be reversed or varied.

(2) Nothing in this section contained shall limit or restrict the powers of a Full Court on the hearing of an appeal from a judgment or order of a judge decreeing or ordering or refusing to decree or order the specific performance of any contract, or granting or refusing any injunction or order for an injunction, or appointing or refusing to appoint a receiver, or granting or refusing any other equitable remedy or relief the granting of which is discretionary.

(3) Nothing in this section contained shall in any manner affect the provisions of section 44."

83 The section does not confer a general discretion to reverse a discretionary decision on the basis of the Full Court's views as to what is reasonable and just: Norris v McGeachy [2010] TASFC 4 at [29]. Error of the kind referred to in s 45(1) of the Act must be demonstrated before this Court may "reverse or vary" the adjudication made at first instance.

84 The general principle requiring restraint in interfering with the exercise of a judicial discretion in respect of a matter of practice and procedure referred to in Adam P Brown Male Fashions Pty Ltd v Philip Morris Pty Ltd [1981] HCA 39; (1981) 148 CLR 170 at 176-177 is not relevant. The Act explicitly provides for an appeal from a costs order.

85 This is a suitable point at which to refer to the Model Litigant Guidelines ("the Guidelines") because it is in respect of their application that I have concluded an error occurred. That the "Model Litigant Guidelines" are applicable to the respondent in its conduct of litigation is not contentious. The thrust of the Guidelines is ensuring fair play in the conduct of dealings between the Crown and its subject: Melbourne Steamship Co Ltd v Moorehead [1912] HCA 69; (1912) 15 CLR 333 at 342, per Griffiths CJ.

86 The appellant referred to these Guidelines in its written submissions and in oral submission at first instance:

"We say it acted unreasonably by not disclosing to the applicant what it obviously knew and believed was what it calls the 'misconception' or 'misapprehension' by the Foundation of what's happening. It did not disclose unequivocally till lines 14 and 20 of the transcript on the 25th that it accepted that the event was entitled to go on and it wasn't incompatible.

Now, your Honour, we say that that was entirely unreasonable given the factual circumstances that we have set out. Your Honour, we've explained that context. We say that that would satisfy the test, particularly given what the court and what litigants are entitled to expect of a state instrumentality as a model litigant. No endeavour has been put to try and explain why STT played its cards in the way it did, but we say this, falling within the principles I had identified in Zibara, falls classically within the conduct that the court should not accept as appropriate and should regard as entirely inappropriate, particularly in this day and age where not only model litigant rules would make it inappropriate, but the duties that litigants have to the court would - and wasting the court's [time] and facilities would also give rise to the kind of sanction and relief we're seeking, which is full compensation for our costs."

87 In its written submissions before this Court, the appellant identifies the following matters:

(a) That the Guidelines require a model litigant to deal with matters efficiently and expeditiously (Guidelines 9(a)).

(b) To settle legitimate claims promptly, without resort to litigation (Guidelines 9(c)).

(c) Avoid resort to litigation (Guidelines 9(d)).

(d) Keep the costs of litigation to a minimum (Guidelines 9(f)).

88 The respondent did not acknowledge the relevance of the Guidelines before Martin AJ. Since their relevance cannot be doubted, their application and operation required attention from the decision maker. The primary judge did not advert to them in his reasons. I do not suggest that a failure to advert to a matter demonstrates, ipso facto, a failure to consider it. It does not. But it can provide a foundation for such submission. A party is entitled to submit that, having regard to all the circumstances, including the relevance of the consideration, a failure to reference a matter bespeaks failure to consider the matter at all. Such inference might be irresistible if the matter goes to a consideration at the very heart of the question before the court. The application of the Guidelines is such a matter. The conduct of a party in the proceedings was a central consideration in relation to the question before the court: Zibara v Ultra Management (Sports) Pty Ltd [2021] FCAFC 4, 387 ALR 48 at [168]- [178] (see below); Rosniak v Government Insurance Office (1997) 41 NSWLR 608 at 616 per Mason P. Squarely engaged, I am satisfied that the failure to refer to the Guidelines, to even touch upon them, evidences a failure to have regard to a relevant matter. Choosing to give ex tempore reasons does not confer protection from such conclusion. In my view such inference cannot be avoided having regard to the relevance of the Guidelines to the exercise of the discretion. The failure to refer to them and to evaluate the respondent's conduct against them, constituted a material error which vitiated the exercise of the discretion in relation to costs: see Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 48.

90 For the same reasons the primary judge erred in concluding that the respondent did not behave unreasonably. Such conclusion is unsustainable in the circumstances. Consideration of the obligations upon the respondent as a model litigant, would have exposed its conduct as unreasonable by reference to an objective standard. I uphold ground 3.

91 Ground 4 is not strictly a ground of appeal. I need not consider ground 5.

92 The position with respect to costs generally is summarised in Re Minister for Immigration & Ethnic Affairs; Ex Parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622 by McHugh J at 624-625:

"In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation. Thus, for example, in R v Gold Coast City Council; Ex parte Raysun Pty Ltd, the Full Court of the Supreme Court of Queensland gave a prosecutor seeking mandamus the costs of the proceedings up to the date when the respondent council notified the prosecutor that it would give the prosecutor the relief that it sought. The Full Court said that the prosecutor had reasonable ground for complaint in respect of the attitude taken by the respondent in failing to consider the application by the prosecutor for approval of road and drainage plans.

Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. This is perhaps the best explanation of the unreported decision of Pincus J in The South East Queensland Electricity Board v Australian Telecommunications Commission where his Honour ordered the respondent to pay 80 per cent of the applicant's taxed costs even though his Honour found that both parties had acted reasonably in respect of the litigation. But such cases are likely to be rare.

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.

The critical question in this case then is whether or not the prosecutrix acted reasonably in bringing these proceedings and whether the respondents acted so unreasonably in not informing the prosecutor that an application to review the decision to refuse a visa was being considered that it would be proper for the Minister to pay the whole or part of the cost of the proceedings. In determining whether or not the prosecutor acted reasonably, it is necessary to mention some further facts in the matter." [Footnotes omitted.]

93 The emphasis is upon the reasonableness of the conduct of the parties: Zibara v Ultra Management (Sports) Pty Ltd (above) at [168]-[178]. The appellant refers to this decision commencing at [176]:

"The point which we wish to emphasise is that to justify a special costs order, there must be conduct deserving of criticism and result in greater expense to the innocent party." [Original emphasis.]

"Indemnity costs are not designed to punish a party for persisting with a case that turns out to fail. They are not awarded as a means of deterring litigants from putting forward argument that might be attended by uncertainty. Rather, they serve the purpose of compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs." [Original emphasis.]

In Galea v Commonwealth (No 2) [2008] NSWSC 260 at [18] to [21], Johnson J held that the Commonwealth had failed to facilitate the just, quick and cheap resolution of the issues in the proceedings, in accordance with the Civil Procedure Act 2005 (NSW) and the standards expected of a model litigant, and relied on these breaches to make a costs order against the Commonwealth.

95 The principles applicable to a costs order intersect with the model litigant rules, as I have already said. A failure to adhere to those rules amounts to conduct which engages the discretion to make a special costs order. In many cases it might be thought that such an order is the only way to uphold the principles enshrined within the rules. That is an important objective. It enforces appropriate standards of engagement between government entities and citizens. The enforcement of those standards is appropriate here for these reasons:

1 The respondent knew its stated position on the matter of access to the zone and the need for a permit was wrong; not arguable, but wrong.

2 It knew it had no grounds and no power to deny access but it asserted otherwise.

3 It persisted in that position even when it knew the appellant would seek a declaration with potential costs implications to it.

96 The respondent remained steadfast in its deception on no defensible basis. Nothing about this matter was, with respect to the primary judge, "finely balanced".

97 There are no other considerations which I consider relevant to the question of costs or which militate against an order favourable to the appellant.

98 In the circumstances of the respondent's egregious conduct, an indemnity costs order should be made against it, in order to properly compensate the appellant.

[1] Those rights were asserted under s 13 of the Forest Management Act 2013.