Commissioner for Children and Young People v "A"

CATCHWORDS : Appeal - Costs - Child protection - Decision at first instance under s 154 overturned on appeal - Successful appellant seeks costs for proceedings at first instance and on appeal - Relevant legislative provisions - Nature of proceedings - Significance of application for declaration in child protection proceedings - Public interest in legal issues being resolved on appeal - Orders made that each party pay their own costs

Child protection - Costs - Appeal - Decision at first instance under s 154 overturned on appeal - Successful appellant seeks costs for proceedings at first instance and on appeal - Relevant legislative provisions - Nature of proceedings - Significance of application for declaration in child protection proceedings - Public interest in legal issues being resolved on appeal - Orders made that each party pay their own costs Child Protection (Prohibited Employment) Act 1998 s 3 s 5 s 6 s 8 s 9 Child Protection Legislation Amendment Act 2002 LEGISLATION CITED : Crimes Act 1900 s 579 Industrial Relations Act 1996 s 152 s 154 s 181 Suitors Fund Act 1951 s 6 s 7 "A" v Commission for Children and Young People (2001) 107 IR 211 Commission for Children and Young People v "A" (2003) 123 IR 395 Health and Research Employees' Association of New South Wales v Baptist Community Services NSW and ACT (2002) 122 IR 178 Hollier v Australian Maritime Safety Authority (No.2) [1998] 975 FCA. Latoudis v Casey (1990) 170 CLR 534 CASES CITED : Milne v Attorney General for the State of Tasmania (1956) 95 CLR 460 New South Wales Teachers Federation v Managing Director NSW TAFE Commission (2003) 123 IR 384 Oshlack v Richmond River Council (1998) 193 CLR 72 Police Association of New South Wales v Commissioner of Police (2002) 123 IR 301 R v Bolton, Ex parte Beane (1987) 162 CLR 514 "R" v NSW Commission for Children and Young People [2002] NSWIRComm 101 HEARING DATES: DATE OF JUDGMENT: 02/02/2004

APPELLANTS: Mr P A Johnson SC and Mr P F Singleton of counsel Crown Solicitor (I V Knight) LEGAL REPRESENTATIVES: RESPONDENT: Ms P F Lowson of counsel MacMahon Associates, Lawyers (Mr P A MacMahon)

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION

FULL BENCH CORAM: WRIGHT J, President WALTON J, Vice-President KAVANAGH J

COMMISSIONER FOR CHILDREN AND YOUNG PEOPLE and ANOR v "A" Application for leave to appeal and appeal against a decision of Hungerford J given on 28 August 2001 in Matter No IRC 4540 of 2000 JUDGMENT OF THE COURT [2004] NSWIRComm 8 1 This judgment concerns an application for costs made on behalf of the appellants in these proceedings, the Commissioner for Children and Young People and the New South Wales Department of Education and Training. The judgment in the substantive appeal is now reported: Commission for Children and Young People v "A" (2003) 123 IR 395. The Full Bench made the following orders (at [72]): 1. Leave to appeal granted; 2. Appeal upheld; 3. Declaration made by Hungerford J set aside; 4. Leave is granted to the parties to make application for orders as to costs (including, if appropriate, orders under the Suitors' Fund Act 1951) provided the leave is exercised within 28 days.

2 The leave granted in order 4 in the substantive decision was subsequently extended by consent to 27 March 2003. The appellants subsequently filed a motion seeking orders that the respondent pay the appellants' costs of the appeal and costs associated with the s 154 application at first instance. The motion was accompanied by the affidavit referred to in the grounds in support of the motion, which were in the following terms:

1. The applicants were wholly successful in their application for leave to appeal and in their appeal; 2. The Applicant's application and appeal were necessitated by the Respondent's decision to initiate proceedings for a declaration to which (in the result of this case) he was not entitled and in the context described in the Affidavit of Caroline Rita Giurastante.

3 The proceedings were then the subject of directions before the Full Bench when the parties agreed that the issue of costs would be appropriately dealt with on the submissions filed. The respondent sought to have the parties bear their own costs of the appeal, that no order be made in relation to the costs orders made by Hungerford J at first instance (or, in the alternative, that the parties bear their own costs at first instance), that the appellants pay the respondent's costs associated with its application for costs and that the Full Bench make an order that the respondent have the benefit of a certificate under the Suitors Fund Act 1951. Directions were made for the filing of written submissions on behalf of both parties. Those directions were later varied and extended. The evidence and submissions on the motion have now been received and it is appropriate to proceed to judgment on the respective motions for costs and the basis of the submissions and related material filed.

4 The Child Protection (Prohibited Employment) Act 1998 came into force on 3 July 2000. The history of that enactment is helpfully dealt with in detail in the judgment of Hungerford J at first instance (see "A" v Commission for Children and Young People (2001) 107 IR 211). It is sufficient to observe that the legislation declared persons who had been convicted of a "serious sex offence", as defined in the statute (see s 5(3)), to be a "prohibited person": see s 5(1). Designation as a "prohibited person" has the practical effect of prohibiting that person from commencing or continuing in "child-related employment" (as defined in s 3). At the time these proceedings were commenced, the only means of avoiding the effect and operation of the statute was for the "prohibited person" to make an application to one of the tribunals nominated in s 9 of the Act and to satisfy the tribunal that the "prohibited person", having regard to the various considerations identified in s 9(5), did not pose a risk to the safety of children (see s 9(4)). If the tribunal is satisfied that the "prohibited person" no longer poses a risk to children, it may, in the exercise of its discretion, make an order that the Act will not apply to the "prohibited person" in relation to a particular matter. We note, for completeness, that the Act has been amended by the Child Protection Legislation Amendment Act 2002 which, inter alia, inserted s 8A into the statute. That section now provides that an application may be made by a "prohibited person" to the Commission for Children and Young People for an order declaring that the Act is not to apply to the person in respect of a specified offence, in addition to the application that may be made either to the Industrial Relations Commission or the Administrative Decisions Tribunal.

5 Relevantly for present purposes, the respondent was a "prohibited person", having been convicted of a serious sex offence, as defined by the statute, some 30 years ago. He was employed as a secondary school teacher with the Department of Education and Training and as such, was engaged in "child related employment". Section 8(1) of the Act provided that an employer "must not commence employing, or continue to employ" a prohibited person "in child-related employment". The continuation of his employment would have rendered both the appellant Department (once it became aware the respondent was a prohibited person) and the respondent guilty of an offence: see ss 6 and 8 of the Act.

6 In order to avoid that consequence, the respondent, on 11 September 2000, made an application to the Industrial Relations Commission under s 9(1) for an order declaring that the Act did not apply to him in respect of a specified offence. The proceedings initially came before Hungerford J and his Honour made an interim order staying the operation of the statute insofar as it related to the identified "serious sex offence". The hearing of the application before his Honour was initially programmed for three days. During the course of final submissions on the third day of hearing, counsel for the respondent sought and was granted an adjournment to consider the potential operation of s 579 of the Crimes Act 1900. In the result, an application under s 154 of the Industrial Relations Act 1996 was filed, seeking a declaration that by virtue of the operation of s 579 of the Crimes Act, the respondent was not a "prohibited person" as defined in the Act.

7 It was the judgment of Hungerford J, sitting as the Commission in Court Session, determining the respondent's application under s 154 of the Act that was ultimately the subject of the appeal in these proceedings. As we observed, at [10], by reference to observations of Hungerford J at first instance, the only issue in the proceedings was "a pure question of statutory construction and the application of the ordinary principles to a determination of competing legislation".

8 As will have been apparent from the terms of the orders made by the Full Bench, the appellants may properly be seen as having been entirely successful on appeal. The issue which now falls for determination is the appropriate order for costs having regard to the fact that these proceedings involve the Full Bench sitting as the Commission in Court Session constituted as a superior court of record (see s 152 of the Industrial Relations Act 1996).

9 Costs under the Industrial Relations Act 1996 are governed by s 181 which, in the form relevant to this appeal, was in the following terms: 181. Costs (1) Subject to the rules of the Commission and any other Act or law: (a) the Commission may award costs, and (b) costs are in the discretion of the Commission, and (c) the Commission may determine by whom and to what extent costs are to be paid, and (d) the Commission may order costs to be assessed on the basis set out in Division 6 of Part 11 of the Legal Profession Act 1987 or on any other basis. (2) However, the Commission when it is not in Court Session may award costs only in the following cases: (a) the Commission may award costs against an applicant if it considers that the application to it was frivolous or vexatious, or (b) the Commission may award costs against a party to proceedings who, in the opinion of the Commission, instituted proceedings without reasonable cause, or (c) the Commission may award costs against a party to proceedings under Part 6 of Chapter 2 (Unfair dismissals) who, in the opinion of the Commission, unreasonably failed to agree to a settlement of the claim or whose application was frivolous or vexatious, or (d) the Commission may award costs in proceedings for a breach of an industrial instrument or the recovery of money under Chapter 7, as provided by sections 357 and 373. (3) The Commission in Court Session may not award costs in proceedings for a contravention of a dispute order or in proceedings under Division 2 of Part 4 of Chapter 5 (Rules of industrial organisations). (4) In this section, "costs" includes: (a) costs of or incidental to proceedings in the Commission, and (b) in the case of an appeal to the Commission, the costs of or incidental to the proceedings giving rise to the appeal, as well as the costs of or incidental to the appeal.

10 The appellants contended that whilst s 181 provided a broad discretion, the respondent had elected to bring these proceedings in the costs jurisdiction of the Commission in Court Session, despite having already commenced proceedings for an order under s 9 of the Child Protection (Prohibited Employment) Act. Proceedings under that statute, brought as they are in the Commission's non-judicial industrial jurisdiction, the appellants emphasising this being "the channel prescribed by Parliament", would not ordinarily attract an order for costs. On the appellants' submission, the respondent, in pursuit of his own interests, departed from the more regular course and brought the application in the jurisdiction of the Commission in Court Session.

11 The appellants conceded that there was "power to depart from the usual rule" in civil litigation that "costs follow the event": referring to Oshlack v Richmond River Council (1998) 193 CLR 72 at [51], however, in the circumstances of these proceedings, the usual rule should apply. The starting point of the consideration should be that as "a general rule … a wholly successful defendant should receive his costs unless good reason is shown to the contrary": Milne v Attorney General for the State of Tasmania (1956) 95 CLR 460 at 477. The rationale of the usual rule, as discussed by McHugh J in Oshlack at [67] - [68] (with whom Brennan CJ agreed in this regard), was applicable to the present proceedings.

12 An order for costs in favour of the successful party is designed to compensate the successful party, not to punish the unsuccessful party: see Latoudis v Casey (1990) 170 CLR 534, and, as was noted by Toohey J in his Honour's judgment in that case (at 535), it would ordinarily be "just and reasonable" that the successful party "should not be out of pocket". The appellant has not been guilty of any "disentitling conduct" as has been spoken of in the authorities: see Latoudis v Casey at 565 - 566 and Oshlack at [70]. The fact that the appellant is a "statutory commission and an officer of State" is not a proper basis for departing from the ordinary rule as to costs: see Oshlack at [92] - [94] and Hollier v Australian Maritime Safety Authority (No.2) [1998] 975 FCA. If the Full Bench were to take such a factor into account, in the appellants' submission, the respondent should lead evidence as to his personal circumstances so that a proper balancing of the financial interests at stake could be undertaken; for example, he may have been supported by an industrial organisation.

13 Similarly, on the appellants' submission, the fact the Suitors Fund Act might be applicable is not a relevant factor to be considered by the Full Bench. A certificate under that statute "will not wholly deal with the costs of this case". Moreover, whatever may be the situation with costs on the appeal, a certificate under that statute will not deal with the costs of the proceedings below (noting that such a certificate can only relate to the costs of proceedings on appeal). Any certificate under the Suitors Fund Act should be made in addition to an order for costs in accordance with the usual rule.

14 In the appellants' submission, the usual rule should apply unless some "exceptional circumstance warranting a different result is demonstrated". It would be appropriate in the circumstances of this case for the Full Bench to make an order for costs in favour of the successful appellant, in accordance with the usual rule, both as to the costs on appeal and at first instance.

15 The respondent, having referred to the judgment of Gaudron and Gummow JJ in Oshlack at [40] - [49] and that of Kirby J at [134], submitted that the judgment supported three propositions in so far as they pertained to the present proceedings: first, there is no absolute rule as to an appropriate order for costs; second, that there was no absolute rule that costs should follow the event unless special circumstances are demonstrated and third, it is appropriate to have regard the legislative context of both the Industrial Relations Act and the Child Protection (Prohibited Employment) Act when considering the exercise of discretion as to costs.

16 It was submitted that the restrictions on costs provided in s 181(2) of the Industrial Relations Act are express recognitions of the Commission's role as a specialist industrial tribunal. The issues that were raised by the respondent's application were essentially employment issues associated with the operation of the Child Protection (Prohibited Employment) Act. As the Full Bench noted in its substantive decision in this matter at [67], that statute requires a balancing of competing interests: see also per Haylen J in "R" v NSW Commission for Children and Young People [2002] NSWIRComm 101. When seen in that way, it was significant that the legislature had seen fit to have parties, in the normal course of an application under s 9 of that statute, bear their own costs: see s 181(2) of the Industrial Relations Act and s 9(11)(a) of the Child Protection (Prohibited Employment) Act. This must be taken to have included the appellant, as the appellant is required to be a party to s 9 proceedings: see s 9(7).

17 On the respondent's submission, it was inappropriate to characterise the invocation of s 154 as an esoteric assertion of a private right. The operation of s 579 of the Crimes Act raised real issues as to the jurisdiction of the Commission to deal with the original application under s 9 of the Child Protection (Prohibited Employment) Act. If the respondent was not a person within the definition of the Child Protection (Prohibited Employment) Act then the Commission had no jurisdiction to deal with the original application. Moreover, in the absence of the declaration, the respondent was faced with the potential to both lose his employment and commit an offence under that Act. Further, it was submitted the assertion that the appeal raised questions of "private rights" is directly contrary to the submission put by the appellants in support of their application for leave and to the basis on which the Full Bench considered it appropriate to grant leave to appeal: see [46] of the substantive decision.

18 The interaction of s 579 of the Crimes Act and the Child Protection (Prohibited Employment) Act was a matter on which "reasonable minds may differ" (referring to Mason CJ, Wilson and Dawson JJ in R v Bolton; Ex parte Beane (1987) 162 CLR 514) and which ultimately required legislative amendment. The declaratory order proceedings would have been unnecessary if the statute had originally been framed in its current amended form. Moreover, the appellants had the opportunity to pursue that amendment rather than take the current proceedings. While the "government status of the appellants may not, of itself, be a relevant consideration, the fact that they had the opportunity to amend the legislation, and the respondent did not, militates in favour of the orders sought by the respondent".

19 Finally, it was submitted "it is unusual in the extreme for an employee to pay the costs of their employer (the second appellant) in proceedings necessitated by deficiencies in the legislation and affecting a person's right to work".

20 While it is important to recognise, to adopt the words of McHugh J in Oshlack (at [92]), that the "law judges persons by their conduct not their identity" and that "in the exercise of the costs discretion, all persons are entitled to be treated equally and in accordance with traditional principle", insofar as those observations are relevant to these proceedings, it is equally important to note that these proceedings are of a particular kind and arise in a particular and unusual statutory context. This is not a case in which it could properly be said that "the public services" provided by the relevant "authority" have been strained in some way by fruitless or frivolous litigation brought at the election of the respondent.

21 The appellants contended that the rationale behind the "usual rule" as to costs, as discussed by McHugh J in Oshlack (at [67] - [68]), was apposite to the present circumstances. We do not agree. It is useful to have regard to what was said by his Honour in the passage relied upon: [67] The expression the "usual order as to costs" embodies the important principle that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour. The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party ( Latoudis (1990) 170 CLR 534 at 543 per Mason CJ, at 562-563 per Toohey J, at 566-567 per McHugh J; Cachia v Hanes (1994) 179 CLR 403 at 410 per Mason CJ, Brennan, Deane, Dawson and McHugh JJ). If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation. [68] As a matter of policy, one beneficial by-product of this compensatory purpose may well be to instil in a party contemplating commencing, or defending, litigation a sober realisation of the potential financial expense involved. Large scale disregard of the principle of the usual order as to costs would inevitably lead to an increase in litigation with an increased, and often unnecessary, burden on the scarce resources of the publicly funded system of justice.

22 As we emphasised in the substantive decision in this matter (at [63]), the legislature: has taken the rather exceptional or unusual course of identifying a specific class of persons, identified and identifiable by means of a particular feature (past criminal conduct as dealt with by a Court) and encumbered them (subject to a limited phasing in of the operation of the relevant provisions), with a prohibition from taking part or continuing in "child-related employment". No opportunity of being heard was afforded to any person subject to the statute's prohibition. The prohibition is to apply unless and until an individual the subject of the statutorily imposed prohibition has obtained an interim or final order from one of the nominated tribunals, "declaring that this Act is not to apply to the person in respect of a specified offence", on either an interim or permanent basis.

23 We also observed at [64] that while it is unusual for an approach of this kind to be adopted (that is, legislation by reference to a class of persons, without affording any of them the opportunity to be heard or notification being given to any member of the class) in light of the significant mischief to which the legislation is directed, the unusual and exceptional has been adopted by the legislature notwithstanding that rights might be affected and apparent hardship could occur. It is also important to have regard to the observations at [65] - [69], and in particular what was stated at [69]: The practical effect of the system is that a person convicted of such a charge [that is one identified as a "serious sex offence"] is required to establish, by application to an independent tribunal, the matters set out in s 9 of the statute.

24 This is not a case in which it could be said that a beneficial by-product of following the usual rule as to costs would be "a sober realisation of the potential financial expense involved" on behalf of potential litigants. Applying the usual rule as to costs would not, in the context of these proceedings, give rise to the beneficial policy considerations that McHugh J identifies as underlying the usual rule. While it may generally be recognised that the mere fact a government instrumentality is a party to proceedings will not be sufficient to depart from the ordinary rule as to costs, we do not consider that parallels can properly be drawn between the circumstances of this case and those in which the High Court observed that "every irrecoverable dollar spent on litigation is one dollar less to spend on the services that public authorities do and ought to provide": see Oshlack at [92]. Proceedings that arise as a consequence of the Child Protection (Prohibited Employment) Act are clearly proceedings sui generis.

25 In exercising our discretion, we consider it is of significance that the legislature reposed the power to exempt an individual from the operation of the Child Protection (Prohibited Employment) Act in the Industrial Relations Commission. The legislature must be taken to have been conscious that proceedings in the Commission's jurisdiction (when not sitting in Court Session) generally do not give rise to costs consequences for the parties. Equally, it is significant that where proceedings under s 9 are brought in the Administrative Decisions Tribunal, the statute prevents the tribunal from making an order for costs: see s 9(11)(a). Clearly, the legislature has envisaged that in the ordinary course of proceedings that arise out of the operation of the Child Protection (Prohibited Employment) Act, cost consequences should not flow to a "prohibited person". This can hardly be considered exceptional when, at least prior to the amendments enacted by the Child Protection Legislation Amendment Act 2002, prohibited persons were obliged to bring proceedings before either the Industrial Relations Commission or the Administrative Decisions Tribunal if they intended to continue a career, or their present employment, in "child related employment" as defined.

26 That proceedings would generally arise in the industrial jurisdiction of the Commission is of considerable significance when approaching the issue of costs in proceedings under s 154, as has been touched upon in two recent decisions of the President: see Health and Research Employees' Association of New South Wales v Baptist Community Services NSW and ACT (2002) 122 IR 178 at 190 and Police Association of New South Wales v Commissioner of Police (2002) 123 IR 301 at 325. As his Honour observed in those decisions, observations with which we would agree, as a matter of practice, the fact that declaratory orders are sought in relation to issues that would generally fall within the industrial jurisdiction of the Commission, or in relation to issues that could truly be identified as having an intimate connection with the Commission's industrial or arbitral jurisdiction, is a consideration that would generally be relevant to the exercise of the discretion to award costs. The observations of his Honour in the latter case were implicitly approved by the Full Bench in New South Wales Teachers Federation v Managing Director NSW TAFE Commission (2003) 123 IR 384 at 394.

27 The current proceedings initially arose as a regular application under s 9 of the Child Protection (Prohibited Employment) Act. The interaction of that statute with s 579 of the Crimes Act was clearly one of considerable significance to both the individual interests of the respondent, and for the appellant insofar as it reflected on the continued operation of the statute. Indeed, it should be observed, that the issue was such as to have prompted legislative intervention: the statute earlier referred to, the Child Protection Legislation Amendment Act 2002 has amended s 5 of the statute by the addition of a subsection (6) so as to clarify that "section 579 of the Crimes Act 1900 does not apply to or in respect of a serious sex offence". Moreover, it is fair to say, with no disrespect to the trial judge, that the commencement of a separate application under s 154 of the Industrial Relations Act may, at least to some degree, be seen as having been at the invitation of his Honour.

28 It is important to note that it is incumbent upon the Commission in Court Session, as it is with any court, to satisfy itself, where relevant, that it has jurisdiction in any proceedings before it. The interaction of s 579 of the Crimes Act and the relevant provisions of the Child Protection (Prohibited Employment) Act would therefore have been an issue that required resolution in the proceedings before Hungerford J in any event.

29 Moreover, the fact that the issue of jurisdiction, once raised, required resolution, belies the appellant's submission that it has unnecessarily been put to costs as the result of the respondent pursuing private rights. There is nothing to suggest that the fact the trial judge dealt with the matter under s 154, rather than merely as a part of hearing the initial application under s 9 of the Child Protection (Prohibited Employment) Act, has resulted in an increase in costs to the appellants. In these circumstances, we consider that to make costs orders in favour of the appellants may be seen as tantamount to punishing the respondent as the ultimately unsuccessful party. As the High Court emphasised in both Oshlack and Latoudis v Casey, that is not the purpose of the usual rule.

30 As was observed in the substantive decision in this matter, in considering the issue of leave to appeal (at [46]), the appeal raised important questions as to the operation and interaction of two important pieces of legislation and any decision on appeal could have considerable ongoing significance for persons engaged in child-related employment as identified in s 3 of the Child Protection (Prohibited Employment) Act. The point was emphasised by reference to three decisions subsequent to that the subject of this appeal. We agreed with the submissions of the appellants to the effect that it was desirable, and in the public interest, that the construction of the relevant legislation be determined authoritatively. In short, there was considerable public interest in the issue determined in the substantive decision on appeal, as there was in the proceedings before Hungerford J.

31 The issue raised in these proceedings was intimately connected with the industrial or arbitral jurisdiction of the Commission. While the issue was subsequently settled by the legislature, the issue determined by the Full Bench in these proceedings was a matter of general importance to the industrial relationship between the appellant Department and a number of the members of its workforce. We agree with the observations of the President in Police Association of New South Wales v Commissioner of Police (at 325) that where "the nature of the proceedings [involves] a dispute between a trade union and an employer of a large number of its members concerning the rights of a member of the union, clarification of whose rights may be of benefit to the membership generally, it may be appropriate there be no order as to costs". We do not consider that, if the respondent had the support of his trade union, that would be a material consideration in favour of granting the appellants' application.

32 In the circumstances, we consider a fair, just and appropriate outcome would involve the parties bearing their own costs at first instance and on appeal. Further, we consider, having regard to the fact that the issue on the appeal was a "pure question of statutory construction", it is appropriate to grant the application of the respondent for an indemnity certificate under s 6 of the Suitors Fund Act. We note that a certificate is not available to the appellant because of the terms of s 7 of the statute.

1. The costs order made by Hungerford J is set aside; 2. The parties to these proceedings are to bear their own costs both at first instance and on appeal; 3. The respondent is to be issued with a certificate under s 6 of the Suitors Fund Act 1951.

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