Eureka Funds Management Limited & Anor v Freehills Services Pty Ltd

3 The unsuccessful respondent, Freehills Services Pty Ltd, has applied for an indemnity certificate in respect of costs under s 4 of the Appeal Costs Act 1998 ('the Act').

4 Section 4 provides:

4. Application by respondent for indemnity certificate in respect of appeal

(1) If an appeal against a decision of a court in a civil proceeding -

(b) to the Court of Appeal, including an appeal to the Court of Appeal from a decision of the Trial Division of the Supreme Court; or

(c) to the High Court of Australia from a decision of the Supreme Court -

succeeds, a respondent to that appeal may apply to the Supreme Court for, and the court may grant, an indemnity certificate in respect of costs.

(2) If an appeal to the County Court against a decision of a court in a civil proceeding succeeds, a respondent to that appeal may apply to the County Court for, and the court may grant, an indemnity certificate in respect of costs.

5 As the section makes clear, the grant of a certificate is discretionary.[1]

6 Counsel appearing for the respondent on the delivery of judgment, who made the application on the respondent's behalf, was asked to indicate whether he relied on any particular facts or circumstances in support of it. He did not point to anything in particular, merely saying that the case came within s 4, and that no specific disqualifying provision of the Act[2] was applicable.

7 The grant of a certificate will usually lead to the expenditure of public money. In my view it is not enough that a case merely falls within one of the descriptions in s 4. The Court needs to be satisfied that it is appropriate in all the circumstances that a certificate should be granted. It is a discretion to grant, not a discretion to refuse, a certificate.[3] On the other hand, a relatively generous approach to the exercise of the discretion is supported by the remarks of the then Attorney-General in her second reading speech for the 1998 bill for the Act, as follows:[4]

The bill repeals the current Appeal Costs Act 1964 and replaces it with a new, simpler and clearer act. In so doing, the bill implements the government's justice policy objective of reforming the justice system so that it is accessible and efficient.

The Appeal Costs Act originated as a form of compulsory insurance.

It was based on the premise that, although the majority of legal disputes can be resolved in one substantive hearing, in a small proportion of cases it is necessary for an appeal or a re-hearing. For example, a party may have to appeal to the Court of Appeal or the High Court because there are conflicting authorities or the area of law in question is new. Equally, in a small number of cases it is necessary to have a re-hearing because the original hearing was aborted or discontinued: for example, because the jury had to be discharged. The act was designed to apply only to those cases where the appeal or re-hearing was necessary. It does not apply if an appeal is brought simply because the party who lost at the first hearing was dissatisfied with the decision.

Since its enactment in 1964, the current act has undergone a succession of substantial amendments. However, it has never been comprehensively reviewed. As a consequence, the coherence of the act has been undermined and anomalies have arisen.

The principal objective of this bill is to address these inconsistencies and anachronisms to ensure that the underlying policies of the appeal costs scheme are properly reflected in the legislation.

The basis for granting an indemnity certificate has been made simpler and more consistent under the bill. The bill provides that the decision to grant or refuse a certificate following a successful appeal is in the discretion of the court.

For example, a party may have succeeded in a trial by deliberately misleading the trial judge. The losing party may then have to appeal against the judgment. The appellate court may allow the appeal and order the respondent to pay the appellant's costs.

In these circumstances the court may refuse to grant an indemnity certificate to the respondent, on the ground that if the respondent had not misled the judge in the court below, it would not have been necessary to have the appeal.

8 Under the Appeal Costs Act 1964, a certificate was only available when the appeal succeeded on a question of law. In Pascon Pty Ltd v San Marco In Lamis Co-operative Social Club Ltd,[5] Kaye J (speaking for the Full Court) endorsed what had been said by Brooking J (with whom the other members of the Full Court had agreed) in Pickford v Incorporated Nominal Defendant,[6] namely:

The consideration of policy which underlies s13(1) is that an error of law occurring in a court may ordinarily be attributed to a fault of the administration of justice rather than of the parties, so that the costs of having the error rectified ought ordinarily not to be borne by the unsuccessful respondent to the appeal but to be paid from a public fund established for that purpose.

9 The coverage of the legislation now extends to appeals which succeed on any ground at all.[7] In the present case it is not necessary to decide whether the policy of the current legislation is that where an appeal is allowed for any reason at all this may ordinarily be attributed to a fault of the administration of justice, so that the costs of having the matter rectified ought ordinarily be paid from a public fund.[8] In my view it is enough to note that this appeal involved questions of construction of the lease, being questions at least closely analogous to questions of law.[9] It cannot be said that any of the arguments which succeeded at trial or any of the arguments which failed on appeal should not have been put or that the need for the appeal was generated by any inappropriate conduct of the respondent.[10]

10 Accordingly, I would grant a certificate and direct that the granting of the certificate be recorded in the Court's order under 'Other Matters'.

[1] See also s 45(1) of the Interpretation of Legislation Act 1984 (construction of 'may') and compare Gurnett v The Macquarie Stevedoring Co Pty Ltd (No 2) [1956] HCA 29; (1956) 95 CLR 106 at 113; Acquilina v Dairy Farmers Co-operative Milk Co Ltd (No 2) [1965] NSWR 772; Steele v Mirror Newspapers Ltd [1975] 2 NSWLR 48 at 50; Melnik v Melnik [2005] FCAFC 207 at [10].

[2] Referring, perhaps, to s 38 of the Act.

[3] See generally Gino Dal Pont, Law of Costs (1st ed, 2003) [21.23] and [21.50]-[21.55] and see in particular, in relation to the predecessor of the Act (the Appeal Costs Act 1964), McLennan v McBroom [1969] VicRp 70; [1969] VR 566 at 573 and Di Battista v Motton [1971] VicRp 68; [1971] VR 565 at 572; and see also, in relation to corresponding (albeit not identical) legislation of other jurisdictions, Bullock and Others v Federated Furnishing Trades Society of Australasia and Others (No 2) (1985) 58 ALR 373 at 374-375 and the cases there cited, Australian Trade Commission v Underwood Exports Pty Ltd unreported, Federal Court of Australia, Mansfield J, 11 November 1997, BC9706028 at 4 and Melnik v Melnik [2005] FCAFC 207 at [10]- [11].

[4] Victoria, Parliamentary Debates, Legislative Assembly, 8 October 1998, 458 (Jan Wade).

[5] [1991] VicRp 63; [1991] 2 VR 227 at 233-234.

[6] [1981] VicRp 58; [1981] VR 583 at 584-585.

[7] As Gillard J noted in DPP v Sher (No 2) [2000] VSC 350 at [22].

[8] Compare Pickford v Incorporated Nominal Defendant [1981] VicRp 58; [1981] VR 583; Gurnett v Macquarie Stevedoring Co Pty Ltd (No 2) [1956] HCA 29; (1956) 95 CLR 106 at 113-114.

[9] Compare Aboriginal Hostels Ltd v Fisher & Kefford, unreported, Supreme Court of Victoria, Hedigan J, 27 November 1997 BC9706288 at 4.

[10] Compare Towie v Medical Practitioners Board of Victoria [2008] VSCA 157 at [45]- [46].