COSTS
42 There have been four phases in the conduct of the proceeding. The first concerned the question of whether the Disputed Documents were brought into existence predominantly for the purposes of obtaining or giving legal advice. During part of that phase, before Mr Hogan was joined as an applicant, Mr Stewart was the only applicant. The second phase was concerned with the issue of whether, even if the Disputed Documents were brought into existence for such purposes, the Cox & Railton Exception applied so as to exclude privilege. The third phase involved the question of confidentiality in relation to the Disputed Documents and the identity of Messrs Hogan and Stewart and the question of media access to material on the Court's file (see P v Australian Crime Commission [2008] FCA 1336). The fourth phase has been concerned with the substantive relief claimed by Mr Hogan.
43 Mr Hogan claims, primarily, an order that the respondents pay the costs of the proceeding, both of Mr Hogan and of Mr Stewart, on the indemnity basis from the time of its commencement. Alternatively, he claims an order that the respondents pay those costs on the party and party basis up to 21 July 2006 and thereafter on the indemnity basis. In addition, he seeks an order that the respondents indemnify him in respect of the costs order that I made in favour of the media interveners.
44 This proceeding was commenced on 23 February 2006. On 7 March 2006, the Commission gave undertakings to the Court that the Disputed Documents be sealed up pending the determination by the Court as to whether the claim for legal professional privilege could be established. Having regard to the likely extent of the evidentiary enquiry that would be involved in the issue as to the application of the Cox & Railton Exception, the Court endeavoured, as a matter of case management, to avoid that enquiry by considering the privilege question on a prima facie basis. Had Mr Hogan and Mr Stewart been unable to establish, even on a prima facie basis, that the Disputed Documents had been brought into existence for the predominant purpose of either requesting or providing legal advice in relation to the affairs of Mr Hogan, the need for an enquiry into the Cox & Railton Exception would have been obviated.
45 The prima facie conclusion that was reached in relation to the privilege question was not a final determination. The Commission had no opportunity to make submissions on that question. Indeed, as I have said, counsel for the Commission had not seen the Disputed Documents. The interlocutory hearing that led to the prima facie conclusions of 21 July 2006 was conducted over several days in May and July 2006. Mr Hogan was added as an applicant on 11 May 2006. The Related Proceeding was commenced on 3 August 2006, following a directions hearing on 2 August. Thereafter, directions hearings were conducted involving both proceedings, which were managed in parallel. On 17 November 2006 a further amended application was filed in this proceeding, in which Mr Stewart was no longer named as an applicant. The proceeding was dismissed in so far as it was brought by Mr Stewart.
46 Focus then shifted to the Related Proceeding. Directions hearings in relation to the Related Proceeding were conducted on a number of occasions during 2006 and 2007, with a final hearing on 28 November 2007. On 19 December 2007, I ordered that the Related Proceeding be dismissed with costs (see MM v Australian Crime Commission [2007] FCA 2026). An appeal was instituted by notice of appeal filed by Mr Hogan on 25 January 2008. That appeal was discontinued on 2 May 2008.
47 In the meantime, disputation concerning discovery continued in this proceeding. On 8 June 2007, Mr Hogan filed an application for discovery in relation to the Commission's contentions concerning the Cox & Railton Exception. An amended notice of motion was filed on 9 August 2007, when orders were made requiring the Commission to conduct enquiries and produce a list of documents concerning inferences said to support the Cox & Railton Exception. On 7 December 2007, Mr Hogan filed a further motion seeking further and better discovery in relation to the Cox & Railton Exception. Affidavits were filed in support of the discovery motion.
48 On 8 April 2008, the Commission's solicitors wrote to Mr Hogan's solicitors making an offer of settlement, without admissions. The settlement included orders that:
· all originals and copies of identified Disputed Documents held by the respondents be returned to Mr Hogan within seven days;
· the Commission take all reasonable steps to remove from its records and destroy any information that was derived from or reproduced the contents of any of the Disputed Documents;
· the proceeding be otherwise dismissed;
· there be no order as to costs.
That offer was not accepted by Mr Hogan.
49 On 17 April 2008 directions were given for hearing of the application for further discovery in relation to the Cox & Railton Exception. On 19 May 2008, the application for further and better discovery was heard and at the conclusion of the hearing orders were made requiring the Commission to file an affidavit by 1 July 2008 detailing the steps that had been taken in relation to discovery.
50 However, on 1 July 2008, the Commission's solicitors requested the Court to relist the matter for orders finally disposing of the proceeding, including abandonment of the contentions concerning the Cox & Railton Exception. On 4 July 2008, orders were made by consent for return of the Disputed Documents and the deletion of reference to them from the Commission's records. The orders for discovery that had been made on 19 May 2008 were vacated.
51 On 14 July 2008, Mr Hogan filed an application for orders relating to confidentiality. That motion and an application for access to Court documents by media interests were heard on 20 August 2008 and I published reasons for my conclusions in relation to those matters on 29 August 2008: see P v Australian Crime Commission [2008] FCA 1336. On 3 October 2008, I made an order than Mr Hogan pay 40% of the media interests' costs of their application: see P v Australian Crime Commission (No 3) [2008] FCA 1520.
52 Notwithstanding that the Disputed Documents had been returned, Mr Hogan indicated that he wished to continue to prosecute his claim for substantive relief dealt with earlier in these reasons. That marked the beginning of the fourth phase of the proceeding.
53 The first question that arises in relation to costs is concerned with the first part of the first phase, when Mr Stewart was the only applicant. Clearly, Mr Stewart has failed in relation to any assertion made on his behalf that he was entitled to legal professional privilege in respect of any of the Disputed Documents. However, it is also clear enough that, perhaps on the basis of a misconception, Mr Stewart was asserting Mr Hogan's privilege in relation to the Disputed Documents. Mr Hogan should have been joined as an applicant from the beginning. The costs involved in dealing with Mr Stewart's claim are minimal. On the other hand, very little of the costs involved in the proceeding from its commencement until the time of Mr Hogan's joinder have been thrown away. Accordingly, I consider that it is appropriate to deal with costs on the basis that the applicant's costs of the proceeding from its commencement are Mr Hogan's costs of the proceeding.
54 The first phase of the proceeding is very much linked to the second phase. As I have said, the Commission had only a limited part to play in relation to the question of whether the Disputed Documents were prima facie privileged, in so far as they were brought into existence predominantly for the purposes of giving or receiving legal advice. Nevertheless, the Commission made no concession in that regard. On the other hand, the Commission vigorously propounded the application of the Cox & Railton Exception. Considerable costs were incurred in relation to the question of discovery on that issue. Mr Hogan was successful in relation to that issue.
55 While Mr Stewart claimed legal professional privilege in respect of a small number of the Disputed Documents, the essential question from the outset was whether Mr Hogan was entitled to legal professional privilege in respect of the vast majority of the Disputed Documents. My interim conclusions were published on 21 July 2006. Between that time and July 2008, the Commission maintained its contention that the Disputed Documents were subject to the Cox & Railton Exception and resisted attempts by Mr Hogan to obtain orders for discovery in relation to that question. However, in July 2008, the Commission abandoned reliance on the Cox & Railton Exception and subsequently consented to orders requiring delivery up of the Disputed Documents to Mr Hogan or his solicitors. To that extent, the Commission might be considered to have capitulated. Such capitulation could, in some circumstances, give rise to an inference that the Commission acted unreasonably in disputing Mr Hogan's claims to legal professional privilege in the first place.
56 It is not clear why the Commission's contentions concerning the application of the Cox & Railton Exception were abandoned. Mr Hogan contends that, in circumstances where the contentions were abandoned without explanation, an inference should be drawn that there never was any sound basis for advancing the contention in the first place. That, he says, is a justification for indemnity costs. First, Mr Hogan points to the evidence that the Commission had formed the view, by no later than March 2006, that none of the Disputed Documents was considered relevant and that, therefore, no documents such as file notes referring to or reproducing the contents of the Disputed Documents were created. He says that, therefore, the Court should conclude that the Commission had no reasonable, or any, basis for persisting with its contentions concerning the Cox & Railton Exception. Mr Hogan contends that, in circumstances where the Commission had determined that the Disputed Documents were irrelevant, it was unreasonable for the Commission to have subjected him to the costs of prosecuting the proceeding.
57 I do not consider that the mere abandonment of a position is, of itself, sufficient to give rise to an inference that it was unreasonable to have adopted the position in the first place. The Commission filed material in support of its contentions on the Cox & Railton Exception, although not all of that material was made available to Mr Hogan and his legal advisers. I am not persuaded that an inference should be drawn merely from the abandonment of the contentions that the Commission did not have any rational basis for advancing the contentions. Accordingly, I do not consider that a case for indemnity costs has been established.
58 Nevertheless, Mr Hogan has been successful in the proceeding in obtaining the first part of the relief claimed, namely, a determination that the Disputed Documents should be returned to him and that the Commission should remove any records relating to the contents of any of the Disputed Documents. Mr Hogan should therefore have his costs of the first and second phases of the proceeding. The costs would include the costs incurred from the commencement of the proceeding, notwithstanding that Mr Hogan did not become an applicant until some time after commencement of the proceeding.
59 Mr Hogan was unsuccessful in claiming orders for confidentiality under s 50 of the Federal Court of Australia Act 1976 (Cth) and in resisting the application by the media interests for access to material. Costs orders were made in favour of the media interests against Mr Hogan and Mr Hogan seeks to be indemnified by the Commission on the basis that they are costs fairly incurred in the proceeding. However, the Commission neither supported nor opposed the respective stances taken by Mr Hogan and the media interests. I do not consider that there is any justification for ordering the Commission to indemnify Mr Hogan in respect of the costs orders made against him in favour of the media interests.
60 Mr Hogan has been unsuccessful in seeking additional substantive relief in the fourth phase of the proceeding. It was not unreasonable for Mr Hogan to require some evidence of the Commission's dealing with the Disputed Documents and to consider his position in the light of that evidence. On the other hand, having considered the evidence, he pursued, unsuccessfully, the further substantive relief to which I have referred.
61 In the result, I consider that it is appropriate to order the respondents to pay Mr Hogan's costs of the proceedings, save for the costs relating to the further substantive relief. There should be no order as to the costs of that phase of the proceeding. While I do not consider that it is appropriate to order the Commission to indemnify Mr Hogan in respect of the costs order made in favour of the media interests, I consider that that phase of the proceeding was sufficiently incidental to the first and second phases to entitle Mr Hogan to have his own costs of that phase paid by the Commission. That is to say, but for the stance adopted by the Commission in relation to the Disputed Documents, Mr Hogan would not have been involved in a dispute with the media interests.