Leadenhall Australia Pty Ltd v Australian Securities and Investments Commission

1. The applicant pay the respondent's costs of the proceedings, fixed in the amount of $6,083.70. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

CHARLESWORTH J: 1 By originating application dated 14 August 2018, Leadenhall Australia Pty Ltd sought relief under s 39B of the Judiciary Act 1903 (Cth) against the Australian Securities and Investments Commission (ASIC) in the following terms: 1. That a writ of mandamus issue to the respondent commanding them to, within 7 days, provide the applicant a statement in writing setting out the findings on material questions of fact, referring to the evidence or other material on which those findings were based and giving the reasons for the decision referred to in the email of Ms Fiona Ng to Mr Gregory Finlayson dated 9th July 2018 not to issue the Direction sought by Leadenhall in its application dated 8 June 2018. 2. Costs. 2 On 28 September 2018, Leadenhall filed a notice of discontinuance by consent in accordance with r 26.12 of the Federal Court Rules 2011 (Cth). A party who files a notice of discontinuance is to pay the costs of the other parties unless the terms of the consent or an order of the Court provide otherwise: r 26.12(7) of the Rules. The notice filed by Leadenhall contains an agreed term to the effect that the costs of the proceedings be determined on the papers. 3 The Court now has before it the parties' submissions together with two affidavits of Leadenhall's solicitor, Mr Gregory Finlayson affirmed on 5 October 2018 and 22 October 2018 and an affidavit of ASIC's in-house lawyer Ms Elizabeth Lee sworn on 12 October 2018. 4 By its submissions, Leadenhall seeks an order to the effect that ASIC pay its costs incurred as at 22 August 2018 in the amount of $3,486.61 and that the parties otherwise bear their own costs. 5 By its submissions, ASIC seeks an order that Leadenhall pay its costs fixed in the amount of $6,083.70. 6 In exercising the discretion to award costs in a civil proceeding, the Court must take into account any failure of a party, or its lawyer to conduct the proceeding in a way that is consistent with the overarching purpose of its civil practice and procedure provisions: Federal Court of Australia Act 1976 (Cth) (FCA Act) s 37N(4). The overarching purpose is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible: s 37M(1) and (2). 7 The proper approach in the present case is to determine the applications for costs by reference to all of the circumstances known to the Court, and without any predisposition in favour or against either application. To be clear, I do not consider the filing of a notice of discontinuance in the terms filed in the present case should give rise, in and of itself, to a presumption that ASIC should have its costs of the proceedings. 8 The events described below are based on the affidavit evidence. They are largely undisputed. 9 On 8 June 2018 Leadenhall made a request to ASIC for the issue of a notice of beneficial ownership of a company under s 672B of the Corporations Act 2001 (Cth). ASIC refused the request. It communicated that decision to Leadenhall on 12 July 2018. 10 ASIC's decision was one in respect of which an application for merits review may be made to the Administrative Appeals Tribunal (AAT): Corporations Act, s 1317B(1)(b). Section 28 of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act) provides that a person who is affected by a decision in respect of which an application for review may be made may request the decision-maker to give a statement in writing setting out the findings on material questions of fact, referring to the evidence or other material on which those findings were based and giving the reasons for the decision. Where such a request is made, the person who made the decision must, as soon as practicable, but in any case within 28 days after receiving the request prepare and give to the applicant such a statement. 11 On 12 July 2018, Leadenhall made a request to ASIC for a statement of reasons under s 28 of the AAT Act. In the ordinary course, reasons were due to be provided by ASIC on or before 10 August 2018: Acts Interpretation Act 1901 (Cth), s 36(1). 12 On 30 July 2018 Leadenhall lodged an application for review of ASIC's decision in the AAT. It had not, by that date, received reasons for the decision pursuant to s 28 of the AAT Act. 13 A person who has made a decision that is subject to an application for review by the AAT must, within 28 days after receiving notice of the application, lodge with the AAT a copy of a statement setting out the findings on material questions of fact, referring to the evidence or other material on which those findings were based and giving the reasons for the decision: AAT Act, s 37. 14 Practice Directions issued by the Tribunal contain the following provisions: Procedures Implied undertaking 5.2 If you or the decision-maker have obtained a document provided under compulsion in an application before the AAT, you, the decision-maker and any person to whom the document is given, by implication, undertake to the AAT that the document will not be used for any purpose other than the purpose for which it was given to us unless: (a) the document was received in evidence by us in the application and the confidentiality of the document is not protected by an order under section 35 of the AAT Act or by another statutory provision; or (b) we give you or the decision-maker permission to use the document for another purpose. 5.3 Documents to which the implied undertaking applies include: (a) documents lodged under section 37 or 38AA of the AAT Act; … Use of documents in any other circumstance 5.6 If you or the decision-maker want to use a document for another purpose, including a document that was given to us in an application that has been finalised, you or they must apply to us for leave to be released from the implied undertaking. The request must: (a) be in writing; (b) specify with particularity the documents in relation to which release is sought; (c) tell us clearly why you want the release and who will use the documents; and (d) if possible, specify whether or not the person to whom the documents relate consents to the release from the implied undertaking. 5.7 Unless you or the decision-maker believes it is not necessary or appropriate, a copy of the request must be sent to the other party or parties to the application in which the documents were originally provided. We might require you or the decision-maker to give a copy of the request to another party or other person if we think it is appropriate. 5.8 We will determine whether to decide the request on the papers or by holding a hearing before making a decision. 15 It is common ground that [5.2] of the Practice Direction applies to a statement of reasons lodged pursuant to s 37 of the AAT Act. Both parties assume that the Practice Direction is valid in that respect. I will proceed on the same assumption. 16 In the days prior to commencing this proceeding, Leadenhall's solicitor wrote by email to ASIC asserting that ASIC was in breach of its obligation to provide reasons within the time specified in s 28 of the AAT Act. The solicitor demanded the reasons by 4:30 pm on 13 August 2018. The solicitor threatened the commencement of this action if the reasons were not provided. 17 On 13 August 2018, ASIC lodged a statement of reasons with the AAT in accordance with s 37 of the AAT Act. The statement of reasons was served on Leadenhall, by its solicitor, on the same day. 18 Initiating documents for the commencement of this proceeding were lodged on the evening of 14 August 2018 and accepted for filing the following day. A first case management conference was set down for 4 September 2018. 19 I am satisfied that prior to commencing this action, Leadenhall, by its solicitor, knew that in order to use the statement of reasons lodged with the AAT for purposes other than the conduct of the AAT review proceedings, it would be necessary for Leadenhall to obtain a release from the undertaking referred to in [5.2] of the Practice Direction in the same way as a litigant in court proceedings might make an application to be released from an undertaking of the kind referred to in Harman v Secretary of State for the Home Department [1983] 1 AC 280 and Hearne v Street (2008) 235 CLR 125 at [96] (Hayne, Heydon and Crennan JJ). 20 Leadenhall resisted that course. By its solicitor, it "requested and required, forthwith" from ASIC a copy of the statement free from any express or implied conditions as to its use. It reasserted its entitlement to receive a statement of reasons pursuant to s 28 of the AAT Act and commenced this proceeding with a view to having that entitlement recognised and enforced. 21 Correspondence passed between the parties in which, among other things, the parties debated whether ASIC was obliged to provide a statement of reasons pursuant to s 28 of the AAT Act in circumstances where Leadenhall had commenced proceedings in the AAT before the time for providing a statement of reasons under s 28 had expired. 22 It was, and remains, ASIC's position that the proper procedure upon the commencement of a proceeding was to lodge reasons with the AAT in the discharge of the obligation of s 37 as the AAT had by that time become seized of the matter by reason of Leadenhall lodging its application for review. From that time, ASIC asserted, the AAT stood in the shoes of the decision-maker and it would, ASIC further asserted, undermine the AAT's jurisdiction to provide a statement of reasons other than in the manner specified in s 37 of the AAT Act. 23 ASIC confirmed that it would not oppose any application Leadenhall might make to the AAT for it to be released from the undertaking. It suggested that such an application might be made orally by Leadenhall at an upcoming preliminary hearing in the AAT, then scheduled for 20 September 2018. ASIC sought Leadenhall's consent for the case management conference in this Court to be adjourned. In response, Leadenhall insisted inter alia that ASIC had an obligation to provide reasons for its decision under s 672B of the Corporations Act irrespective of the AAT's processes. 24 At the first (and only) case management hearing in this matter, Leadenhall's solicitor confirmed that Leadenhall had not at that time made any approach to the AAT to be released from the undertaking. It was submitted that Leadenhall had a legal entitlement to receive reasons pursuant to s 28 of the AAT Act and that such reasons would not be subject to the same undertaking attaching to the reasons lodged by ASIC with the AAT. The solicitor submitted that there would be nothing "exceptional" to support an application to the AAT to be released from the undertaking, notwithstanding that ASIC had indicated its consent to the release. He informed the Court that although Leadenhall could make such an application, "we're not prepared to withdraw this application pending the knowledge of the outcome of that application". 25 On 26 September 2018, the AAT released Leadenhall from the undertaking in relation to ASIC's statement of reasons lodged and served on 13 August 2018. That was done in response to an oral application by Leadenhall made on 20 September 2018 and later supported by written materials. 26 Had the notice of discontinuance not been filed, the issue to have been determined in this proceeding was whether Leadenhall had an entitlement to receive reasons pursuant to s 28 of the AAT Act notwithstanding that it had commenced proceedings in the AAT and notwithstanding that ASIC had lodged a statement of reasons with the AAT on 13 August 2018 and served the reasons on Leadenhall in accordance with the AAT's procedures. Although it is somewhat unclear, I will also proceed on the basis that Leadenhall persisted in its assertion that there was an obligation on ASIC to provide reasons for the decision sourced in s 672B of the Corporations Act itself. An issue might also have arisen as to whether there was any reason to deny Leadenhall relief in the discretion of the Court, having regard to the circumstance that ASIC's decision was subject to merits review and that, if set aside by the AAT, it would not be an operative decision. None of that is to reject or accept Leadenhall's primary submission that it had a legal entitlement to be provided with reasons under s 28 of the AAT Act. That issue will remain undecided. 27 In my view, resolution of the cross-applications for costs does not depend on an assessment of the relative merits of the parties' positions in the action. In my view, the question of costs is more appropriately determined having regard to Leadenhall's reasons for commencing this proceeding at the time that it did and, relatedly, the reasons why the action was subsequently discontinued a short time later. 28 The critical fact is that this action was discontinued upon Leadenhall obtaining from the AAT a release from the undertaking, such that it was then able to use the statement of reasons lodged by ASIC for purposes other than its merits review application (whatever they might be). When that occurred, for practical purposes at least, the subject matter of the controversy fell away. 29 When faced with ASIC's disputed position about its entitlement to reasons under s 28 of the AAT Act, it was necessary for Leadenhall to make choices, not only as to whether to commence a proceeding in this Court, but also as to when that should be done. The considerations to be taken into account went beyond an assessment of Leadenhall's strict legal rights. In light of the inevitable costs to be incurred by both parties, the circumstances called for some pause and perspective. 30 I have already observed that once the proceeding was commenced Leadenhall was not prepared to withdraw the application until the outcome of its application to the AAT was known. To a degree that position is understandable as Leadenhall had by then incurred a not insubstantial filing fee and the costs of its solicitor's attendance at the first case management hearing. However, in my view, those expenses would have been avoided had Leadenhall adopted an alternative and less costly means of resolving the impasse. 31 In my view, by electing to commence this proceeding without first making an unopposed application to the AAT for a release from the undertaking to use, for all or any purpose, the statement of reasons it already had in its possession, Leadenhall incurred an unnecessary expense. It could have made, and awaited the outcome of, an unopposed application to the AAT before commencing this action, but it chose not to do so. 32 None of that is to say that Leadenhall has acted unreasonably in commencing this action. It is not necessary to go so far in order to determine the applications for costs. It is simply to recognise that the "event" that brought the proceedings to an end was the outcome of an alternative procedure to achieve the same practical ends by a different and less costly procedure that was always available to Leadenhall. To the extent that the outcome of that procedure was uncertain, Leadenhall has not explained why it did not await the outcome before incurring the expense (and causing ASIC to incur the expense) associated with the commencement of an application for judicial review in this Court. 33 Whilst there are circumstances of urgency asserted for having ASIC's decision set aside, that does not explain the urgency (if there be any) for seeking a statement of reasons free from an implied undertaking as to its use. Leadenhall's intended alternative uses for the reasons are unknown to the Court and the application in this Court was not expressed to be urgent in any event. The substantive application in this Court was unlikely to have been heard and determined prior to 20 September 2018, the date when Leadenhall could apply to the AAT to be released from the undertaking. 34 I have not overlooked that Leadenhall incurred additional costs obtaining a release from the undertaking, nor its contention that it should not have been put to that inconvenience and expense. However, the elevated costs were, I find, attributable to the AAT (unsurprisingly) requiring Leadenhall to explain the subject matter of this very proceeding before granting the release, apparently causing Leadenhall to incur the expense of (for example) obtaining a transcript of this proceeding. That additional expense is also explained by Leadenhall's choice to seek to quell by litigation a dispute that had an obvious non-litigious solution. Again, it is to be emphasised that a litigant in Leadenhall's position is legally entitled to commence a proceeding in this Court to have a justiciable controversy determined, particularly where there is controversy surrounding the legality of administrative action. Whether it should have its costs of doing so is a different question, as is the question of whether ASIC should have its costs. 35 In all of the circumstances, I consider the appropriate order is that Leadenhall should pay ASIC's costs of the action. I am satisfied by reference to all of the parties' correspondence that ASIC from the earliest reasonable opportunity informed Leadenhall that it would not oppose the release from the undertaking and that that procedure in the ordinary course would have been neither onerous nor costly. 36 The fixed sum sought by ASIC is supported by the affidavit of Ms Lee. The amount sought includes the costs of preparing evidence and submissions in support of ASIC's application for costs. I am satisfied that an order for costs in a fixed sum is appropriate. The matter (including the question of costs) is fit for junior counsel. The hourly rates charged by the solicitor and junior counsel are below the rates specified in the applicable scale. 37 Leadenhall submits there should be no allowance for counsel settling the affidavit of Ms Lee. It appears to base the latter submission on the absence of any express reference on the documents to the effect that counsel has settled them, and an assertion that charges have been levied for settling a document that was not relied upon. The latter submission may refer to the circumstance that Ms Lee's affidavit was originally filed in unsworn form, then filed again as sworn. 38 Leadenhall's complaint about the cost of settling the documents appears to amount to an allegation that ASIC's in-house lawyer and independent counsel have wrongly claimed an amount attributable to counsel settling a document counsel did not in fact settle, and have annexed to an affidavit an invoice which either falsely includes entries attributable to that work or that exaggerates the scope of the work. These serious allegations are not made out. 39 If I am wrong in characterising the complaint that way, I would in any event find it unnecessary on an application such as this to conduct other than a broad brush calculation of costs. 40 Before concluding, I should note that the second affidavit filed on behalf of Leadenhall contains an assertion that the solicitor "truly believe[s] and [is] instructed that" Leadenhall "does not concede" that the reasons provided pursuant to s 37 of the AAT Act are the genuine reasons for ASIC's decision. This appears to be an indirect way of asserting (by the means of a solicitor's affidavit) that ASIC may have contravened s 37 of the AAT Act and so may have misled the AAT. 41 The statement of reasons was in Leadenhall's possession before these proceedings were commenced. Prior to that time, Leadenhall has been in possession of a letter dated 12 July 2018 in which ASIC notified it of the decision and set out its reasoning. The assertion that the reasons subsequently lodged by ASIC with the AAT are not "genuine" seems to be based on a comparison between the two documents. It is neither necessary nor appropriate for the Court to entertain the submission (if that is what it is) that the reasons lodged with the AAT are not genuine. It is unclear how that assertion could or should bear on the costs of this discontinued action. I have had no regard to this aspect of the evidence in determining that Leadenhall should pay ASIC's costs. 42 For the above reasons I will order that Leadenhall pay ASIC's costs of the proceedings, fixed in the amount of $6,083.70. I certify that the preceding forty-two (42) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Charlesworth.