Commissioner of the Australian Federal Police v. Razzi and Ors (No 2) [1991] FCA 267; (1991) 30 FCR 64

J-Corp Pty Ltd v. Australian Builders Labourers Federated Union of Workers, Western Australian Branch and Anor (No 2) [1993] FCA 42; (1993) 46 IR 301

Counsel for the Applicant: Mr P. N. Rose with Mr G. Moloney

Counsel for the Respondents: Mr R. R. Tracey QC with

Mr A. L. Cavanough

Solicitor for the Respondents: Australian Government Solicitor

1. The respondents pay to the applicant ninety percent (90%) of her

costs, including reserved costs.

2. Certified for two counsel.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

(re COSTS) KEELY J In this matter reasons for judgment were published on 15 November 1993. On 18 November 1993 the applicant's counsel applied for costs. The respondents' counsel submitted that there should be no order for costs; alternatively that Ms Mok should pay half the respondents' costs and be paid half of her costs (transcript 3563). The hearing (excluding the interlocutory application) occupied 39 days but that included two days which were largely devoted to the associated application of Ly v. The Minister for Immigration, Local Government and Ethnic Affairs, so that the hearing time that is material for present purposes was 37 days (transcript 3563). The respondents' counsel contended that 18 of those days were spent on issues on which the applicant had failed. He submitted that on the authorities it is necessary "to take a broad look at the conduct of this litigation and to make an assessment, again in broad terms, of the time that was devoted to arguing issues and in particular issues on which the applicant was not successful, and further than that, your Honour is bound in our submission to examine the manner in which the applicant's case was conducted, having regard to the allegations that were made and found by your Honour to have been made on no evidence" (transcript 3507). The court pointed out to counsel (1) that it had not found that "the allegations (had) been made on no evidence", (2) that the evidence had not succeeded in persuading the court, on the standard of proof in Briginshaw v. Briginshaw [1938] HCA 34; (1938) 60 CLR 336, that a policy to reject existed and that (3) it had found that there were understandable fears that such a policy existed.

2. The respondents' counsel also said that "deliberate fraudulent misconduct was alleged" by the applicant (transcript 3515), that the placing of the material before the court "was a waste of time and improper" (transcript 3522) and that "it should not have been placed before the court because it did not provide a foundation for the allegation that it was alleged to have supported, or any other relevant matter either". It should be said that the words "deliberate fraudulent misconduct" were not used by the applicant's counsel, who submitted that "policy" in s.5(2)(f) of the Judicial Review Act included informal policies (see p. 43 of the earlier reasons); the words "policy to reject" were used by the applicant's counsel as including "institutional bias, prejudgment, predetermination, policy to reject, rejection mentality and predisposition to reject" - see p. 20-21 of the earlier reasons. As to the suggestion that the placing of material before the court was "a waste of time and improper", it should be said that the respondents' counsel later expressly said "in relation to the conduct of the case on the other side ... we are not alleging any impropriety" (transcript 3574). On the third day of the hearing on the question of costs, the respondents' counsel referred to "the scatter-gun approach, which is the way it was done here, with arguments changing along the way . . . It was a case of throw everything at the department, and see how much mud will stick" (transcript 3752).

3. Having regard to the reference by the respondents' counsel to the length of the hearing, it may be noted that the respondents, in giving discovery on 14 May 1993, produced a verified list of documents which filled five volumes, each approximately two inches thick, i.e. the list, as distinct from the documents, filled those five volumes. In the hearing as to costs it was said (transcript 3711) by the respondents' counsel that the number of pages of the documents specified in the verified list were in excess of 200,000 and that approximately two million pages of documents had been perused by the respondents' solicitors in preparing the verified list. In other words two million pages, examined by the solicitors, were reduced, for the purpose of discovery, to something in excess of 200,000 pages and the applicant requested that approximately 20,000 pages of those be photocopied by the respondents (transcript 3713).

4. The respondents' counsel said that the respondents, in giving discovery, "felt that we must (err) on the side of disclosing everything". During the hearing on the question of costs the court looked at volume 1 of those five volumes and observed that the respondents' verified list of documents included a large number of newspaper articles. The respondents were asked by the court to supply information in respect of that verified list. The matters raised, and the answers given in writing by the respondents' solicitors, were as follows:

"A) The approximate number of newspaper articles listed in

the verified list; Answer - 3286 items.

B) The number of documents listed in the verified list

which pre-date October 1988; Answer - 57 items.

C) The number of document listed in the verified list

which are undated; Answer - 3267 items."

5. The respondents' counsel accepted that the award of costs is in the discretion of the court and that the Federal Court Rules do not qualify that discretion, which must be exercised judicially. He referred to a number of decisions relating to the exercise of a court's discretion in considering the question of costs. He placed considerable reliance upon the following observations by Wilcox J in Commissioner of the Australian Federal Police v. Razzi and Ors (No. 2) [1991] FCA 267; (1991) 30 FCR 64 at 68:

"I do not think that the mere fact that Mrs Razzi was

disbelieved warrants a denial to her of her full costs,

under the second exception mentioned by Mahoney JA. To take

that view would be significantly to erode the general

principle that a successful party is entitled to full costs.

It is not unusual for a party to be disbelieved in regard to

some aspect of a case and yet be ultimately successful. But

I am of the opinion that this case is covered by Mahoney

JA's first exception. The costs of this trial were greatly

increased by Mrs Razzi's decision to contest the

Commissioner's contention that she was engaged in the

dealing. The matter of engagement was not something of

incidental or peripheral importance, dealt with in passing

whilst the court pursued a central issue on which Mrs Razzi

was successful. It was logically a separate question,

tendered as a separate issue and vigorously contested by Mrs

Razzi. If she had accepted the allegation of engagement,

and limited herself to an argument about benefit, the

hearing would have been concluded within one day. The

effect of her decision to contest the issue upon which she

failed was greatly to increase the Commissioner's costs.

The Commissioner does not, of course, seek recovery of his

increased costs. . . .

I recognise the importance of the general principle to

which Mahoney JA referred. But I do not think that courts

should be reluctant to recognise the existence of

exceptional cases. In these days of extensive court delays

and high legal costs the courts should use all proper means

to encourage parties to consider carefully what matters they

will put in issue in their litigation. If parties come to

realise that they will not necessarily recover the whole of

their costs, . . . they have unsuccessfully raised a

discrete issue, they are likely better to consider whether

the raising of that issue is a justifiable course to take."

(emphasis added)

6. It will be noted that his Honour recognised "the importance of the general principle" ("that a successful party is entitled to full costs") but treated Mrs Razzi's conduct as an "exceptional case".

7. The respondents also relied upon the following observations by French J in J-Corp Pty Ltd v. Australian Builders Labourers Federated Union of Workers, Western Australian Branch and Anor (No. 2) [1993] FCA 42; (1993) 46 IR 301 at 302:

"Those principles are subject to the qualification that the

ends of justice may not be served if a party is dissuaded by

the risk of costs from canvassing all issues however

doubtful which might be material to the decision of the

case: Cretazzo v. Lombardi (1975) 13 SASR 4 at 12. In Trade

Practices Commission v. Nicholas Enterprises Pty Ltd (1979)

42 FLR 213, Fisher J saw the discretion to apportion costs

as one to be exercised only in the most exceptional

circumstances. On the other hand, his Honour accepted that

if a considerable portion of the trial is taken up in

determining issues upon which the defendant fails, it is a

proper exercise of discretion to reduce the costs allowed to

that defendant. In Inn Leisure Industries Pty Ltd v. D.F.

McCoy Pty Ltd (No. 2) (1991) 28 FCR 172, I allowed a minor

apportionment of costs recoverable by the successful

applicant in respect of certain distinct and severable

factual issues on which the respondent succeeded.

Notwithstanding the principles adverted to by Toohey J and

reinforced by the other authorities to which I have

referred, the demands of the community for greater economy

and efficiency in the conduct of litigation may have to be

reflected in a softening of the presumption that a

successful party is entitled to all its costs. I agree with

the observation of Wilcox J in Commissioner of Australian

Federal Police v. Razzi [1991] FCA 267; (1991) 101 ALR 425 at 430 . . ."

(emphasis added)

8. Although French J expressed agreement with the observation by Wilcox J in Razzi (i.e. the last paragraph of the passage quoted above from Razzi), it will be noted that his Honour said in the preceding sentence that "the demands of the community for greater economy and efficiency in the conduct of litigation may have to be reflected in a softening of the presumption that a successful party is entitled to all its costs".

9. In my opinion the court's power to order a successful applicant to pay the costs in respect of an issue raised by the applicant, on which the applicant has failed, ought to be exercised only where the court, on a consideration of all the circumstances, has concluded that the raising of that issue by the applicant was so unreasonable that it is fair and just to make the order. In expressing that opinion I am of course, not attempting to fetter in any way the judicial discretion of the court. As Bray CJ said in Cretazzo (at 11):

"Order 65, rule 1 provides generally that all costs

shall be in the discretion of the court or judge, subject to

a proviso irrelevant for the present purpose. Time and

again attempts have been made to fetter that general

discretion by the imposition of judge-made rules. Time and

again those fetters have been released by appellate courts.

I think the guiding principle still stands as it left the

House of Lords in the famous case of Donald Campbell and Co.

v. Pollak, that the general discretion is absolute and

unfettered, except that it must be exercised judicially, not

arbitrarily or capriciously, and that it cannot be exercised

on grounds unconnected with the litigation."

10. In Hughes v. Western Australian Cricket Association (Inc.) and Ors [1986] FCA 382; (1986) ATPR 40-748 at 48,136 Toohey J said that there are decisions that "throw light on the way in which the discretion is to be exercised" and set out a summary of the effect of certain authorities, saying:

"1. Ordinarily, costs follow the event and a successful

litigant receives his costs in the absence of special

circumstances justifying some other order. Ritter v.

Godfrey (1920) 2 KB 47.

2. Where a litigant has succeeded only upon a portion of

his claim, the circumstances may make it reasonable that he

bear the expense of litigating that portion upon which he

has failed. Forster v. Farquhar (1893) 1 QB 564.

3. A successful party who has failed on certain issues may

not only be deprived of the costs of those issues but may be

ordered as well to pay the other party's costs of them. In

this sense, "issue" does not mean a precise issue in the

technical pleading sense but any disputed question of fact

or of law. Cretazzo v. Lombardi (1975) 13 SASR 4 at p 12.

There is no difficulty in stating the principles;

their application to the facts of a particular case is not

always easy. Also it is necessary to keep in mind the

caveat by Jacobs J in Cretazzo v. Lombardi at p 16. His

Honour sounded what he described as "a note of cautious

disapproval" of applications to apportion costs according to

the success or failure of one party or the other on the

various issues of fact or law which arise in the course of a

trial. His Honour commented:

"But trials occur daily in which the party, who in the

end is wholly or substantially successful,

nevertheless fails along the way on particular issues

of fact or law. The ultimate ends of justice may not

be served if a party is dissuaded by the risk of costs

from canvassing all issues, however doubtful, which

might be material to the decision of the case. There

are, of course, many factors affecting the exercise of

the discretion as to costs in each case, including in

particular, the severability of the issues, and no two

cases are alike. I wish merely to lend no

encouragement to any suggestion that a party against

whom the judgment goes ought nevertheless to

anticipate a favourable exercise of the judicial

discretion as to costs in respect of issues upon which

he may have succeeded, based merely on his success in

those particular issues."

In the present case it is true that if one took a head count

of the causes of action pleaded in the statement of claim,

the applicant failed on more than he succeeded, and by some

margin. Nevertheless, the applicant succeeded in his

primary aim viz. to challenge the operation of r.2:38:1 of

the rules of the Cricket Council in so far as the rule

operated to preclude him from playing district cricket by

reason of his participation in the South African tours.

It is relevant, but not conclusive, to consider how

much time of the hearing was taken up with evidence and

submissions relating to those issues on which the applicant

failed. This is not an easy task because much of the

evidence bore upon more than one cause of action."

11. The respondents' counsel also referred (transcript 3514) to Australian Transport Insurance Pty Ltd and Anor v Graeme Phillips Road Transport Insurance Pty Ltd and Anor [1986] FCA 85; (1985) 10 FCR 177. Woodward J was there dealing with an application that the successful parties should have an order for costs on a "solicitor and client", rather than a "party and party" basis. Although that was a different application from the present case, reference may be made to the following statements by his Honour (at 177-179):

"The arguments put in favour of such an order may be

summarised as follows:

1. Very serious allegations of fraud and conspiracy

were made which were found to be entirely without

foundation.

2. The respondents/cross-claimants, and in particular

Graeme Phillips, conducted the litigation in a high-handed

and oppressive way

. . .

Courts in both the United Kingdom and Australia have long

accepted that solicitor and client costs can properly be

awarded in appropriate cases where "there is some special or

unusual feature in the case to justify the court exercising

its discretion in that way": Preston v Preston (1981) 3 WLR

619 at 637. It is sometimes said that such costs can be

awarded where charges of fraud have been made and not

sustained; but in all the cases I have considered, there has

been some further factor which has influenced the exercise

of the Court's discretion - for example, the allegations of

fraud have been made knowing them to be false, or they have

been irrelevant to the issues between the parties: . . .

In the present case I am unable to say that the making

of fraud and conspiracy allegations was improper, given the

facts as they must have appeared to Phillips. It is

understandable that he should have suspected double-dealings

in such circumstances, even though the evidence eventually

made it clear that the applicants had done nothing unlawful

and the former employees were blameless. . . .

I am not satisfied that he had no honest belief in the

genuineness of the other allegations he made. Counsel's

decision not to press some of them was a tactical decision,

responsibly taken, and it does not necessarily reflect on

the honesty of the allegations." (emphasis added)

12. The respondents' counsel submitted that the documentary material tendered by the applicant was not relevant to the issue of reasonable apprehension of bias. He submitted that the court's finding on that aspect was limited to reasonable apprehension by Ms Mok. It was pointed out to him, at the time of making that submission, that the court's earlier reasons were not intended to be so read; the court had taken the view that the matters leading to a finding that the apprehension (of bias) by the applicant was reasonable, would similarly result in the apprehension by a hypothetical member of the public being reasonable.

13. A number of the matters referred to in the cases cited can be compared with the circumstances in Ms Mok's case:

1. It was never suggested that Ms Mok "had no honest belief in the

genuineness of (her) allegations".

2. In my opinion the contention that there was a policy to reject was

not a "discrete" issue (W.A. Cricket Association at 48,316) or a

"separate question" (Razzi at 68) or a severable issue (Cretazzo

at p. 16 per Jacobs J) because it was so closely allied to the

contention that there was a reasonable apprehension of bias.

3. The reasons for judgment in the present case, published 15

November 1993 (the earlier reasons), contained a finding (page 53)

that "there were understandable fears that such a policy existed"

i.e. a "policy" that included "rejection mentality" and a

"predisposition to reject" - see p.20 of the earlier reasons.

4. Ms Mok's claim as to a reasonable suspicion of bias was upheld.

In my opinion it was neither improper nor unreasonable for her to

contend that (1) there was a policy or predisposition to reject

and (2) it was reasonable for her and for a hypothetical member of

the public to suspect that the delegate would not bring an

unprejudiced and impartial mind to the consideration of her case

cp. the statements by Woodward J in Australian Transport

Insurance that he was "unable to say that the making of fraud and

conspiracy allegations was improper" and that it "is

understandable that he should have suspected double-dealings . . .".

14. In considering whether it was "unreasonable" for the applicant to advance that claim to the court, regard must be had to the evidence as a whole and to all the circumstances, including, for example, the following matters.

(a) The statements by Mr Hawke on 6 June 1990;

(b) Mr Hawke's admission privately to Mr Hand that he was wrong;

(c) The statement by Senator Evans;

(d) Senator Evans' admission privately to Mr Hand that he was wrong;

(e) The respondent Minister's failure to tell his delegates either in

writing or orally that the statements by Mr Hawke and Senator

Evans were wrong and must be disregarded in their decision making;

(f) Mr Conybeare, the Secretary to the Department, had a Departmental

investigation into the allegation in (g) and in his evidence to

the court as to that investigation referred to "the personal

conduct of one or two officers . . . (who) have attitudes or use

language often loosely that might give cause for some to

misunderstand . . . The unfortunate and inappropriate use in

official environments of casual or vulgar language . . . those

officers were appropriately counselled" (quoted in earlier

reasons, page 52);

(g) The "rumours in the Department were such that on 16 April 1992

Mr Simington, as First Assistant Secretary, Refugee and International

Division, sent a "Notice to all Staff Refugee and International

Division" (Document MWP5 - part of Exhibit "A") stating that he

had "been made aware today that rumours may be circulating in the

Division to the effect that case determination staff have been

"instructed" by management to ensure low success rates in refugee

decision making . . . ordained percentage rates of approvals. The

imputed importance of this process is to send negative messages to

intending applicants . . . It may be that (those who may have

initiated these rumours) are confused by the juxtaposition of the

decision making philosophy and the management imperative to ensure

productive outcomes";

(h) The oral evidence called by the applicant gave some support to

that claim - see the earlier reasons p.43. Reference may also be

made to two other matters which became known during the hearing of

Ms Mok's case:

(i) The adoption, by the respondents' counsel (transcript 3198),

of the statements by Wilcox J in Lek (22 June 1993) "as a

fair summation of what these documents disclose". The

respondents' counsel there referred to (i) "concern within

the Australian Government, at Ministerial level, about the

problems that would result from any significant increase in

the number of "refugees" attempting to reach Australia by

boat"; (ii) "an element of self-interest" in the Australian

Government's gesture in making a "financial contribution" to

Indonesia, in the hope that it might prevent an increase in

"the number (of boat-people) who continued on to Australia

and eventually became a burden on the Australian

Government"; (iii) "There was a strong and understandable

wish, at a high level of government, to abate the flow of

arrivals"; and (iv) "the Australian Government (was) anxious

to avoid undermining the Paris peace agreements"; and

(ii) The statement by Wilcox J in Lek (p. 48 of 22 June 1993

reasons) that "the use by decision makers of reasons devised

by others is a matter that should excite concern about the

possibility that individual decisions were taken in

accordance with an overriding rule or policy . . ." (a

statement with which I agreed in the earlier reasons, page 52);

4. It can not be said (as it was in Schindler Lifts Australia Pty Ltd

and Anor v Debelak and Ors [1989] FCA 311; (1989) 89 ALR 275, at 319-320 per Pincus J)

that "the more serious allegations have failed". The claim as

to the existence of a reasonable apprehension of bias has

succeeded. Further, although the court, applying the standard of

proof enunciated in Briginshaw v. Briginshaw, was not prepared to

find that a "policy to reject" existed, as mentioned in paragraph

3 above, it stated (p.53) that "there were understandable fears

that such a policy existed" and that it was "not surprising that

the applicant should contend that . . . there was a policy to

reject".

15. In connection with the latter, I adopt, with respect, the observation of Jacobs J in Cretazzo (at 16) that the "ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case. . . . I wish merely to lend no encouragement to any suggestion that a party against whom the judgment goes ought nevertheless to anticipate a favourable exercise of the judicial discretion as to costs in respect of issues upon which he may have succeeded, based merely on his success in those particular areas". In the passage from Hughes, quoted above, Toohey J referred to that observation, saying that "it is necessary to keep in mind the caveat by Jacobs J in Cretazzo"; see also Toohey J in Hughes.

16. It is not necessary to quote from the judgments in the following cases which were also cited by counsel and which I have considered: Thorne and Ors v Doug Wade Consultants Pty Ltd and Ors [1985] VicRp 48; (1985) VR 433 at 500 per Kaye and Marks JJ; Queensland Wire Industries Pty Ltd v Broken Hill Proprietary Co Ltd and Anor (1987) 78 ALR 407 at 418; Lombok Pty Ltd v. Supetina Pty Ltd and Anor (1987) 14 FCR 226 per Pincus J, at 246-247; Woodger v Federal Capital Press of Australia Pty Ltd (1992) 107 ACTR 1 at 40; Latoudis v Casey [1990] HCA 59; (1990) 65 ALJR 151.

17. In Cummings v. Lewis and Ors (1993) 113 ALR 285 at 327-328 Cooper J, with whose reasons for judgment on the question of costs Sheppard and Neaves JJ agreed (at 294), said:

"It is within the discretion of a trial judge to award

only a proportion of a successful party's costs if the

conduct of that party in the trial was such as to

unreasonably prolong the proceedings: Latoudis v. Casey

[1990] HCA 59; (1990) 170 CLR 534 at 544, 565; [1990] HCA 59; 97 ALR 45; Re Elgindata Ltd

(No. 2) (1992) 1 WLR 1207 at 1214, 1217.

Wilcox J was of the view that to persist in a denial

that the statements as found were made was unreasonable and

was conduct which unreasonably prolonged the proceedings.

It is no answer to say that a party is entitled to test the

evidence to show that nothing was said which might amount to

the representations as pleaded. A party always has that

right in litigation. However, the question which is

relevant to the issue as to costs is whether or not the

exercise of that right, or the manner in which it was

exercised, was reasonable in all the circumstances; and,

whether the exercise of the right had the effect of

unreasonably prolonging the proceedings. It was this issue

which Wilcox J found against the respondents and upon which

he based his decision." (emphasis added)

18. Having considered all of the submissions advanced by the respondents' counsel at great length, and the material referred to by them, I am not prepared to uphold the main thrust of their contentions. I accept, however, that there is some force in their criticism of the way in which the case for the applicant was presented, and, specifically, that that caused some increase in the length of the hearing. I assess that increase as being approximately two days. In respect of that period fairness requires that the applicant not be awarded costs and that she pay the respondents' costs. However, in all the circumstances of this case, in my opinion the preferable course is to order that the applicant be awarded 90% of her costs - the 10% reduction being intended to both deprive her of part of her costs and to give the respondents in substance the same result as if they had been awarded the costs of two days. It may be noted that the respondents did not seek an order for their costs to be paid by the applicant.

19. The applicant's counsel applied for a certificate for two counsel and a statement by the court, for the assistance of the registrar fixing costs, that "it was a case that required substantial preparation". The respondents' counsel stated (transcript 3564) that, if an order for costs were to be made, they did not oppose either of those two applications.