Snow v Secretary, Department of Social Security

Principles governing awards of costs 12 The Court has a broad discretionary power to award costs in proceedings: s 43(2) of the Federal Court of Australia Act 1976 (Cth). In the exercise of this discretion, the Court will generally order that costs follow the event: Plaintiff M76/2013 v Minister for Immigration, Multicultural Affairs and Citizenship [2013] HCA 53; 251 CLR 322 at [241]; Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 at [66]. Costs of appeal proceedings are similarly in the discretion of the appellate court: Ruddock v Vadarlis (No 2) [2001] FCA 1865; (2001) 115 FCR 229 at [16] (Black CJ and French J). The Court is required by s 37N(4) of the FCA Act to take into account any failure by a party to comply with the overarching purpose of the civil procedure provisions when exercising its discretion to award costs. 13 Generally, costs are awarded to the successful party to compensate for the expenses incurred in the proceedings on a "party-party" basis: Colgate-Palmolive Company v Cussons Pty Ltd [1993] FCA 536; 46 FCR 225 at 232. The Court must be satisfied that there are circumstances in the particular case such as to warrant a departure from the general rule: Colgate-Palmolive at 233. 14 The term "costs" is not defined in the FCA Act. Provisions relating to costs are intended to reimburse a legal practitioner for the work done or expenses incurred in the course of a proceeding. A litigant in person is not entitled to costs for out-of-pocket expenses or time spent on preparing their case: Cachia v Haines [1994] HCA 14; 179 CLR 403 at 410-11; Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29; 93 ALJR 1007 at [1] (Kiefel CJ, Bell, Keane and Gordon JJ). 15 Circumstances where the Court has traditionally departed from the general rule include: (1) Where the successful party's conduct of the proceedings has disentitled it to costs such that the Court should not exercise its discretion in that party's favour, eg where the party's conduct at trial caused unreasonable delay: Oshlack at [69] (McHugh J); Ruddock at [15] (Black CJ and French J); (2) Where an appeal raises a novel and important question of some difficulty: Ruddock at [17]; and (3) Where the Court considers that the character and circumstances of the proceeding warrant such a course, it may exercise its discretion to make no order for costs against a successful respondent: Coombes v Registrar of Aboriginal Corporations (No 2) [2008] FCA 1078 at [29] (Mansfield J). 16 A party's intention to commence proceedings as a test case or "public interest litigation", in which the outcome may determine the position for other litigants with similar claims or uphold the public interest may, depending on the circumstances, also be relevant to the exercise of discretion under s 43 of the FCA Act: Campbell v Northern Territory of Australia (No 4) [2021] FCA 1413 at [25] (White J).

The parties' submissions 17 The applicant opposes the making of an order that he pay the respondent's costs and contends that the respondent ought to pay his costs. As I have noted, that order is no longer pursued by the respondent but I deal with the applicant's submissions given the order he seeks that the respondent pay his costs. 18 I note that the applicant was not represented in this Court and has not identified any costs for which he seeks to be indemnified, save for $3,3031.00 paid to a solicitor for advice and representation at the "first tier" Tribunal hearing in 2018 which was not the subject of appeal. 19 The respondent contends that there is no basis for the Court to order that the respondent pay the applicant's costs as all grounds of appeal were dismissed and (notwithstanding that the respondent no longer seeks an order that the applicant pay its costs) there is no basis to depart from the general rule that costs follow the event. 20 The respondent submits further that a litigant in person is not entitled to costs, or entitled to compensation for time spent on the proceeding: Cachia at 410-11. 21 The applicant submits that four special circumstances exist to justify the Court departing from the ordinary rule that costs follow the event.

Public interest litigation 22 First, the applicant contends that the proceeding was "public interest litigation" as it concerned the administration of the age pension under the Social Security Act and the Social Security (Administration) Act. 23 The applicant submits that any person entitled to the age pension in Australia under those provisions could have been affected by the decision: Oshlack at [71] (McHugh J). 24 In support of his submission that the proceedings involved a public interest element, the applicant referred to Gaudron and Gummow JJ's consideration in Oshlack at [20]. The applicant contends that this paragraph stands for the proposition that litigation brought in the public interest may contribute to a finding of special circumstances to justify a departure from the general rule that costs follow the event: cf Ruddock at [21] Black CJ and French J. 25 The respondent submits that the proceeding could not be characterised as a public interest case or a test case as the applicant's grounds related to the particular factual findings made by the Tribunal on the evidence before it, and in any event were rejected in their entirety. 26 I am not satisfied that this proceeding should be characterised as "public interest litigation" in any sense warranting an award of costs in the applicant's favour. The proceeding concerned the applicant's private entitlement to the age pension and, consequently, he personally stood to benefit financially from the outcome of the litigation. The grounds of appeal identified by the applicant were not so novel or of such general public importance that the public interest in the resolution of the proceeding warrants an order the respondent should pay his costs. The fact that the respondent, as well as the applicant, had an interest in the resolution of the issues raised by the proceedings does not differentiate this case from the ordinary run of cases.

The respondent's interest in the proceeding 27 Second, the applicant contends that the respondent had a direct interest in the proceeding as it pertained to the interpretation and application of the relevant provisions of the Social Security Act and the Social Security (Administration) Act. The applicant contends that the respondent's resistance to his attempts to negotiate settlement and his proposal to explore alternative dispute resolution is evidence of the respondent's interest in having the dispute determined by the Court. The applicant submits that the respondent is therefore obliged to pay the applicant's costs of and incidental to the proceedings. 28 Clearly, the respondent had an interest in the proceedings, however there is no evidence that the respondent resisted any attempts to negotiate a settlement or explore alternative dispute resolution. In any event, even if that were the case, it does not follow that I should exercise my discretion to order the respondent to pay the applicant's costs.

Alleged breaches of the Federal Court of Australia Act 1976 (Cth) 29 Third, the applicant alleges that the respondent has failed to act consistently with the overarching purpose articulated by s 37M of the FCA Act and that, in doing so, the respondent has breached s 37N of the FCA Act. 30 The applicant claims that the respondent has committed multiple breaches of s 37M, including the respondent's failure to engage in "meaningful" negotiations to resolve the matter, the provision of complicated sets of data and explanations of re-calculations to the applicant and, more generally, the length of the dispute and delays to the proceeding. 31 The applicant also submits that by pursuing the costs of the proceeding, the respondent has acted contrary to its model litigant obligations by taking advantage of a self-represented party who lacks the resources to litigate a legitimate claim. In support for his contention that the Court should have regard to these transgressions as a relevant consideration in the exercise of its discretion, the applicant refers to the summary by Gaudron and Gummow JJ in Oshlack at [23]-[24] of the High Court's consideration of Latoudis v Casey (1990) 170 CLR 534. 32 The respondent submits that the applicant's assertion that the respondent has acted contrary to any model litigant obligation or breached any of the provisions of the FCA Act has no legal or evidentiary merit. 33 I accept the respondent's submission. 34 The applicant has not provided any evidence to support the contention that the respondent has breached the FCA Act or its model litigant obligations. Any failure of the respondent to agree to a resolution of the proceedings provides no basis for an award of costs in the applicant's favour given that he was wholly unsuccessful. 35 So too, I am not satisfied that the applicant has otherwise established that the respondent's conduct in the course of the proceeding was so inefficient or improper to suggest that it has either breached the provisions of the FCA Act or its model litigant obligations.

Impecuniosity and health issues 36 Fourth, the applicant contends that the Court should award costs in his favour due to the impact of the proceeding on his health and financial circumstances. He submits further that his impecuniosity justifies a departure from s 43 of the FCA Act. In support for his contention that his impecuniosity is sufficient reason for awarding costs in his favour, the applicant refers to the High Court's decision in Northern Territory v Sangare [2019] HCA 25; 265 CLR 164. 37 The respondent submits that the applicant's health issues, while regrettable, cannot be attributed to the respondent as the respondent did not commence the proceedings, and was entitled to defend the validity of the Tribunal's decision. The respondent submits further that the proceedings were drawn out for reasons entirely unrelated to the respondent's conduct. 38 As to the applicant's impecuniosity, the respondent submits it is not a special circumstance that the Court should take into consideration as justification for making an order that the respondent pay the applicant's costs. 39 I accept these submissions. None of the matters raised by the applicant on this fourth reason provide a basis for making an order that the respondent pay his costs. 40 In particular, I do not consider the applicant's impecuniosity to be a special circumstance to justify a special order as to costs in this case, particularly in light of the High Court authority in Sangare which states that a party's impecuniosity is not relevant to the proper exercise of the Court's discretion under s 43 of the FCA Act.

Conclusion 41 Given that the respondent no longer seeks an order that the applicant pay its costs, I consider that it is appropriate that the parties bear their own costs. 42 The Court will make no order as to costs. I certify that the preceding forty-two (42) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice O'Sullivan.