Ure v Commonwealth of Australia

Federal Court of Australia|2020-03-13|Before: Yates J

The interlocutory application filed on 14 December 2018, as amended on 23 September 2019, be dismissed.
The respondents pay the applicant's costs of and incidental to the interlocutory application.
The proceeding be dismissed.
Aside from the order for costs made on 11 May 2015, each party bear his or its own costs of the proceeding. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

YATES J: INTRODUCTION 1 On 23 September 2019, the Commonwealth of Australia (the Commonwealth) and the Director of National Parks (together, the respondents), filed an amended interlocutory application (the unamended application was filed on 14 December 2018) seeking, amongst other orders, an order for costs of this proceeding, assessed on a lump sum basis. While this application, on its face, seems somewhat ordinary, the circumstances in which it is made are far from ordinary. 1 The proceeding was commenced on 22 May 2013. It concerned a dispute as to the ownership of two islands - Middleton Reef and Elizabeth Reef - and the adjacent waters and seabed, in the Tasman Sea (the Islands). The applicant, Doreen Margaret Ure, claimed to be the owner of the full proprietary rights in the Islands, which were originally acquired by her predecessor in title, Alexander Francis Ure, for himself and on behalf of Michael Chan, on or about 19 March 1970. Mrs Ure's claim raised international law and constitutional law questions. Originally, the Commonwealth was the only respondent. However, on 15 July 2013, the Director of National Parks was joined as a respondent and, on 16 July 2013, an amended statement of claim was filed. On 22 October 2013, the respondents filed an amended defence. 2 From around July 2013, the respondents proposed that the matter be dealt with by way of separate questions pursuant to r 30.01 of the Federal Court Rules 2011 (Cth). In the following months, there were discussions between the parties as to the form of the questions to be considered. 3 On 18 December 2013, a special case was filed pursuant to r 38.01. It was heard in 2014 and, on 17 March 2015, judgment was given: Ure v Commonwealth of Australia [2015] FCA 241; 323 ALR 164. The special case was disposed of by answering two substantive questions. The first question concerned the justiciability of Mrs Ure's claim. This question was answered adversely to the Commonwealth, as follows: An allegation that the Commonwealth or any other State had not claimed or acquired jurisdiction, sovereignty and/or sovereign rights over the Islands at any time prior to 19 March 1970 or thereafter is justiciable in this Court in the sense that the Court is not precluded from considering and/or inquiring into any such allegation, or from determining any cause of action based on any such allegation, merely by reason of the making of the allegations pleaded in the Amended Statement of Claim and Amended Defence and, in particular, the allegations pleaded in paras 5.1, 5.2, 5.5 and 11.2.2 of the Amended Defence as particularised. 4 The second question concerned whether Mrs Ure could establish that Messrs Ure and Chan had acquired proprietary rights in the Islands under international law. This question was answered adversely to Mrs Ure. 5 There were two further questions, which were answered as follows: Question 3: If and to the extent that the answer to question (2) is 'no', should the claim be dismissed? Answer 3: Yes. Question 4: What order as to costs should be made with respect to the Special Case? Answer 4: If the parties are unable to agree on the appropriate order in light of these reasons for judgment, each party is to provide short written submissions, not exceeding three pages, in support of the order that that party seeks, with the question to be determined on the papers. 6 There can be no doubt that the special case procedure was adopted because of its capacity to determine the whole of the proceeding. The answer to the second question had that consequence. The determination of that question, adversely to Mrs Ure, necessarily meant that her claim could not succeed and should be dismissed. 7 Following the giving of judgment on 17 March 2015, the parties engaged in correspondence on the question of costs. They were able to reach agreement on that question, which is reflected in the following paragraphs of a letter sent to my Chambers on 11 May 2015 by the Australian Government Solicitor who was acting for both respondents: 1. We refer to the above proceeding and, in particular, to the Order made by Yates J on 17 March 2015. His Honour's answer to Question 4 of the Special Case filed 18 December 2013 required the parties to attempt to reach an agreement as to the order that His Honour should make with respect to the costs of the Special Case. 2. The parties have conferred and have agreed that each party should bear its own costs of the Special Case. 3. Pursuant to r 39.11 of the Federal Court Rules 2011, the parties have prepared and signed a proposed consent order that reflects their agreement. We would be grateful if you could draw the proposed consent order, which is enclosed, to his Honour's attention. 4. Please let us know if we can be of any further assistance. 8 In accordance with the parties' agreement and request, I made the following order on 11 May 2015: BY CONSENT, THE COURT ORDERS THAT: 1. Each party bear its own costs of the Special Case, including the cost of the hearing and determination of the questions reserved. 9 On that day, my Associate sent an email to the parties, stating: I refer to the email from the respondents below [i.e., the email sending the letter quoted above]. I advise that his Honour has made the order sought by consent. The order is viewable on the public Comcourts portal. I confirm that the matter has now been finalised. 10 On 2 April 2015, Mrs Ure filed an appeal. However, on 11 July 2015 she passed away. The appeal continued for the benefit of her estate. On 12 October 2015, an order was made in the appeal, as follows: 1. Until further order, the Court orders that Mr Paul Joseph Ure, with exposure as to costs, be appointed to represent the estate of the appellant for the purposes of this proceeding (NSD 343 of 2015) and the balance of proceeding NSD 894 of 2013. 11 In these reasons, I will now refer to Mr Paul Ure as the applicant. 12 The appeal was heard in 2015 and dismissed with costs on 4 February 2016: Ure v The Commonwealth of Australia [2016] FCAFC 8; 236 FCR 458. An application for special leave to appeal to the High Court was refused with costs on 5 May 2016: Paul Joseph Ure in his capacity as the executor of the estate of the Late Doreen Margaret Ure v The Commonwealth of Australia & Anor [2016] HCASL 88 (5 May 2016). 13 One would be forgiven for thinking that, as at 11 May 2015, Mrs Ure's claim at first instance had been fully heard and determined. But not so. On 17 October 2018, the Australian Government Solicitor wrote to the applicant's solicitors proposing an offer in respect of the costs of the proceeding at first instance, in which the special case had been brought. 14 This, no doubt, was a matter of great surprise to the applicant. But the respondents are of the view that the proceeding at first instance was not finally determined and that, after 11 May 2015, the question of the costs of that proceeding remained open. The respondents say that the only costs that were determined in the proceeding at first instance were those of the special case.

The applicant's submissions 15 The applicant submits, firstly, that the Court does not have the power to make the costs order sought in this application by the respondents because this would amount to a variation of what he contends was a final costs order made in the proceeding on 11 May 2015. This would be impermissible: Bailey v Marinoff (1971) 125 CLR 529 at 530 (Barwick CJ); Short v Crawley (No 45) [2013] NSWSC 1541 at [23]. 16 This submission raises the question of the construction of the order made on 11 May 2015, in particular what is conveyed by the reference in the order to "the Special Case". The applicant submits that the answer to the fourth question in the special case was, and was intended to be, a complete and final order in the proceeding at first instance. While the applicant says that, construed literally, and devoid of context, that order conceivably left room for an order for costs outside the special case, this is only so because of infelicitous drafting. The applicant submits that the Court and the parties have at all times proceeded as if the order was to finalise the question of costs between the parties. The special case was the vehicle through which the fate of the proceeding would be determined. He submits that the order was clearly intended to be not only the final costs order at first instance but the final order of any type in that proceeding. 17 By way of elaboration, the applicant argues that the proposal to proceed by way of separate questions was originally proposed by the Commonwealth based on its view that, if certain questions of law were answered in its favour, the entire proceeding would be completely resolved without the need for a trial. This was a view advanced by the Commonwealth (and, later, the respondents) on a number of occasions before the Court in the period July to December 2013, during which the terms of the special case were being finalised. As the applicant puts it, the special case procedure was propounded by the Commonwealth as an efficient means of determining the fate of the proceeding as a whole. 18 The evidence shows that following the Court's judgment on 17 March 2015, the parties engaged in correspondence on the question of costs. On 10 April 2015, the solicitors for Mrs Ure proposed that the costs order should be that: … each party bear their own costs in respect of the Special Case. 19 On 28 April 2015, the respondents agreed to an order in those terms. 20 However, the applicant argues that this agreement must be seen in the context that the fourth question in the special case was not merely dealing with part of the costs of the proceeding. As a matter of substance, there was nothing left to resolve having regard to the answers to the second and third questions. Bearing this consideration in mind, the applicant argues that, at the time that costs were discussed between the parties, there was no suggestion that there be any other costs order in the proceeding. The respondents certainly did not reserve their position in that regard. The applicant says that this is unsurprising given that the process of progressing the proceeding to a special case commenced early in the piece and that it can be inferred that, in 2015 at least, the parties did not consider that there were significant costs that had been incurred outside the special case. The applicant says that the respondents did not intimate that there was any outstanding issue in relation to costs in connection with the proceeding at first instance until the letter from the Australian Government Solicitor was sent on 17 October 2018. He submits that the respondents' delay in raising any issue for costs after May 2015 - a period of about three and a half years - is consistent with the proposition that, at the time the order was made on 11 May 2015, the parties understood that it dealt fully with the question of costs of the proceeding at first instance.

The respondents' submissions 21 The respondents do not dispute that the order made on 11 May 2015 was a final order. They do dispute, however, the construction which the applicant places on it. They submit that the order means precisely what it says, and there is simply no evidentiary basis on which to contend that it was intended to be the final costs order of the proceeding at first instance, let alone the final order of any type in that proceeding. As the respondents put it, the very words of the order tell against such a proposition. 22 The respondents contest the inferences which the applicant seeks to draw from the circumstances to which I have referred. As to the absence of any mention in correspondence between the parties of further costs orders, the respondents point out that the applicant's submission assumes that which it posits - namely, that the fourth question pertained to costs other than those of the special case, and that the parties proceeded on that basis. As to the fact that the special case procedure was considered relatively early in the proceeding, the respondents submit that, even so, it does not follow that significant costs were not incurred outside the special case itself. They argue that the evidence in the present application shows that substantial work had been done outside the special case up until 22 October 2013. As to the question of delay, the respondents submit that their delay (which in large measure they accept) is equally consistent with the respondents proceeding on the basis that the order made on 11 May 2015 did not pertain to costs other than those of the special case.

Consideration 23 It is important to recognise at the outset that the order in question was made by the Court at the request of the parties, following the answer given by the Court to the fourth question in the special case. It is, therefore, an order that reflects their agreed position. It is not an order made by the Court based on the Court's judgment as to what the appropriate costs order should be following a contested hearing on that question. 24 As a general principle, a consent order must be construed in light of any admissible evidence of surrounding circumstances, but without direct evidence of the parties' intentions: General Accident Fire & Theft Assurance Corporation Ltd v Inland Revenue Commissioners [1963] 1 WLR 421 at 430; see also the discussion in Kirkpatrick v Kotis [2004] NSWSC 1265; 62 NSWLR 567 at [38] - [45]; Athens v Randwick City Council [2005] NSWCA 317; 64 NSWLR 58 at [28] (Hodgson JA). 25 I start from the position that the fourth question in the special case was, in terms, directed to the costs of that case, not to the costs of the proceeding generally. I also observe that it was the solicitors acting for Mrs Ure who proposed an agreement on costs that referred, in terms, to the special case. Having said that, I accept that, in proposing that order, the solicitors may well have believed that, by 2015, the proceeding had evolved into one that was nothing more than the special case even though, technically, that understanding would not be correct. My Associate's communication to the parties, following the making of the order on 11 May 2015, reflects my own understanding of the position at that time. However, in reaching that understanding, I was not privy to the communications between the parties at that time or, indeed, their communications prior to the filing of the special case, other than what I had been told at case management hearings as to developments in that regard. I had no understanding of what other work, if any, each party had undertaken for the purposes of the proceeding generally. In any event, as I have emphasised, a consent order must be construed having regard to admissible evidence of all surrounding circumstances, and those circumstances have now been put before the Court. 26 In light of these matters, I am not persuaded that the order made on 11 May 2015 should be construed as the applicant contends. The surrounding circumstances at the time the order was made are not such as to persuade me that the order should be given a meaning beyond the limits of its actual terms. I do not accept that the order, as made, was simply the product of infelicitous drafting. Had it been intended that the order was to have a wider scope to cover the costs of the proceeding generally, then it was incumbent on the parties to ensure that this was made clear. The simple fact is that the respondents agreed to what Mrs Ure's solicitors had proposed. Nothing more. 27 In this connection, I note that, at the time, no order was sought (or has since been made) that the proceeding at first instance be dismissed, although that was clearly in contemplation given the answer to the third question in the special case. Further, when the applicant was appointed to represent Mrs Ure's estate in the appeal, he was also appointed to represent the estate in the "balance" of the proceeding at first instance, thereby indicating that, at that time (12 October 2015), the parties did not see the proceeding at first instance as being at an end. Put another way, at that time, and regardless of the outcome of the appeal (which was pending), the order of 11 May 2015 was not seen to be "the final order of any type" in the proceeding at first instance. 28 For these reasons, I am not persuaded that the Court does not have power to make the further costs order that the respondents seek.

Should the respondents' application for a further costs order be refused?

The applicant's submissions 29 The applicant submits that, should I not be persuaded that the Court does not have power to make a further costs order, the Court should, nonetheless, refuse to make such an order having regard to the history of the proceeding, the role that the special case came to play in the proceeding (as the vehicle for the final resolution of the controversy between the parties) and the respondents' extraordinary delay in now seeking a further costs order. 30 In order to put this submission in its correct setting, I should refer to some further facts. As I have noted, when I made the orders on 11 May 2015, my Associate wrote to the parties indicating my understanding of the position, which was that the making of the costs order had finalised the proceeding. 31 No response to this communication was received. The fact that there was no response from the solicitors for Mrs Ure is not surprising. It was, no doubt, their understanding of where the proceeding at first instance stood at that time. The fact that there was no response from the Australian Government Solicitor is, however, surprising. If the respondents had been of a different view from the one I expressed through my Associate, I do not understand why the Court was not immediately disabused. For example, as has now been pointed out, no formal order dismissing the proceeding was proposed, despite the answer given to the third question in the special case. This was, perhaps, an oversight on my part, but the misunderstanding under which I was labouring should have been corrected, especially by the parties who, it seems, were of the view that the proceeding at first instance not only remained extant but that they had an entitlement to an order for costs which went beyond the costs of the special case itself. There was, however, complete silence on the part of the respondents. 32 The respondents say that, at the time that the order was made on 11 May 2015, Mrs Ure's appeal had already been commenced and that, in those circumstances, the parties were not able to deal with orders disposing of the whole of the proceeding at first instance or related costs orders. It is not clear to me how or why that view was arrived at. In an affidavit made on information and belief in support of the orders now sought, a solicitor from the Australian Government Solicitor deposed: 10. Since the completion of the appeal process, with the High Court's refusal of special leave to appeal on 5 May 2016, my review of the file indicates that AGS communicated with its clients regarding recovery of the costs the subject of the current application in 2016, 2017 and 2018, and provided advice as to the approach and amount of costs to be recovered. On 6 July 2017, AGS was instructed to apply for an order for costs of the subject proceeding. In January 2018, following the advice of AGS, the Respondents instructed AGS to also apply for a gross sum costs order. 11. At each point, advice was given and instructions sought from necessary clients. Given the complexity of the issues raised in this matter, which I discuss further below, a number of different Commonwealth agencies were required to be consulted for instructions, including in relation to the position to be taken in relation to costs and resolution of the Proceeding. 12. My review of the file and knowledge of the conduct of the matter indicates that instructions in relation to seeking costs were required to be conveyed to and obtained from two different Commonwealth agencies: a. the Department of Environment and Energy b. the Department of Infrastructure, Regional Development and Cities (as they are now known). 13. This need for consultation between two government departments meant that additional time was required to obtain instructions in relation to each aspect of the matter. 33 It is not clear to me how the legal complexity of the proceeding required some years to reach a position that the respondents should seek an order for costs when they knew they had won the case when I gave judgment in the special case on 17 March 2015. Moreover, there is nothing in the affidavit to explain the respondents' silence to the communication from my Associate on 11 May 2015. 34 Further, these paragraphs do not explain how it is that, having received instructions on 6 July 2017 to apply for an order for costs, nothing further was done to progress those instructions in some meaningful way. The affidavit makes reference to the preparation of the initial affidavit in support of the application for costs being a lengthy process because it involved the deponent reviewing the file to identify attendances which related to the special case and attendances which did not, so as to determine the amount to be sought as lump sum costs. I do not consider this explanation to be convincing. It certainly does not provide a convincing explanation as to why it took more than two years simply to receive instructions to apply for a costs order, and then a further 18 months to raise the matter with the applicant who, with some justification, had thought the proceeding at first instance had been brought to an end on 11 May 2015. 35 The applicant submits that several consequences flow from the respondents' delay. 36 First, the applicant submits that he and the Court have been denied the ordinary opportunity to deal with the question of costs at a time when the proceeding was fresh in mind. The applicant says that this has the consequence of increasing costs because those acting for the applicant must now re-familiarise themselves with the matter many years later. Relatedly, the applicant submits that this has a consequence for the due administration of justice because the Court has been denied the opportunity to resolve the question of costs at the time when it was most familiar with the issues, and now places additional demands on the finite resources of the Court. 37 Secondly, the applicant submits that the respondents' delay is wholly unexplained. I have, of course, already touched on that matter. In advancing this submission, the applicant suggests that the obligations imposed on the respondents by the Legal Services Directions 2017 (Cth) were not met in that, as model litigants, the respondents are required to avoid "unnecessary delay" in litigation. 38 Thirdly, as I have noted, Mrs Ure passed away after the orders were made on 11 May 2015. The applicant submits that he was not the person who gave instructions at the hearing of the special case and that he is now disadvantaged in having to respond to a costs application brought in respect of a period during which he was not instructing. Further, since 11 May 2015, Mrs Ure's estate has been partially distributed. 39 Fourthly, the applicant submits that he pursued the appeal, and the application for special leave to the High Court, in circumstances where he believed that he faced no adverse cost burden in the proceeding at first instance. He submits that it would be unjust in the circumstances to visit such a burden on him now, given that costs were awarded against him in the appeal and in the application for special leave to appeal. 40 Fifthly, the applicant submits that the present case is far removed from the ordinary circumstances in which a supplemental order is justified. He submits that the order which the respondents now seek undermines the principle of finality and the due administration of justice.

The respondents' submissions 41 The respondents submit that, even though the special case determined the outcome of the proceeding as a whole, this does not relieve the applicant from the costs consequences of that outcome. Only the costs of the special case have been provided for, not the costs of the proceeding generally. The respondents accept that a significant period of time has elapsed between the making of the order on 11 May 2015 and their initial letter of offer of settlement in relation to cost recovery on 17 October 2018. They submit that the delay has been explained and that the applicant suffers no prejudice should a further costs order be made now. 42 In this latter regard, the respondents say that, even though the applicant was not giving instructions at the time of the hearing of the special case, the invoices establishing the costs that the respondents now seek are available to the applicant who can make submissions on the question of quantification. Relatedly, the respondents submit that any complications caused by Mrs Ure's death in the quantification of costs is not a disadvantage occasioned by delay on their part. Moreover, the respondents submit that the significance of the partial distribution of Mrs Ure's estate is not apparent on the evidence. 43 To the extent that the applicant raises the Commonwealth's model litigant policy, the respondents submit that nothing that the applicant has said impacts on the propriety of the respondents seeking to recover costs now and that any question of delay can be taken into account when considering the appropriate order to be made. 44 As to the submission that it would be unjust to visit further costs on the applicant now, the respondents submit that they are not responsible for the applicant acting on an incorrect view as to the scope and effect of the order made on 11 May 2015. They submit that if the applicant was unsure as to whether or not he faced an adverse cost burden, he should have sought clarification from the Court (by application) or the respondents (by correspondence). 45 Finally, the respondents submit that the order they seek is not a "supplemental order".

Consideration 46 The respondents' delay in bringing their claim for further costs is inordinate. For all practical purposes, the proceeding in respect of which the further costs are sought concluded years ago. Although the applicant was mistaken to think that the order made on 11 May 2015 was, in legal effect, an order in respect of all costs of the proceeding, his mistaken view is understandable. At the time, I too proceeded on the assumption that, following the making of the order on 11 May 2015, the Court was not going to be asked to make any further orders at first instance and that, for that reason, the proceeding had been finalised. 47 In my view, it is simply not appropriate for a party to litigation, who considers that it is entitled to an order for costs, to sit back and do nothing about obtaining that order (so far as the Court and the other party are concerned) until some years have passed. To effectively drag out litigation by seeking a costs order well after the proceeding has been determined as a matter of substance - as in the present case - is contrary to the requirement of s 37N of the Federal Court of Australia Act 1976 (Cth) (the Act) that parties in a civil proceeding before the Court must conduct the proceeding in a way that is consistent with the overarching purpose of facilitating the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible. The respondents' application for a further costs order does not secure the efficient use of the judicial and administrative resources available for the purposes of the Court, or the efficient disposal of the Court's overall caseload, or the disposal of all proceedings in a timely manner. It also does not secure the resolution of the dispute at a cost that is proportionate to the importance and complexity of the matters in dispute. 48 To compound matters, the respondents must have known that, after the making of the order on 11 May 2015, the Court was proceeding on the assumption that the case at first instance had been finalised. In the face of that understanding, which to them must have been a misunderstanding, they did nothing to correct it. As I have noted, no explanation for that failure has been forthcoming. Certainly, the respondents do not suggest that their failure to correct the Court's impression was an oversight on their part or by their lawyers. Further, the explanation that the respondents have proffered for their delay is, as I have said, not persuasive. 49 Although Mrs Ure's estate has not been fully administered, and although the applicant does not go so far as to say that, because of the respondents' delay, neither he nor the estate is now able to meet the order for costs that is now sought, I am firmly of the view that neither the applicant nor the estate should be vexed by such an order years after the proceeding at first instance effectively ended. 50 Although the respondents were ultimately successful in defending Mrs Ure's claim, it is not the case that costs always follow the event. The discretion involved in awarding costs is undoubtedly broad. Given the respondents' inordinate delay in seeking a further costs order, and given also the dominating role the special case played in the conduct of the litigation, I am not persuaded that the respondents should now be awarded further costs. Rather, the costs should lie where they have fallen. The appropriate order is, therefore, that, aside from the orders made on 11 May 2015, each party should bear his or its own costs of the proceeding.

Would a Lump sum award have been appropriate? 51 Had I been persuaded that it was appropriate, as a matter of discretion, to make a further costs order in favour of the respondents, it would have been necessary for me to consider whether a lump sum order is appropriate. Given the conclusion to which I have come, that question has now fallen away. I should nevertheless state that the sum sought by the respondents is, on its face, large ($344,598.56) for the work it is said to cover and, on the evidence before me, significantly disproportionate to the costs incurred by Mrs Ure in the corresponding period. Having said that, I accept that the nature and magnitude of the legal work required on each side of the record might not have been closely comparable. But the difference in costs incurred rings a warning bell. 52 A case such as the present would normally be considered as appropriate for a lump sum costs order. However, the magnitude of the costs sought by the respondents suggests that greater explanation might be required as to why (if it were otherwise appropriate) a lump sum of that magnitude should be awarded. I mention this because it illustrates an aspect of why it is not conducive - indeed, it is antithetical - to the quick and efficient disposition of the proceeding as inexpensively as possible to now embark on a consideration of costs, many years after the event.

Disposition 53 I will make orders that the proceeding be dismissed and that, aside from the order made on 11 May 2015, each party bear his or its own costs. The respondents have been unsuccessful in achieving the costs order they seek. They should pay the applicant's costs of and incidental to the present application. I certify that the preceding fifty-four (54) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Yates.

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