FEDERAL COURT OF AUSTRALIA Cabal v United Mexican States (No 6) [2000] FCA 651 COSTS – extradition proceeding – two applications for bail – whether costs awarded in bail applications - jurisdiction of Federal Court of Australia to award costs – comparison with awards of costs in criminal proceedings. Federal Court of Australia Act 1976 (Cth): s 43 Hughes v Western Australian Cricket Association (Inc) (1986) ATPR 40‑748 cited R v Scott (1993) 42 FCR 1 cited The King v Clifford (1824) 2 LJ OS (KB) 210 cited Latoudis v Casey (1990) 170 CLR 534 cited Oshlack v Richmond River Council (1998) 193 CLR 72 cited CARLOS CABAL PENICHE & MARCO PASINI BERTRAN v UNITED MEXICAN STATES & ANOR (No 6 ) V 728 of 1999 GOLDBERG J MELBOURNE 17 MAY 2000 IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY No V 728 of 1999 BETWEEN: CARLOS CABAL PENICHE First Applicant MARCO PASINI BERTRAN Second Applicant AND: UNITED MEXICAN STATES First Respondent LISA HANNAN M Second Respondent JUDGE: GOLDBERG J DATE OF ORDER: 17 MAY 2000 PLACE: MELBOURNE THE COURT ORDERS THAT: 1. There be no order as to costs in respect of the applicants' applications, filed on 17 December 1999 and 9 February 2000, that they be released on bail until the review has been conducted. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY No V 728 of 1999 BETWEEN: CARLOS CABAL PENICHE First Applicant MARCO PASINI BERTRAN Second Applicant AND: UNITED MEXICAN STATES First Respondent LISA HANNAN M Second Respondent JUDGE: GOLDBERG J DATE: 17 MAY 2000 PLACE: MELBOURNE REASONS FOR JUDGMENT Introduction 1 On 17 December 1999 Ms L A Hannan, a Magistrate in Victoria, determined pursuant to s 19(9) of the Extradition Act 1988 (Cth) ("the Act") that the first applicant ("Mr Cabal") and the second applicant ("Mr Pasini") were persons eligible for surrender to the first respondent ("Mexico") in relation to a number of extradition offences. 2 The Magistrate, pursuant to s 19(9) of the Act, by warrant, ordered that the applicants be committed to the Melbourne Assessment Prison or Port Phillip Prison to await, in relation to the offences the subject of her determination, surrender under a surrender warrant or release pursuant to an order under s 22(5) of the Act. 3 On the same day as the Magistrate issued the warrants, the applicants filed an application pursuant to s 21(1) of the Act for a review of the Magistrate's decision to commit the applicants to prison. In that application the applicants sought by way of interim relief orders pursuant to s 21(6)(f)(iv) of the Act that they be released on bail pending the review of the Magistrate's decision. On 4 January 2000 I dismissed the applicants' application for bail but I reserved liberty to the applicants to renew their application for bail in the terms set out in my reasons. 4 On 9 February 2000 the applicants filed a notice of motion for orders pursuant to s 21(6)(f)(iv) of the Act that they be released on bail until the review of the Magistrate's decision had been determined. On 20 April 2000 I dismissed that motion. On each occasion I reserved the question of costs for further consideration. 5 The applicants have submitted that there should be no order as to the costs of the bail applications having regard to the nature of the applications and the underlying facts which led to the applications. The applicants submitted that if they had been charged with offences and had applied for bail there would be no question of costs being ordered against them. Accordingly if costs are awarded against them they will be in a worse position than if they had been charged with an offence and detained in custody. They also submitted that the facts underlying their applications militated against an order for costs. These facts were that Australia was in breach of its obligations under the International Covenant on Civil and Political Rights in the manner in which the applicants were detained and that the conditions in which they were detained in the Sirius East Unit at Port Phillip Prison were extreme and that they should not be punished further by an award of costs. 6 The respondent submitted that although the applications were properly characterised as bail applications, the scheme of the legislation is that proceedings before the Magistrate and the Federal Court on review cannot be classified as criminal matters. The respondent submitted that there was nothing in the nature of the applications which removed an application for bail under the Act from those cases where costs followed the event. 7 The jurisdiction of the Court to award costs "in all proceedings before the Court … other than proceedings in respect of which any other Act provides that costs shall not be awarded" is very wide and is "in the discretion of the Court or judge": s 43 Federal Court of Australia Act 1976 (Cth). The general rule is that a successful party in a proceeding should be awarded its costs. As Toohey J observed in Hughes v Western Australian Cricket Association (Inc) (1986) ATPR 40‑748 at 48,136: "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 K.B. 47." Although the discretion is at large it must be exercised judicially. 8 From time to time in applications for bail made to the Federal Court pursuant to s 21(6)(f)(iv) of the Act, costs have been awarded against an unsuccessful applicant for bail but it does not appear from any of those cases that an application that costs not be awarded against the unsuccessful applicant was made or that the issue of costs was argued in any way or was the subject of any particular consideration by the parties or the Court. 9 It has been a traditional and well‑accepted principle, subject to specific statutory provisions, that in criminal proceedings brought by the Crown costs are not awarded in favour of or against the Crown: R v J (1983) 49 ALR 376 at 379; R v Goia (1988) 19 FCR 212 at 213; Latoudis v Casey (1990) 170 CLR 534 at 538. This principle covers not only proceedings where the guilt or innocence of the accused is the issue but also interlocutory proceedings: R v Kimmins; Ex parte Attorney‑General [1980] Qd R 524 at 525; R v Goia (supra) at 213. This principle is subject to statutory exceptions such as are found in a number of statutes relating to summary offences: see, for example, Magistrates' Court Act 1989 (Vic), s 131. 10 The principle applies to applications for bail in criminal matters. In R v Scott (1993) 42 FCR 1, Hill J said at 13: "I should say that the cumulative experience of the bench and of counsel in the present case was that costs had never been awarded in bail matters either in New South Wales, the Territory, Queensland or elsewhere." Cooper J said at 31: "It is not the practice to award costs for or against an accused on a bail application (R v Clifford (1824) 2 LJ OS (KB) 210) and matters concerning bail in criminal matters come within the general rule as stated in R v Goia (supra) at 213. The reason for this is that there should be no impediment to a person to seek bail. The risk of a costs order being made on an unsuccessful bail application may deter persons seeking bail in appropriate cases. That there should be no impediment is reflected in the statutory requirement that no court fees are chargeable when an application for bail is made (s 564 of the Crimes Act 1900 ACT))." 11 In The King v Clifford (1824) 2 LJ OS (KB) 210 the Crown sought an order that the defendant should pay the costs incurred by giving several notices of bail. The Court said at 210: "These proceedings have certainly been very vexatious to the prosecutor; but, in a criminal case, we cannot, on any pretence, deprive the defendant of his right to put in bail. We very much doubt, whether we have the power, under any circumstances, to deny him the exercise of that right." 12 The proceedings by which the applicants come before a magistrate and by way of review before the Federal Court are not criminal proceedings but rather civil proceedings under the Extradition Act. The opportunity for the applicants to establish their innocence is not available to them as s 19(5) of the Act provides: "In the proceedings, the person to whom the proceedings relate is not entitled to adduce, and the magistrate is not entitled to receive, evidence to contradict an allegation that the person has engaged in conduct constituting an extradition offence for which the surrender of the person is sought." Nevertheless the fact remains that the applicants have been deprived of their liberty and freedom by the power and authority of the State and are in a similar position in that respect to persons who are arrested, charged with offences under the criminal law and taken into custody. 13 Although I have a wide discretion as to costs, that discretion must be exercised judicially. In Latoudis v Casey (1990) 170 CLR 534 the High Court considered the matters appropriate to take into account in determining whether costs should be awarded in favour of a defendant who successfully defended a prosecution for a summary criminal offence. Although the High Court considered the issue in the context of a particular statutory provision (Magistrates' (Summary Proceedings) Act 1975 (Vic) s 97(a) and (b)) which gave the Court the power to order costs against a defendant in the case of a conviction or order and against an informant or complainant in the case of the dismissal of an information or complaint, the matters discussed are of assistance in determining how a judicial discretion as to costs should be exercised. 14 In Latoudis v Casey (supra) the Magistrate, in summary criminal proceedings, refused the successful defendant's application for costs. The High Court, by a majority, held that the magistrate's exercise of discretion had miscarried and that the defendant was entitled to an order for costs. Although the nature of the proceedings in that case were quite different from those presently before this Court, there are dicta in the judgments which are of assistance in resolving the present issue. At 543 Mason CJ said: "If one thing is clear in the realm of costs, it is that, in criminal as well as civil proceedings, costs are not awarded by way of punishment of the unsuccessful party. They are compensatory in the sense that they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings: Cilli v Abbott (1981) 53 FLR at 111." Mason CJ saw differences between summary proceedings and civil proceedings which made him unable to accept that in summary proceedings there should be a general rule that costs followed the event (543‑544). However, in that case there was a specific statutory provision which enabled the Court to order a defendant in summary proceedings to pay costs. 15 The view of the majority in Latoudis v Casey (Mason CJ, Toohey and McHugh JJ) was that in summary criminal matters a successful defendant should be entitled to his costs unless there is something in the defendant's own conduct which disentitles him to costs: per Mason CJ at 544, Toohey J at 562, 565, McHugh J at 569. A successful defendant should not be deprived of costs because the charge was laid in the public interest or because the informant acted reasonably in laying the charge: per Mason CJ at 544, Toohey J at 564, McHugh J at 569‑570. The proposition which the majority emphasised in Latoudis v Casey (supra) was that an order for costs is not to punish a party but rather to compensate the party for the expense involved in being involved in litigation. In Oshlack v Richmond River Council (1998) 193 CLR 72 Kirby J said at 121: "But the compensatory principle cannot be treated as an absolute rule. Otherwise, the discretion conferred in unqualified terms would indeed be shackled and confined. To permit this would be incompatible with statutory language expressed in such terms [Donald Campbell & Co v Pollak [1927] AC 732 at 811‑812]." 16 Kirby J, in commenting upon Latoudis v Casey (supra), said at 119: "Apart from the obvious fact that Latoudis was therefore concerned with a special difficulty, several members of this Court, both in the majority and dissenting, took pains to emphasise the importance of paying close attention to the purposes of the particular legislation in question. The significant differences between criminal and civil proceedings were stressed. They rendered an exact analogy between the approaches to costs in both proceedings unnecessary or inappropriate. Therefore, having regard to the context in which Latoudis fell to be decided, stated most clearly in the opening words of the judgment of Mason CJ, it was erroneous to derive from that decision a general rule governing the exercise of all unqualified statutory cost discretions, whatever the terms in which they were stated, whatever the context concerning the court and the purpose for which they were provided and whatever the peculiarities of the jurisdiction in which costs orders would play a part." 17 The discretion to award costs in s 43(2) of the Federal Court of Australia Act 1976 (Cth) is not only general and unfettered in its terms, it extends, subject to any specific provision to the contrary, across the whole of the jurisdiction committed to the Federal Court. Section 43(2) does not discriminate in any way between any areas of jurisdiction which the Federal Court is called upon to exercise. It therefore does not specifically take into account that in some areas, such as in the area of extradition, there may intrude into a consideration of matters before the Court matters not only civil but matters which raise issues similar to those recognised in the area of the criminal law. Because the jurisdiction is conferred on the Court not only by the Federal Court Act 1976 (Cth) but also by other statutes, a wide range of issues will arise which bear upon the considerations to be taken into account in determining an appropriate order as to costs in any given case. It is no doubt, for that reason, that the discretion as to costs is as wide and unfettered as it is. 18 Nevertheless, any order as to costs must take into account the particular considerations which bear upon the matters before the Court. The observations of members of the Court in Oshlack v Richmond River Council (supra) are apposite in this context. The Court was concerned with the application of s 69(2) of the Land and Environment Court Act 1979 (NSW) which at that time provided: "Subject to the rules and subject to any other Act: (a) costs are in the discretion of the Court; (b) the Court may determine by whom and to what extent costs are to be paid; and (c) the Court may order costs to be taxed or otherwise ascertained on a party and party basis or on any other basis." The majority of the High Court (Gaudron, Gummow and Kirby JJ) upheld the order by the trial judge who made no order as to costs against an unsuccessful applicant who had brought proceedings against a local council and a land developer to vitiate a consent granted by the council to a development applicant by the developer. The trial judge took into account a number of matters which the council claimed were not appropriate to be taken into account in the exercise of his discretion. In short the trial judge gave weight to the public interest character of the proceedings before him. The majority concluded that he did not take into account considerations extraneous to any objects the legislature had in mind in enacting s 69 and in relation to the operation of that section on proceedings under the Environmental Planning and Assessment Act (1979 (NSW). 19 Relevantly for present purposes Gaudron and Gummow JJ said at 81: "The terms of s 69(2) contain no positive indication of the considerations upon which the Court is to determine by whom and to what extent costs are to be paid. The power conferred by the section is to be exercised judicially, that is to say not arbitrarily, capriciously or so as to frustrate the legislative intent. However, subject to such considerations, the discretion conferred is, to adapt the words of Dixon J, unconfined except in so far as 'the subject matter and the scope and purpose' of the legislation may enable an appellate court to pronounce the reasons given by the primary judge to be 'definitely extraneous to any objects the legislature could have had in view.' [Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492 at 505.]" At 88 their Honours said: "There is no absolute rule with respect to the exercise of the power conferred by a provision such as s 69 of the Court Act that, in the absence of disentitling conduct, a successful party is to be compensated by the unsuccessful party. Nor is there any rule that there is no jurisdiction to order a successful party to bear the costs of the unsuccessful party." 20 The particular statutory provision under consideration in Oshlack v Richmond River Council (supra) was found in the Land and Environment Court Act 1979 (NSW) so that it was possible to take into account particular issues which related to matters covered by that Act and its administration in considering relevant issues as to costs. Having regard to the disparate jurisdictions exercised by the Federal Court under the Federal Court of Australia Act 1976 (Cth) it is not so easy to discern matters which assist in determining the appropriate matters to take into account in exercising a discretion as to costs under s 43(2). 21 With these matters in mind I turn to a consideration of the issues which arise on a bail application under s 21(6)(f)(iv) of the Act. An applicant for bail under s 21(6)(f)(iv) has, as a matter of choice, decided to apply to the Court for an order in respect of which the Court has a discretion to make. However, that choice is overborne by the fact that the applicant has been incarcerated against his or her will by the power and authority of the State in accordance with the Act. The position in which the applicant for bail finds himself or herself is involuntary. It is inappropriate that a person detained under the provisions of the Act should have to take into account, in determining whether to apply for bail and obtain his or her liberty, whether he or she might be visited with an adverse costs order if the application is unsuccessful. Where the power and authority of the State deprives a person of his or her liberty by force of law, that person ought not to have to pay a price or suffer a disadvantage if his or her application to obtain his or her liberty and freedom, whilst no formal charge has been laid and no conviction has been recorded, is not successful. 22 Although an order for costs is made to compensate a successful party for the expenses incurred in responding to an application or proceeding, that principle of compensation should yield in favour of the principle that a person detained by authority of the State should not be deterred by a potential costs order from seeking his or her liberty. There is a public interest in ensuring that persons detained against their will should not have any impediment put in their way which will inhibit them in seeking their liberty. In my view that public interest outweighs the general rule that a successful party is to be compensated for its costs by the unsuccessful party. In particular is this so where the costs are incurred by the State under whose authority the person is detained. 23 I can see no reason, in principle, why the same approach as is taken in the criminal jurisdiction should not be carried over into the area of applications for bail under s 21(6)(f)(iv) of the Act. I consider that an unsuccessful application for bail under the Act is one of the unusual or special circumstances which warrants the Court exercising its discretion so as not to require the costs to follow the event. 24 It is of no consequence that the respondent on the record is the United States of Mexico as the costs incurred in relation to proceedings under s 21(6)(f)(iv) including the costs of any bail applications are paid by the Commonwealth of Australia. The respondent's solicitor is the Commonwealth Director of Public Prosecutions. Article 27 of the Extradition Treaty between Australia and the United Mexico States provides: "The expenses incurred in relation to an extradition in the territory of the Requested Party shall be borne by that Party except those relating to transport of the person sought which shall be borne by the Requesting Party." 25 It is not therefore necessary to consider whether the underlying facts asserted by the applicants of themselves warrant a variation on the usual order that costs follow the event. As both parties made submissions on the issue I address it briefly. Although the claim that Australia was in breach of its obligations under the International Covenant on Civil and Political Rights in housing the applicants in Port Phillip Prison with convicted persons was raised on the first bail application, it was not fully argued and I made no finding in relation to that issue. For the reasons which appear in Cabal v United Mexican States (No 2) [2000] FCA 295 I did not allow that matter to be raised on the second bail application. It therefore provides no basis for considering whether to vary the usual order that costs follow the event. 26 Although I made findings as to the severity of the conditions in which the applicants were detained in the Sirius East Unit at Port Phillip Prison, that factor of itself is no reason to vary the usual order as to costs. It was one of the matters which was to be taken into account and weighed up with other relevant matters in determining whether special circumstances existed and whether the applications for bail should succeed. I expressed concern as to the conditions under which the applicants were being detained but I did not find that that matter constituted relevant special circumstances for the purposes of s 21(6)(f)(iv) of the Act. In those circumstances it would not be appropriate to rely upon those conditions as a basis for varying the usual order as to costs. The applicants said that they should not be further punished by an order for costs, but if an award for costs had been made against the applicants it would not have been made to punish them, but rather to compensate the respondent for the costs and expenses incurred in responding to the applications made by the applicants. 27 There will be no order as to the costs of either of the bail applications. I certify that the preceding twenty-seven (27) numbered paragraphs and the succeeding confidential appendix are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg. Associate: Dated: 17 May 2000 Counsel for the Applicants: Mr J Gilmour QC and Mr M D Howard Solicitor for the Applicants: Phillips Fox Counsel for the First Respondent: Ms L Lieder QC and Mr G Gilbert Solicitor for the First Respondent: Commonwealth Director of Public Prosecutions Date of Hearing: 20 April 2000 Date of Judgment: 17 May 2000