FEDERAL COURT OF AUSTRALIA Smith v Australian Crime Commission [2005] FCA 1113 COSTS – further prosecution of proceeding unnecessary – whether the parties acted reasonably in instituting and defending the proceeding – whether the applicants acted reasonably in the conduct of the proceeding. Federal Court of Australia Act 1976 (Cth) s 43 Australian Securities Commission v Aust‑Home Investments Ltd (1993) 44 FCR 194 cited Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd No 2 [2000] FCA 602 referred to Hughes v Western Australian Cricket Association (Inc) (1986) ATPR 40‑748 referred to Re Minister for Immigration & Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 applied STEWART RODNEY SMITH AND BERENDINA JACOBA SMITH v AUSTRALIAN CRIME COMMISSION NSD 1837 of 2004 BRANSON J 15 AUGUST 2005 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 1837 of 2004 BETWEEN: STEWART RODNEY SMITH FIRST APPLICANT BERENDINA JACOBA SMITH SECOND APPLICANT AND: AUSTRALIAN CRIME COMMISSION RESPONDENT JUDGE: BRANSON J DATE OF ORDER: 15 AUGUST 2005 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The applicants pay the respondent's costs: (a) from 1 April 2005 – 29 April 2005 inclusive; and (b) of and incidental to the hearing on 5 August 2005. 2. There otherwise be no order as to the costs of the proceeding. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 1837 of 2004 BETWEEN: STEWART RODNEY SMITH FIRST APPLICANT BERENDINA JACOBA SMITH SECOND APPLICANT AND: AUSTRALIAN CRIME COMMISSION RESPONDENT JUDGE: BRANSON J DATE: 15 AUGUST 2005 PLACE: SYDNEY REASONS FOR JUDGMENT introduction 1 The parties agree that the further prosecution of this proceeding is unnecessary but they are unable to agree as to the appropriate order, if any, to be made concerning the costs of the proceeding. It is thus necessary for the Court to determine that question. history of the proceeding 2 This proceeding was instituted by the filing of an application pursuant to s 57 of the Australian Crime Commission Act 2002 (Cth) and also s 11 of the Administrative Decisions (Judicial Review) Act 1977 (Cth). The applicants sought to restrain the respondent from examining them ahead of the hearing and determination of certain proceedings in the Supreme Court of the Australian Capital Territory ('the Supreme Court proceeding') and the Administrative Appeals Tribunal of the Australian Capital Territory ('the Tribunal proceeding'). The Supreme Court proceeding was heard on 20 May 2005. As the parties made no reference during argument on the question of costs to the Tribunal proceeding, I assume that it has either been heard or discontinued. 3 A first directions hearing was held in this proceeding on 11 February 2005. On that day I made orders that required the applicants, amongst other things, to file and serve their evidence in affidavit form by no later than 25 February 2005 and the respondent to file and serve its evidence in affidavit form by no later than 11 March 2005. The applicants were further required to file and serve an outline of their submissions and a list of authorities by 24 March 2005. The respondent was required to do the same by 7 April 2005. My associate was authorised to list the matter for hearing upon being notified that the matter was ready for hearing. 4 The applicants did not file and serve their evidence in affidavit form within the time frame fixed by my orders of 11 February 2005. By letter dated 7 March 2005 the respondent sought advice 'as a matter of priority' as to when the applicants' affidavit evidence would be served. The applicants filed an affidavit sworn by a solicitor employed by the firm retained to represent them in this proceeding ('the Solicitor') on 11 March 2005. 5 On 31 March 2005 the Solicitor received advice from the ACT Government Solicitor that the ACT Supreme Court list clerk had advised that the Chief Justice of the ACT had two dates available before the end of June when the Supreme Court proceeding could be heard, namely 20 May and 10 June 2005. He was asked to advise 'ASAP' and informed that '[i]f those days are not suitable to your counsel, then I anticipate that we will seek to have it listed before another judge'. The Solicitor responded on that day advising that the two suggested dates were suitable. 6 Either on or shortly before 4 April 2005 the Solicitor received instructions from the applicants to seek settlement of both the Supreme Court proceeding and the Tribunal proceeding. On 4 April 2005 and thereafter he sought to implement those instructions. 7 By letter dated 4 April 2005 the respondent advised the applicants' solicitor that it had not, and did not propose to, file any evidence in this proceeding. It sought advice as to when it might receive the applicants' outline of submissions and list of authorities. Correspondence passed between the respondent and the applicants' solicitors on the topic of filing a written consent to the making of an order varying the timetable fixed by me on 11 February 2005. The variation proposed was that the applicants be required to file and serve an outline of submissions and a list of authorities by 11 April 2005 and the respondent be required to do the same by 22 April 2005 (see O 35 r 10 of the Federal Court Rules). No written consent of the parties to the making of an order of the kind envisaged by the correspondence was ever filed. 8 By letter dated 14 April 2005 the respondent wrote to the applicants' solicitors noting that the date by which they had indicated that the applicants' outline of submissions and list of authorities would be able to be filed had passed. They asked to be provided with the documents immediately. 9 The applicants' outline of submissions with an annexed list of authorities was filed on 20 April 2005. 10 On 20 April 2005 the applicants' solicitors received a letter from the ACT Government Solicitor that touched on settlement negotiations concerning the ACT Supreme Court proceeding. The letter concluded: 'We are proceeding at this stage on the basis that these matters will proceed to hearing as listed on 20 May 2005.' 11 The respondent was provided with a copy of the applicants' outline of submissions and the annexed list of authorities under cover of a letter from the applicants' solicitor dated 22 April 2005. By that letter the respondent's consent was sought to a variation of the orders made by me on 11 February 2005 that would regularise earlier steps taken in the proceeding and require the respondent to file and serve its outline of submissions and list of authorities by 6 May 2005. The letter made no reference to either the Supreme Court proceeding or the Tribunal proceeding. 12 By letter dated 29 April 2005 the applicants' solicitors advised the respondent: 'that the proceedings before the Supreme Court of the ACT have been listed for hearing to commence on 24 [sic] May 2005 and to continue on 10 June 2005.' The letter sought a resolution by consent of this proceeding. The respondent, by a letter of the same date, rejected the proposed method of resolving the proceeding. 13 The respondent filed a document headed 'Respondent's Contentions of Fact and Law' and a list of authorities on 5 May 2005. Contentions of the Parties 14 The applicants contend that '[a] confluence of contributing factors conspired to deprive the proceedings of utility' and in the circumstances it would be appropriate that no order as to the costs of the proceeding be made. 15 The respondent argued that it was unreasonable of the applicants to institute and prosecute this proceeding which would 'almost certainly' have failed. Alternatively the respondent argued that the applicants acted unreasonably in their conduct of the proceeding. In this respect the respondent pointed to the applicants' failure to comply with the timetable fixed by the Court for pre‑trial steps. This failure, the respondent argued, delayed the hearing of the matter until a time when any hearing would be pointless. Secondly, the respondent pointed to the failure of the Solicitor to tell the respondent promptly that the Supreme Court proceeding would be heard on 20 May 2005. 16 The respondent contends that the applicants should be ordered to pay the respondent's costs of the proceeding, or alternatively, its costs of the proceeding from early April 2005. consideration 17 Section 43 of the Federal Court of Australia Act 1976 (Cth) gives the Court a wide discretion to award costs. Principles have been developed according to which that wide discretion is ordinarily exercised (see, for example, Hughes v Western Australian Cricket Association (Inc) (1986) ATPR 40‑748 at 48,136; Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602). Where neither party wishes to proceed with the litigation, or where the issue between the parties has become moot except so far as costs are concerned, the Court should be ready to facilitate the determination of the proceeding by making a costs order (Australian Securities Commission v Aust‑Home Investments Ltd (1993) 44 FCR 194). It is not appropriate for a proceeding to continue to a full hearing simply because the parties are unable to reach an agreement as to costs where no other issue between them requires judicial determination (Re Minister for Immigration & Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 ('Ex parte Lai Qin')). 18 In Ex parte Lai Qin McHugh J observed at 624‑625 that where there has been no hearing on the merits, a court is deprived of the factor that usually determines whether and in what terms it will make a costs order. His Honour said: 'The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action … Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried … If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings.' (citations omitted) 19 Although the case of the applicants in this proceeding faced obvious difficulties, I do not feel able to conclude that the respondent 'was almost certain to have succeeded if the matter had been fully tried'. No other basis was advanced upon which I could conclude that the applicants acted unreasonably in instituting this proceeding. It was, in my view, entirely reasonable of the respondent to defend the proceeding. 20 I am satisfied, however, that it was unreasonable for the applicants by their legal representatives not to have advised the respondent immediately that the likelihood arose that the Supreme Court proceeding could probably be listed for hearing in May or June 2005. Once it became apparent, or even likely, that this proceeding could not be heard and determined an appreciable period of time ahead of the Supreme Court proceeding the reasonableness of the continued prosecution of this proceeding was significantly undermined. 21 I am satisfied that the Solicitor had a reasonable expectation from 31 March 2005, when he confirmed the suitability to his clients of the suggested hearing dates of 20 May and 10 June 2005, that the hearing of the Supreme Court proceeding would commence on 20 May 2005 unless the proceeding earlier settled. 22 Yet the Solicitor did not advise the respondent on or about 31 March 2005 of the likely hearing dates of the Supreme Court proceeding. Indeed, on two occasions thereafter the Solicitor engaged in correspondence with the respondent touching on the timetable for the preparation of this matter for hearing without adverting to the possible futility of preparing this matter for hearing. It was not until 29 April 2005 that the respondent was advised that the Supreme Court proceeding had been listed for a hearing to commence in May 2005. 23 Once the respondent learnt that the Supreme Court proceeding had been listed for hearing in May it was, in my view, unreasonable for it to continue to incur legal costs in preparing this matter for hearing. The appropriate course then, if not before, was for the parties to approach this Court to advise that a hearing of the proceeding on the merits would in all probability prove unnecessary. 24 In all of the circumstances I conclude that the appropriate orders as to costs are that: (1) the applicants pay the respondent's costs: (a) from 1 April 2005 – 29 April 2005 inclusive; and (b) of and incidental to the hearing on 5 August 2005; and (2) there otherwise be no order as to the costs of the proceeding. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Branson. Associate: Dated: 15 August 2005 Counsel for the Applicants: G Sirtes Solicitor for the Applicants: Baker Deane and Nutt Counsel for the Respondent: S Donaghue Solicitor for the Respondent: A Adams Date of Hearing: 5 August 2005 Date of Judgment: 15 August 2005