FEDERAL COURT OF AUSTRALIA Underdown v Secretary, Department of Education, Employment and Workplace Relations (No 2) [2009] FCA 1223 COSTS – whether any departure from costs following the event can be justified Federal Court of Australia Act 1976 (Cth) s 43 Federal Court Rules O 62 Ritter v Godfrey (1920) 2 KB 47 Scott v Secretary, Department of Social Security (No 2) [2000] FCA 1450 Trade Practices Commission v Nicholas Enterprises Pty Ltd (No 3) (1979) 42 FLR 213 Underdown v Secretary, Department of Education, Employment and Workplace Relations [2009] FCA 965 THE ESTATE OF THE LATE SAMANTHA UNDERDOWN and ARTURO FAZIO v SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS WAD 217 of 2008 MCKERRACHER J 29 October 2009 PERTH IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 217 of 2008 BETWEEN: THE ESTATE OF THE LATE SAMANTHA UNDERDOWN First Applicant ARTURO FAZIO Second Applicant AND: SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS Respondent JUDGE: MCKERRACHER J DATE OF ORDER: 29 October 2009 WHERE MADE: PERTH THE COURT ORDERS THAT: 1. The second applicant is to pay the respondent's costs, to be taxed if not agreed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using eSearch on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 217 of 2008 BETWEEN: THE ESTATE OF THE LATE SAMANTHA UNDERDOWN First Applicant ARTURO FAZIO Second Applicant AND: SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS Respondent JUDGE: MCKERRACHER J DATE: 29 october 2009 PLACE: PERTH REASONS FOR JUDGMENT 1 In Underdown v Secretary, Department of Education, Employment and Workplace Relations [2009] FCA 965 (Underdown No 1), I concluded (at [64]) that the appeal was incompetent and had no prospects of success. I made the following additional observations (at [65] and [66]): 65 These reasons do not develop at length the underlying very sad circumstances in which the complete breakdown in communications between Mr Fazio (now) and Centrelink have developed. However unfortunate that may be, there is no power in the Court to entertain this appeal but, in any event, no useful purpose would be served by allowing an inevitably doomed appeal to continue to run. To do so would not be in the interests of the respondent, of Mr Fazio, of the public or the Court. 66 The appeal must be dismissed. Costs would follow the event in the ordinary course. I will allow Mr Fazio 10 days from the date of delivery of the reasons file any written submissions as to why costs should not follow the event. The Secretary is to file written submissions, if any, in response within a further 7 days. 2 Mr Fazio has filed and served written submissions in relation to costs in the following terms: '1. It is extremely difficult to make submissions with such a clouded mind amidst an air of futility but nevertheless we try. 2. Financially insignificant a matter as this might seem to the rest of the world, this is simply about what is right and what is wrong and the indelible scar this leaves against Samantha's exemplary name. Yes this is a tragedy if allowed to stand. 3. How dare those that perpetrated this nefarious wrong and the manifestly flawed, uncalibrated system that allows such! 4. With all deference we can only ask that in relation to costs, Your Honour is mindful of the sentencing remarks and since then, further diminished circumstances in the Federal Magistrates Court (Fazio v Centrelink (No 2) [2008] FMCA 1389.' 3 In the Federal Magistrates' decision referred to by Mr Fazio, the following comments were made by his Honour, Lucev FM: 1. Sad circumstances surround these proceedings. They were initiated in personal circumstances poignantly described by the applicant, Arturo Fazio in an affidavit sworn 16 April 2007: "My lawful wife since 24 March 2006, Samantha Underdown, is terminally ill with metastatic breast cancer whereby she is wheelchair bound and reliant upon extensive life support due to the extent of her cancer in her lungs, liver, throughout her spine and vertebrae and hips." 2. Mr Fazio's wife, Samantha Underdown died on 1 July 2007. 3. The application, which, as initially filed sought the payment of alleged unpaid and underpaid social security entitlements and out of pocket disbursements, interest on monies owed and damages, has, following amendment, become an application for payment of allegedly outstanding social security (pension and carer) entitlements, disbursements, and damages for loss of potential wages, stress, physical and mental injury, hardship, loss of earnings and dignity, plus punitive damages and unquantified interest on the basis that the respondent Centrelink, owed Mr Fazio a duty of care. In submissions filed by Mr Fazio he has also alleged misfeasance in public office by Centrelink officials. 4. Centrelink has filed an interim application seeking the summary dismissal of the amended application. 4 It may be those comments to which Mr Fazio was referring. I also observed in Underdown No 1 that the circumstances giving rise to the very extensive disputation between the parties was most regrettable given that the original sum involved was so small. At [2] of the reasons I made the following observations: The financial consequence of that conclusion was that there had been an overpayment of benefits to Ms Samantha Underdown (Ms Underdown) (almost 10 years ago) of some $70.86. The apparent emotional impact on Mr Fazio of dealings with Centrelink appears to have been extremely significant. How such a financially insignificant matter escalated in the fashion it has over many years remains a mystery as well as a tragedy. 5 Nevertheless, as his Honour concluded, especially in circumstances where Centrelink had given Mr Fazio notice of an intention to claim costs in respect of the proceedings if they were lost by Mr Fazio, he was put on notice as to that outcome and it was appropriate, on his Honour's view, notwithstanding the impecuniosity of Mr Fazio that costs should follow the event. He ordered Mr Fazio to pay Centrelink's costs of those proceedings. 6 These proceedings raised the following matters which Mr Fazio asserted were the questions of law properly raised on the appeal: '(a) whether Centrelink engaged in an abuse of legal process by raising a debt in the very first instance back in 2003, which then became the subject of subsequent various protracted appeal processes? (b) whether or not the raising of a debt by the respondent in the first instance and the subsequent appeal processes deliberately engaged in was vexatious, fanciful, capricious and or malfeasant? (c) whether or not a serious miscarriage of justice has arisen out of such in any event? (d) whether or not the applicants were denied procedural fairness in the appeal processes to the SSAT and then subsequently to the AAT? (e) whether a reasonable minded person would conclude an apprehension of bias or lack of impartiality by both the adjudicators of the SSAT and AAT? (f) whether or not proper weight was ever apportioned to the evidence? (g) whether or not the decision is incompossible at law with a finding decision of the SSAT in February 2002 which remains on foot in that, Arturo Fazio in antithesis, was not a member of a couple in a marriage like relationship with Samantha Underdown?' RELEVANT PRINCIPLES 7 Section 43 of the Federal Court of Australia Act 1976 (Cth) (FCA) and O 62 of the Federal Court Rules (FCR) give a wide discretion in relation to costs. The general rule is that costs follow the event unless there is some reason or special circumstance justifying some other order. The discretion to award costs has been described as being unfettered and absolute except that it must be exercised judicially, not arbitrarily or capriciously and cannot be exercised on grounds unconnected with the litigation – Trade Practices Commission v Nicholas Enterprises Pty Ltd (No 3) (1979) 42 FLR 213. It has also been observed that in the case of a wholly successful defending party, the judge must give that party his or her costs unless there is evidence that the defendant has brought about the litigation, has done something connected with the institution or conduct of the suit calculated to occasion unnecessary litigation or expense or has done some wrongful act in the course of the transaction of which the plaintiff complains (Ritter v Godfrey (1920) 2 KB 47 at 60). 8 The respondent contends that the Court should exercise its discretion and make an order that Mr Fazio pay the respondent's costs of the proceedings for the following reasons: 1. He has been wholly unsuccessful, consistently, not only in this proceeding but also in the Social Security Appeals Tribunal and in the Administrative Appeals Tribunal. 2. Some of the arguments advanced, in particular, the purported claim for damages were also advanced in the earlier proceeding before the Federal Magistrates Court to which I have referred. Mr Fazio was wholly unsuccessful in the arguments before that Court and without appealing that decision has attempted to relitigate them in these proceedings. 3. Mr Fazio was given notice that the respondent would seek a costs order against him if he was unsuccessful in these proceedings. 4. An opportunity to file written submissions on costs has been availed of by Mr Fazio but no special circumstance which would justify a departure from the usual rule of costs following the event has been articulated. Impecuniosity alone is not a sufficient reason for declining to make a costs order (Scott v Secretary, Department of Social Security (No 2) [2000] FCA 1450). 9 There is no evidence before the Court as to the financial circumstances of Mr Fazio but even assuming they are precarious, that is an issue which can be dealt with by making provision for time to meet a costs order by way of instalments. conclusion 10 This litigation has not only been most unfortunate but also, futile. One would hope that creative means would be adopted to endeavour to avoid the ongoing disputation between Mr Fazio and the respondent. But in all the circumstances, I have no real choice other than to order that Mr Fazio pay the respondent's costs to be taxed if not agreed. I so order. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. Associate: Dated: 29 October 2009 Mr Fazio appeared in person and represented the Applicants Counsel for the Respondent: S Oliver Solicitor for the Respondent: Australian Government Solicitor Date of Last Written Submissions: 16 September 2009 Date of Judgment: 29 October 2009