FEDERAL COURT OF AUSTRALIA Site Skills Group Pty Ltd v Administrative Appeals Tribunal (No 2) [2020] FCA 78 File number: QUD 233 of 2019 Judge: REEVES J Date of judgment: 7 February 2020 Catchwords: COSTS – application for indemnity costs under r 25.14(2) of the Federal Court Rules 2011 (Cth) – where the respondent made an offer of compromise – whether the applicant acted unreasonably in not accepting that offer – costs ordered on an indemnity basis Legislation: Federal Court of Australia Act 1976 (Cth) Federal Court Rules 2011 (Cth) Cases cited: Site Skills Group Pty Ltd v Administrative Appeals Tribunal [2019] FCA 1970 Date of hearing: Determined on the papers Date of last submissions: 5 December 2019 Registry: Queensland Division: General Division National Practice Area: Administrative and Constitutional Law and Human Rights Category: Catchwords Number of paragraphs: 8 Counsel for the Applicant: Mr SA McLeod QC and Mr M Wilkinson Solicitor for the Applicant: HopgoodGanim Solicitor for the First Respondent: The First Respondent filed a Submitting Notice Counsel for the Second Respondent: Ms M Brennan QC and Ms S Wright Solicitor for the Respondents: Australian Government Solicitor ORDERS QUD 233 of 2019 BETWEEN: SITE SKILLS GROUP PTY LTD ACN 153 744 417 Applicant AND: ADMINISTRATIVE APPEALS TRIBUNAL First Respondent AUSTRALIAN SKILLS QUALITY AUTHORITY Second Respondent JUDGE: REEVES J DATE OF ORDER: 7 February 2020 THE COURT ORDERS THAT: 1. Pursuant to r 1.36 of the Federal Court Rules 2011 (Cth), these orders and the reasons for judgment in support of these orders are made and published from Chambers. 2. The applicant pay the second respondent's costs of the originating application filed on 9 April 2019 to be taxed if not agreed on an indemnity basis from 11.00 am on 10 May 2019. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT REEVES J: 1 Following the delivery of judgment in this matter on 22 November 2019 ([2019] FCA 1970), in which the Australian Skills Quality Authority's (ASQA) summary judgment application under s 31A of the Federal Court of Australia Act 1976 (Cth) succeeded and Site Skills Group Pty Ltd's originating application in this proceeding was dismissed, ASQA exercised the option provided for to seek an order for costs other than a standard costs order. In support of that application, it filed an affidavit of Ms Jessica MacDonald, a lawyer acting for ASQA, together with a set of written submissions. Site Skills later responded with its own set of written submissions in which it opposed ASQA's application for indemnity costs, but did not oppose a standard costs order being made. 2 In its submissions, ASQA accepted that a standard costs order should be made up until 11.00 am on 10 May 2019. Thereafter, it contended, its costs should be paid on an indemnity basis having regard to the terms of an offer of compromise it made on 8 May 2019 under r 25.01 of the Federal Court Rules 2011 (Cth) (the Rules). The relevant terms of that offer, which was expressed to be inclusive of costs, were that: (a) Site Skills' application be discontinued; and (b) Site Skills pay 50% of ASQA's reasonable party/party costs incurred to the date of service of this offer as agreed or taxed. 3 In its written submissions, ASQA placed exclusive reliance on r 25.14 of the Rules. That rule relevantly provides: (1) If an offer is made by a respondent and not accepted by an applicant, and the applicant obtains a judgment that is less favourable than the terms of the offer: (a) the applicant is not entitled to any costs after 11.00 am on the second business day after the offer was served; and (b) the respondent is entitled to an order that the applicant pay the respondent's costs after that time on an indemnity basis. (2) If an offer is made by a respondent and an applicant unreasonably fails to accept the offer and the applicant's proceeding is dismissed, the respondent is entitled to an order that the applicant pay the respondent's costs: (a) before 11.00 am on the second business day after the offer was served—on a party and party basis; and (b) after the time mentioned in paragraph (a)—on an indemnity basis. … 4 Initially, ASQA relied upon both rr 25.14(1) and (2) but, in an email forwarded after it filed its written submissions, it confined its reliance to r 25.14(2). It can be seen from sub-r (2) above, that an essential prerequisite for its application is that "an applicant unreasonably fails to accept the offer". The other prerequisite, that "the applicant's proceeding is dismissed", has, as mentioned above, been met in this instance. 5 In support of its application under sub-r (2), ASQA generally contended that its offer was made in good faith; that it included an element of true compromise; and that it was made early enough in the proceedings that, if it had been accepted, it would have avoided the incurring of significant costs. On the first essential prerequisite mentioned above, ASQA contended that the covering letter it sent with its offer explained why it considered Site Skills' originating application could not succeed and provided it with an opportunity to assess its position with respect to those arguments. It therefore contended that it was unreasonable for Site Skills to fail to accept its offer. 6 In response, Site Skills first emphasised that ASQA bore the onus to establish that it had acted unreasonably in failing to accept its offer. In addressing the essential prerequisite mentioned above, it claimed that "the only reasons given by [ASQA] for why the offer of compromise should be accepted were that the originating application was incompetent, the Court did not have jurisdiction, and certiorari was not available"; and that the Court had "expressly rejected [ASQA's] contentions on these points" at [31] of the Reasons. It added that the "complaints articulated in [ASQA's covering] letter … were wrong and rejected by the Court". 7 In my view, Site Skills is essentially correct in its latter contention above in that, at [31] of the Reasons, ASQA's jurisdictional arguments were all rejected. However, Site Skill's limited success on that aspect fails to acknowledge that it was entirely unsuccessful on the central tenet of ASQA's summary judgment application, namely it failed to establish that it had reasonable prospects of success on the issues raised by its originating application. Specifically, it failed to establish that it had reasonable prospects of setting aside the Administrative Appeals Tribunal's procedural ruling at the heart of this proceeding as that ruling was affected by jurisdictional error because: (a) the Tribunal failed to consider the prejudice that would be suffered by it, or its related company, Productivity Partners Pty Ltd (ground 1 at [32]–[39] of the reasons); or (b) the Tribunal's conclusions about its capacity to consider the behaviour of Mr Wills in isolation from the behaviour of Productivity Partners were affected by legal unreasonableness (grounds 2 and 4 at [40]–[44] of the reasons); or (c) of the comments the Tribunal made about the controversy that surrounded the education sector (ground 3 at [45]–[46] of the reasons). 8 While ASQA did not expressly address each of these issues in the covering letter that accompanied its offer, I consider it canvassed them in sufficient detail to warrant a response from Site Skills. In this respect, I reject Site Skills' contention that the "only reasons" ASQA advanced in support of its offer were its unsuccessful jurisdictional arguments referred to above. In these circumstances, I consider Site Skills acted unreasonably in rejecting ASQA's offer without any debate or further discussion and instead proceeding with the hearing which resulted in its proceeding being dismissed. Accordingly, I consider ASQA has made out its application for indemnity costs under r 25.14(2) of the Rules. I will make orders accordingly. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Reeves. Associate: Dated: 7 February 2020