Federal Court of Australia DAQ22 v Minister for Immigration and Multicultural Affairs (Costs) [2024] FCA 1514 File number(s): Judgment of: HORAN J Date of judgment: 20 December 2024 Catchwords: COSTS – application for indemnity costs – where applicant offered to resolve proceeding in his favour – where Minister subsequently agreed to consent orders allowing the application – whether Minister's initial failure to concede was unreasonable – whether special or unusual feature warranting indemnity costs – Held: costs payable as between party and party Federal Court of Australia Act 1976 (Cth) ss 37M, 37N Legislation: Migration Act 1958 (Cth) ss 197C, 477A(2), 501(3A), 501CA(4) Federal Court Rules 2011 (Cth) rr 31.23, 40.01 AJN23 v Minister for Immigration, Citizenship and Multicultural Affairs (2024) 304 FCR 586 Al-Kateb v Godwin (2004) 219 CLR 562 BNGP v Minister for Immigration, Citizenship and Multicultural Affairs (2023) 298 FCR 609 Calderbank v Calderbank [1976] Fam 93 DAQ22 v Federal Court of Australia [2024] HCASJ 27 DAQ22 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2023] FCA 1557 Cases cited: Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 HSCK v Minister for Immigration, Citizenship and Multicultural Affairs [2024] FCA 313 J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (WA Branch) (No 2) (1993) 46 IR 301 Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd (No 2) [2017] FCAFC 116 NZYQ v Minister for Immigration, Citizenship and Multicultural Affairs [2023] HCA 37; 97 ALJR 1005 PHTP v Minister for Immigration and Multicultural Affairs [2024] FCA 1170 TCXM v Minister for Immigration, Citizenship and Multicultural Affairs [2024] FCA 451 Division: General Division Registry: Victoria National Practice Area: Number of paragraphs: 45 Date of last submissions: Applicant: 13 November 2024 Respondent: 27 November 2024 Date of hearing: Determined on the papers Counsel for the Applicant: Mr M Albert and Ms K Laycock-Walsh Solicitor for the Applicant: Norton Rose Fulbright Australia Counsel for the Respondent: Mr N Wood SC and J Barrington Solicitor for the Respondent: MinterEllison ORDERS VID 499 of 2022 BETWEEN: DAQ22 Applicant AND: MINISTER FOR IMMIGRATION AND MULTICULTURAL AFFAIRS Respondent order made by: HORAN J DATE OF ORDER: 20 DECEMBER 2024 THE COURT ORDERS THAT: 1. The applicant's costs of the proceeding until 29 October 2024 are to be assessed as between party and party. 2. There be no order as to the costs of the proceeding after 29 October 2024. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT HORAN J: Introduction 1. In this proceeding, the applicant sought judicial review of a decision made by the Minister personally under s 501CA(4) of the Migration Act 1958 (Cth) not to revoke the cancellation of a protection visa held by the applicant. 2. The Minister has now accepted that his decision was affected by jurisdictional error and should be set aside. The Minister has been ordered to pay the applicant's costs. The only outstanding issue concerns the basis or method of quantification of those costs. 3. The applicant submits that the Minister should pay costs on an ordinary basis up until 6 September 2024, and on an indemnity basis thereafter. The Minister submits that costs should be payable on the usual basis, that is, as between party and party: see r 40.01 of the Federal Court Rules 2011 (Cth). 4. For the reasons set out below, I consider that the costs of the proceeding up to the making of consent orders on 29 October 2024 should be as between party and party, and that there should otherwise be no order as to costs after that date. Background 1. In order to provide context, it is necessary to set out the history of this proceeding. 2. The applicant is a Shia Muslim of Hazara ethnicity who was born in Afghanistan. He arrived in Australia by boat on 23 September 2011, and was granted a protection visa on 24 January 2012. He was subsequently convicted of attempted murder, and sentenced to 11 years and six months' imprisonment, with a non-parole period of six years. 3. On 15 May 2020, the applicant's protection visa was mandatorily cancelled under s 501(3A) of the Migration Act. On 17 December 2021, after the applicant had made representations about revocation of the cancellation decision, the Minister personally decided under s 501CA(4) not to revoke the original decision. 4. The applicant was taken into immigration detention after his release from criminal custody in late January 2022. 5. The Minister has previously accepted that the applicant is owed protection obligations in respect of Afghanistan, and that the prospects of finding another country willing to accept the applicant are poor. 6. On or about 5 September 2022, the applicant filed an application under s 477A(2) of the Migration Act and r 31.23 of the Rules for an extension of time within which to lodge an application for judicial review of the Minister's decision under s 501CA(4). 7. By an amended originating application dated 26 April 2023, the applicant sought review of the Minister's decision on two grounds: (i) that the Minister "failed to perform his statutory task or failed to act on a correct application of the law" by finding that the applicant would be indefinitely detained without revocation and his prospects of removal to liberty were "poor", but failing to consider whether this finding was sufficient on its own to engage the power under s 501CA(4) of the Migration Act; and (ii) that the Minister's decision "was legally unreasonable and/or lacking in proportion when he concluded that 'significant weight in favour of non-revocation' arose from 'a low likelihood' that the Appellant would reoffend, but if he did, it 'may' result in harm to members of the community". 8. In his written submissions in support of the first ground of review, the applicant argued that the effect of the cancellation of his protection visa was indefinite detention, in circumstances where s 197C of the Migration Act operated to prevent his removal to Afghanistan, so that revocation of the cancellation decision under s 501CA(4) was "the only compellable and reviewable means by which his liberty in Australia can be regained". 9. The application was heard on 25 May 2023 before O'Sullivan J, who reserved judgment. 10. The High Court subsequently handed down its decision in NZYQ v Minister for Immigration, Citizenship and Multicultural Affairs [2023] HCA 37; 97 ALJR 1005. On 8 November 2023, the Court pronounced orders in that case declaring that the plaintiff's detention was unlawful by reason of there having been and continuing to be no real prospect of his removal from Australia becoming practicable in the reasonably foreseeable future, and issued a writ of habeas corpus requiring the respondents to release the plaintiff forthwith. On 28 November 2023, the Court delivered its reasons for judgment. 11. At the risk of oversimplification, the effect of the decision in NZYQ is that the detention of an unlawful non-citizen for the purposes of his or her removal from Australia is not validly authorised by the relevant provisions of the Migration Act if and for so long as there is no real prospect of his or her removal from Australia becoming practicable in the reasonably foreseeable future. In reaching this conclusion in NZYQ, the High Court reopened and overruled the "constitutional holding" in Al-Kateb v Godwin (2004) 219 CLR 562. 12. On 21 November 2023, the applicant was released from immigration detention as a consequence of the decision in NZYQ. 13. The parties were invited to make written submissions on the effect of NZYQ on the applicant's grounds for review. In submissions dated 29 November 2023, the applicant relevantly submitted that the Minister had failed to act on a correct understanding of the law by proceeding on the basis that the applicant would be indefinitely detained if the cancellation decision were not revoked. The applicant indicated that "[f]or clarity", he sought to amend the first ground of the originating application to delete the phrase "he would be indefinitely detained without revocation", so that the amended ground would read: The Minister failed to perform his statutory task or failed to act on a correct application of the law in that he found that there was a reason to revoke the cancellation of the Appellant's protection visa – namely, that he would be indefinitely detained without revocation and his prospects of removal to liberty were 'poor' – but failed to consider whether this, on its own, was sufficient to engage the Minister's power under s 501CA(4) of the Migration Act 1958 (Cth). 1. The applicant further submitted: 8. What is now clear is that [the Minister's] error is compounded by the clarified position on detention of people in a predicament similar to or the same as that of the Applicant. Following NZYQ, it seems that two additional aspects of the Minister's analysis are in error. 9. First, the true legal position emerging from there being 'poor' prospects of removal was not indefinite detention, but was rather destitution at liberty in Australia. This is so because, if the prospect of removal of the Applicant is not real, he was required to be released into the Australian community. However, he would do so as an 'unlawful noncitizen'. Such a person has no right to work and no access to social security, both of which depend on there being the relevant entitltments [sic] attached to a visa. That is, such a person would be dependent – including for shelter – on friends, family or well-meaning community members. That position – like detention before NZYQ – would last for so long as it took the Respondent to grant him a visa, if ever. Like circumstances have elsewhere been found to amount to conditions that are inhuman at law. 10. No part of this reality was considered or weighed by the Minister, despite it being the true legal consequence of his conclusion that the Applicant's prospects of removal were 'poor'. Nor did the Minister consider these matters in combination with this Applicant being the subject of strict parole conditions until 2026. These facts could equally have been a standalone, 'another reason' for the Minister to exercise his power under s 501CA(4) of the Migration Act. 11. Second, an alternative way the Applicant seeks to characterise the error is, in essence, a combination of the two extant grounds. An administrative decision-maker is in error and has made a decision that was legally unreasonable if they make a decision on an understanding of the law which, by the time of judicial review, has been clarified in a way that is fundamentally different to what the decision-maker understood and applied. 12. So much was made plain in an authority already cited in the Applicant's primary written submissions (at footnote 49), being Minister for Immigration and Border Protection v Mohammed [2019] FCAFC 49. In that case, the administrative decision-maker relied on a legal proposition from long-standing authority binding on it which was, after its decision, over-ruled. The Full Federal Court concluded that that gave rise to jurisdictional error. 13. The same should occur here in analogous circumstances: the Minister made his decision understanding that the 'poor' prospect of removal meant indefinite detention in Australia of the Applicant when the true legal position (revealed by NZYQ) is that he was instead liable to be released as an 'unlawful non-citizen' without any financial or other public support for the indefinite future. Such a misunderstanding of the operation of the law is itself revealing of jurisdictional error and it too justifies this application being allowed. (Footnotes omitted.) 1. On 8 December 2023, O'Sullivan J refused the applicant's application for an extension of time to seek judicial review of the non-revocation decision: DAQ22 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2023] FCA 1557. In particular, his Honour (at [68]-[69]) rejected the applicant's contention that "the Minister erred in making a decision that was legally unreasonable by making a decision on an understanding of the law which, by the time of judicial review, has been clarified in a way that is fundamentally different to what the decision-maker understood and applied". 2. On 25 June 2024, the High Court (Jagot J) issued a writ of certiorari to quash the orders made by O'Sullivan J, and a writ of mandamus requiring this Court to determine according to law the applicant's extension of time application: DAQ22 v Federal Court of Australia [2024] HCASJ 27 (DAQ22 (High Court)). Justice Jagot concluded that the applicant's "second contention" (set out in paragraphs 11 to 13 of the written submissions extracted above) was not answered by the proposition that legal unreasonableness was to be judged at the time that the power was exercised, in circumstances where the Minister did not know and could not have known the legal consequences of his decision in the light of the subsequent decision in NZYQ. Rather, Jagot J held (at [13]-[15]) that O'Sullivan J had not considered the substance of the applicant's contention that the Minister's decision was legally unreasonable at the time it was made because he had acted on an understanding of the law that was subsequently held to have always been incorrect. 3. The orders made by Jagot J included an order requiring the Minister to pay the applicant's costs in the High Court as well as the costs in this Court to that date. 4. Following the remittal from the High Court, orders were made on 11 September 2024 to list the matter for hearing before me on 30 October 2024, and directing the parties to file written submissions. 5. On 10 October 2024, the applicant filed written submissions addressing the following grounds of review (which were the subject of a draft amended originating application): 1. The Minister's decision was legally unreasonable because it was made on a misunderstanding or misapplication of law, namely as set out in NZYQ v Minister for Immigration, Citizenship & Multicultural Affairs & Anor (2023) 97 ALJR 1005. 2. The Minister's decision was infected by jurisdictional error in that it was legally unreasonable and/or lacking in proportion when he concluded that 'significant weight in favour of non-revocation' arose from 'a low likelihood' that the Appellant would reoffend, but if he did, it 'may' result in harm to members of the community. 1. In support of the first ground of review, the applicant relied on the decision of the Full Court in AJN23 v Minister for Immigration, Citizenship and Multicultural Affairs (2024) 304 FCR 586, in which it was held that, in deciding to refuse to grant a protection visa to the appellant under s 501A(2) of the Migration Act, the Minister had acted on an erroneous understanding of the operation of the Act and the legal consequences of his decision, namely that the appellant faced the prospect of immigration detention for an indefinite period. Such an understanding was wrong in the light of the decision in NZYQ, although the misunderstanding was "unknown, and unknowable, to the Minister" at the time of his decision: AJN23 at [30]-[34] (Murphy, Stewart and McEvoy JJ). The Full Court in AJN23 held that the Minister's error of law was material to the decision in circumstances where the erroneous understanding that the applicant would remain in immigration detention on the refusal of his visa application until he was removed to another country "was centrally relevant to several aspects of the Minister's reasoning": AJN23 at [49], [51]. 2. In the present case, the applicant submitted that the Minister had similarly erred in law due to an erroneous conclusion as to the consequences of the decision, which was centrally relevant to the Minister's reasoning. 3. Prior to the hearing, and before filing any written submissions, the Minister informed the Court that he no longer opposed the application for review. The hearing was vacated, and orders were made by consent on 29 October 2024 granting an extension of time under s 477A(2) of the Migration Act, quashing the Minister's decision dated 17 December 2021, and requiring the Minister to determine according to the law the application for revocation under s 501CA(4) of the Migration Act. 4. The consent orders included an order that the Minister pay the applicant's costs, "with the method of quantification of the costs to be determined on the papers". The parties were directed to file written submissions addressing the issue of costs and the appropriate form of order that should be made. 5. As is evident from the orders made on 29 October 2024, the only issue is the "method of quantification" of the costs that have been awarded to the applicant. Consideration 1. The applicant submitted that the Minister should pay costs on an ordinary basis up until 6 September 2024 and on an indemnity basis from that date. In support of his application for indemnity costs, the applicant relied on an affidavit of Bridget Scougall affirmed 13 November 2024. 2. The applicant submitted that the circumstances of the present case were "highly unusual, if not unique", and that the Minister had ultimately conceded "based on an argument which had been articulated to it [by the applicant] on five occasions by the time it conceded the case", namely: 3. in the applicant's written submissions dated 29 November 2023 on the effect of NZYQ; 4. in the applicant's written submissions dated 21 February 2024 and filed in the High Court proceeding; 5. in a letter dated 6 September 2024 from the applicant's solicitors to the Minister's solicitors following the remittal of the matter by the High Court; 6. in the applicant's written submissions filed on 10 October 2024; and 7. in a letter dated 17 October 2024 from the applicant's solicitors to the Minister's solicitors. 8. The letter from the applicant's solicitors dated 6 September 2024 referred to the Full Court's decision in AJN23, and invited the Minister to consent to orders by which the non-revocation decision would be quashed and the matter would be remitted for reconsideration. In the alternative, the applicant's solicitors proposed that the matter be listed for hearing, stating: We consider our client has strong prospects of success in the application and you should be under no doubt that we will seek a full recovery of costs if, as we anticipate, our client succeeds in the application. We intend to bring this letter to the attention of the Court when matters of costs fall to be determined. 1. It is not clear from the evidence before me whether or not the Minister's solicitors responded to the letter dated 6 September 2024. 2. The letter from the applicant's solicitors dated 17 October 2024 referred to the decision in PHTP v Minister for Immigration and Multicultural Affairs [2024] FCA 1170, in which the Minister conceded that a decision made by the Administrative Appeals Tribunal was affected by jurisdictional error on the ground that the Tribunal had failed to act on a correct understanding of the law by having regard to the prospect of the applicant's indefinite detention. The applicant's solicitors again invited the Minister to enter into consent orders, reiterating that they would seek "a full recovery of costs" if the applicant were to succeed in the application, and would bring their letter to the Court's attention when matters of costs were determined. 3. Again, there is no evidence of the response (if any) of the Minister's solicitors to the letter dated 17 October 2024. 4. The applicant submits that he ought not properly have been put to the expense of pursuing the proceeding "after, at the latest, the third articulation of his case on 6 September 2024", at which time the Minister "was invited to resolve the proceeding by consent in terms substantially the same as those agreed after the expense of preparing submissions was incurred". The applicant submits that it was unreasonable for the Minister to have subjected him to the expenditure of costs after that time, because it was plain that the application would be successful for the reasons that had been articulated by the applicant. The applicant further submits that the Minister's "belated capitulation" should be considered in the light of his status as a model litigant, and that an award of indemnity costs would reflect appropriate disapproval of the Minister's failure to resolve the dispute as quickly, inexpensively and efficiently as possible. It is submitted that an order for indemnity costs "would remedy the wasted expense to which the Applicant was put from the fact that the Respondent did not make a decision to concede earlier and despite knowing precisely the reasons and the authority by which it was bound to lose". 5. The Minister opposes the application for costs on an indemnity basis from 6 September 2024. The Minister submits that there must be a "special or unusual feature" to warrant a departure from the usual course, referring to Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd (No 2) [2017] FCAFC 116 at [5] (Jagot, Yates and Murphy JJ). While the Minister accepts that, in the light of the decision in AJN23, it was responsible for him to consent to dispositive orders in advance of the hearing, he submits that it was not objectively unreasonable not to consent to such orders immediately upon or shortly after receipt of the letter dated 6 September 2024. The Minister notes that the letter dated 6 September 2024 purported to summarise the decision in AJN23 "in a single paragraph" and asserted that the principles in AJN23 were applicable to the applicant's situation, before inviting the Minister to consent to dispositive orders. The applicant subsequently filed detailed submissions addressing the reasons why a lengthy extension of time should be granted under s 477A, and in support of the applicant's position regarding the alleged jurisdictional error in the Minister's decision. As at 6 September 2024, the period within which the Minister could apply for special leave to appeal to the High Court from the decision in AJN23 had not yet expired. 6. More generally, the Minister argues that it was not unreasonable for him to seek advice about the implications of AJN23 for the "cohort" of cases involving similar, but not necessarily identical, facts. The Full Court in AJN23 had distinguished a number of prior decisions in which a different outcome had been reached: see AJN23 at [37]-[42], referring to HSCK v Minister for Immigration, Citizenship and Multicultural Affairs [2024] FCA 313, TCXM v Minister for Immigration, Citizenship and Multicultural Affairs [2024] FCA 451 and BNGP v Minister for Immigration, Citizenship and Multicultural Affairs (2023) 298 FCR 609. In particular, the Minister submits that it was not unreasonable to consider whether, on the particular facts in the present case, any error of the kind identified in AJN23 was material to the decision under review. Further, in circumstances where the applicant required a lengthy extension of time under s 477A of the Migration Act, there were other considerations bearing on the Minister's decision to consent to dispositive orders. 7. The applicant does not place any direct reliance on the principles in Calderbank v Calderbank [1976] Fam 93 in support of his application for indemnity costs. This is unsurprising. First, it may be doubted that the terms on which the applicant invited the Minister to finalise the proceeding involved any genuine compromise. Second, the letters from the applicant's solicitors dated 6 September 2024 and 17 October 2024 made no reference to Calderbank principles. 8. Thus, the application for indemnity costs is essentially based on the contention that it was unreasonable for the Minister to have continued to defend the proceeding beyond 6 September 2024. In other words, it is argued that this is a case where the Minister, "properly advised, should have known that he had no chance of success", or where the Minister persisted "in what should on proper consideration be seen to be a hopeless case", in so far as such principles can be applied to the defence of a proceeding as opposed to the commencement or continuation of an action: see Melbourne City Investments at [5] (Jagot, Yates and Murphy JJ), referring to Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401 (Woodward J) and J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (WA Branch) (No 2) (1993) 46 IR 301 at 303 (French J). 9. In the circumstances of the present proceeding, one might be forgiven for asking how the contest between the parties over the "method of quantification" of costs incurred by the applicant after 6 September 2024 advances the overarching purpose of facilitating the just resolution of disputes as quickly, inexpensively and efficiently as possible: see ss 37M and 37N of the Federal Court of Australia Act 1976 (Cth). The steps taken in the proceeding during the relevant period were relatively limited. After a case management hearing listed on 20 September 2024 was vacated, the applicant's legal representatives proceeded to file the draft amended originating application, written submissions and a list of authorities on 10 October 2024, and then drafted and sent the letter dated 17 October 2024. There do not appear to have been any other costs incurred by the applicant before the consent orders were made on 29 October 2024. 10. In such circumstances, one would not expect that the difference in the quantum of costs as between party and party and the quantum of costs on an indemnity basis in the period between 6 September 2024 and 29 October 2024 would be a substantial amount. The Dictionary in Sch 1 of the Rules defines "costs as between party and party" to mean "only the costs that have been fairly and reasonably incurred by the party in the conduct of the litigation". On the other hand, "costs on an indemnity basis" is defined to mean "costs as a complete indemnity against the costs incurred by the party in the proceeding, provided that they do not include any amount shown by the party liable to pay them to have been incurred unreasonably in the interests of the party incurring them". 11. In this regard, there is no suggestion that the costs incurred by the applicant in filing the written submissions and accompanying materials on 10 October 2024, in accordance with the consent orders made by the Court on 11 September 2024, were not fairly or reasonably incurred in the conduct of the litigation. Particularly where counsels' fees in preparing those submissions would be recoverable as disbursements, it is not clear what (if any) practical difference would result from ordering the costs since 6 September 2024 to be paid on an indemnity basis. The costs incurred by the applicant's solicitors in drafting and sending the letter dated 17 October 2024 are unlikely to be significant, and would be wholly or mostly recoverable as between party and party. 12. In relation to the Minister's prospects of successfully defending this proceeding, the argument that was ultimately conceded by the Minister was not considered by O'Sullivan J, and was not finally determined by Jagot J. It might well be said that the writing was on the wall following the Full Court's decision in AJN23, which was handed down on 20 August 2024. Nevertheless, I do not consider that it was unreasonable for the Minister to have taken some time to consider his position in the light of the Full Court's decision, including the application of the Full Court's reasoning to the particular facts of the present case and the applicant's submissions filed on 10 October 2024, including on the considerations relevant to the extension of time. Although the previous decision by O'Sullivan J to refuse an extension of time was based solely on the merits of the judicial review application and not on any discretionary basis such as the length of the delay or the adequacy of the explanation for the delay (see DAQ22 (High Court) at [4] (Jagot J)), that does not mean that such considerations, which were addressed at length in the applicant's submissions dated 10 October 2024, were not live issues on the remittal. 13. Having regard to all of the circumstances, I do not consider that there is any special or unusual feature which warrants a departure from the ordinary rule that costs should be awarded as between party and party. The application for indemnity costs from 6 September 2024 is refused. I consider that each party should bear their own costs of that application. 14. In the result, I order that the Minister pay the applicant's costs of the proceeding until 29 October 2024, with those costs to be assessed as between party and party. There should otherwise be no order as to costs. I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Horan. Associate: Dated: 20 December 2024