FEDERAL COURT OF AUSTRALIA

Li v Chief of Army (No 2) [2013] FCAFC 40

THE COURT ORDERS THAT:

1.    The appellant pay the respondent’s costs of the appeal, including the costs of submissions concerning the issue of costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

1    On 8 April 2011, after a trial by restricted court martial, the appellant was convicted of the offence of creating a disturbance contrary to s33 of the Defence Force Discipline Act 1982 (Cth) (the “DFDA”). The appellant appealed to the Defence Force Discipline Appeal Tribunal (the “Tribunal”). The appeal failed. The appellant then appealed to this Court, such appeal being limited to a “question of law involved in a decision of the Tribunal”.

2    On 26 February 2013 the Full Court dismissed that appeal by majority (Keane CJ, Jagot and Yates JJ, Dowsett and Logan JJ dissenting). The respondent now seeks the costs of the appeal. On 1 March 2013 Keane CJ resigned from this Court upon his appointment to the High Court. It was not practicable to dispose of the costs application prior to his Honour’s resignation. Section 14(3) of the Federal Court of Australia Act 1976 (Cth) (the “Federal Court Act”) provides that in those circumstances the application may be determined by the remaining members of the Court.

3    The respondent submits that:

… there is no basis upon which the usual principle ought not be applied – that is, that costs follow the event … .

4    In support of this proposition the respondent refers to the decision of the Full Court in Jones v Chief of Navy (2012) 205 FCR 458. The appellant submits that there should be no order as to costs. He relies upon the following matters:

    no application was made at the time at which the Court published its decision and reasons;

    the “clear merit in the issues raised by the majority and the minority”;

    the matter was resolved by a majority decision;

    in Jones, the appellant’s appeal point was regarded as “plainly untenable”, a proposition which cannot readily be advanced in this case, given the divergent views of the members of the Court;

    the appellant’s ongoing membership of the Defence Force;

    a general practice in criminal appeals that no costs be ordered against an appellant;

    s 17 of the Criminal Appeal Act 1912 (NSW) (the “Criminal Appeal Act”) provides that there be no order as to costs in appeals to the Court of Criminal Appeal, such provision applying, it is said, to this Court by virtue of s 79 of the Judiciary Act 1903 (Cth) (the “Judiciary Act”);

    an adverse costs order would be contrary to Art 14(5) of the International Covenant on Civil and Political Rights 999 UNTS 181 (the “International Covenant”) which provides that:

Everyone convicted of a crime shall have the right to his conviction and sentence being reviewed by a higher tribunal according to law.

THE POWER TO AWARD COSTS

5    Section 43(1) of the Federal Court Act provides:

Subject to subsection (1A) and section 570 of the Fair Work Act 2009, the Court or a Judge has jurisdiction to award costs in all proceedings before the Court (including proceedings dismissed for want of jurisdiction) other than proceedings in respect of which this or any other Act provides that costs shall not be awarded.

6    Subsection 43(2) provides:

Except as provided by any other Act, the award of costs is in the discretion of the Court or Judge.

7    The exception in s 43(1) applies to “proceedings in respect of which this or any other Act provides that costs shall not be awarded”. There is no suggestion that the present proceedings are within a class in respect of which any Commonwealth legislation provides that costs should not be awarded (subject to the possible interaction of s 79 of the Judiciary Act and s 17 of the Criminal Appeal Act).

8    The appellant’s first submission seems to be that the respondent is, in some way, estopped from seeking costs at this stage. As the respondent points out, it sought an order as to costs in its written submissions on appeal. Not infrequently the question of costs is left for argument following the decision. The application for costs remains outstanding and must be resolved.

9    The appellant seeks to make something of the fact that two members of the Court would have allowed his appeal. Whilst this fact may indicate that the appeal was not completely misconceived, it is difficult to see how it might affect the exercise of the discretion as to costs. The High Court held, in Latoudis v Casey (1990) 170 CLR 534, that an order for costs is compensatory, not punitive (per Mason CJ at 542-3, Dawson J at 559, Toohey J at 562-3 and McHugh J at 567. The appropriateness of a compensatory order generally depends on the outcome, not the individual views of the judges constituting the court. The award of costs in Jones was not primarily based upon the untenable nature of the appellant’s argument. We see no particular significance attaching to this fact or to the fact that the appellant remains a member of the Defence Force.

10    The appellant submits that the practice is not to make orders against an appellant in criminal appeals. It may be dangerous to generalize, but our understanding is that the state and territory courts of criminal appeal do not generally make orders as to costs in appeals against convictions on indictment or against sentences for indictable offences. However we do not understand that to be necessarily the practice in connection with appeals against decisions in summary proceedings. The decision of the Full Court in Jones and the case referred to at [193] in that decision, Hoffman v Chief of Army (2004) 137 FCR 520, suggest that such practice does not obtain in this Court.

11    As to s 17 of the Criminal Appeal Act, we see no reason to conclude that s 79 of the Judiciary Act applies that section to proceedings in this Court to the exclusion of s 43 of the Federal Court Act. Section 79 provides that the laws of each state or territory, including the laws relating to procedure, evidence and the competency of witnesses shall apply “except as otherwise provided by the Constitution or the laws of the Commonwealth”. Section 17 purports to apply to proceedings in the Court of Criminal Appeal, and not to proceedings in other courts. There is no compelling reason for treating it as being of wider application, or for concluding that s 79 should be construed as extending its operation so as to exclude the operation of s 43 which clearly confers this Court’s power to award costs.

12    One reason why s 79 should be not construed so as to render s 17 of the Criminal Appeal Act applicable is that the submission assumes that the Full Court was exercising federal appellate jurisdiction on appeal from a court exercising federal original jurisdiction. This is not so. The restricted court martial, like other service tribunals, does not exercise the judicial power of the Commonwealth under s 71 of the Constitution: R v Bevan; Ex parte Elias and Gordon (1942) 66 CLR 452 and White v Director of Military Prosecutions (2007) 231 CLR 570. Even though the power which the Tribunal exercises under the Defence Force Discipline Appeals Act 1955 (Cth) (the “Defence Force Discipline Appeals Act”) can be, and in this case was exercised by judicial officers, that power also is not Commonwealth judicial power. The Tribunal is another tribunal within the military justice system. The Full Court exercised original, not appellate, jurisdiction in hearing the “appeal” under s 52 of the Defence Force Discipline Appeals Act: Hembury v Chief of the General Staff (1998) 193 CLR 641 at [31]. As Gummow and Callinan JJ observed in Hembury at [31], “The Full Court was not exercising any jurisdiction analogous to that of a Court of Criminal Appeal.” Thus, even though s 79 “should be interpreted and applied liberally” (Huddart Parker Ltd v The Ship Mill Hill (1950) 81 CLR 502 at 507 per Dixon J), it cannot here operate to apply s 17 of the Criminal Appeal Act.

13    As to the International Covenant, the appellant simply asserts that a costs order impairs the right to have a conviction reviewed by a higher tribunal. We see no apparent merit in that submission. The reference to s 73 of the Constitution adds nothing. No attempt has been made to develop a rational argument based upon either the International Covenant or s 73 of the Constitution. No such argument immediately occurs to us. It is no part of our duty to manufacture an argument, given that counsel has failed to do so.

14    We turn to the respondent’s submissions in support of its application for costs. The thrust of the submissions is that the “usual principle” should be applied, namely “that costs follow the event”. The decision in Jones is said to justify this approach. In Jones an order for costs was made pursuant to s 43, the Court observing at [193]:

The orders made in Hoffman at [48] confirm that it is not the practice of this Court on appeals under s 52 of the Appeals Act to make no order as to costs. Under s 43 of the Federal Court Act, the usual rule is that costs follow the event. We see no reason not to follow that approach.

THE DISCRETION AS TO COSTS

15    Pursuant to s 43(2), costs are in the discretion of the court. Not infrequently Judges and counsel tend to move easily from that proposition to the proposition that “the usual rule is that costs follow the event”. The ready assertion of this “usual rule” may sometimes place an inappropriate fetter upon the general discretion. Even if, in civil proceedings, it is generally safe to adopt such an approach, none of the members of the High Court sitting in Latoudis adopted the proposition that costs follow the event in summary criminal proceedings. That case concerned the circumstances in which an order for costs might be made in favour of a successful defendant in summary criminal proceedings. There had long been a tendency to award costs, as a matter of course, to a successful prosecutor, whilst awarding costs to a successful defendant only in exceptional circumstances. At 543-544 Mason CJ said:

I am not persuaded that there is a complete analogy between the discretion to award costs in summary proceedings and the power to award costs in civil proceedings. For that reason I would not be prepared to accept that in summary proceedings there should be a general rule that costs follow the event. As I have noted, the making of provision in s 97(a) and (b) is not without significance. The differences between criminal and civil proceedings are substantial, not least of them being the absence of pleadings, the different onus of proof, the defendant’s inability in criminal proceedings to enter into a compromise and the possibility that the charge, if proved, may affect the defendant’s livelihood and reputation. These differences may possibly provide grounds in the circumstances of particular cases for refusing to order costs in favour of a successful informant which would have no application in civil proceedings.

Nevertheless I am persuaded that, in ordinary circumstances, an order for costs should be made in favour of a successful defendant. However, there will be cases in which, when regard is had to the particular circumstances, it would not be just and reasonable to order costs against the prosecutor or to order payment of all the defendant’s costs. If, for example, the defendant, by his or her conduct after the events constituting the commission of the alleged offence, brought the prosecution upon himself or herself, then it would not be just and reasonable to award costs against the prosecutor.

I agree with Toohey J that, if a defendant has been given an opportunity of explaining his or her version of events before a charge is laid and declines to take up that opportunity, it may be just and reasonable to refuse costs. Likewise, if a defendant conducts his or her defence in such a way as to prolong the proceedings unreasonably, it would be just and reasonable to make an award for a proportion of the defendant’s costs.

16    After a detailed examination of the position in the various states and in England, Dawson J observed at 561:

For all of these reasons, a successful defendant in summary proceedings for an offence can, in my view have no expectation as a general rule, unlike a successful party in civil proceedings, that costs will be awarded in his favour. The discretion conferred by [the relevant legislation] was unfettered, but the considerations which a magistrate ought to take into account in criminal proceedings require a particular approach. All other things being equal, the mere acquittal of a defendant ought not to result in an order for costs being made in his favour against a police informant. Thus, the magistrate in this case was entitled in the exercise of his discretion to refuse to award costs in favour of the appellant.

17    Brennan J appears to have agreed with this approach. His Honour and Dawson J dissented in the result, but the differences between their respective positions and those of the majority seem to have involved emphasis rather than principle.

18    At 565-566, Toohey J said:

Now, in a particular case there may be good reasons connected with the prosecution such that it would not be unjust or unreasonable that the successful defendant should bear his or her own costs or, at any rate, a proportion of them. To return to the examples given earlier in this judgment, if a defendant has been given the opportunity of explaining his or her version of events before a charge is laid and refuses the opportunity, and it later appears that an explanation could have avoided the prosecution, it may well be just and reasonable to refuse costs … . This has nothing to do with the right to silence in criminal matters. A defendant or prospective defendant is entitled to refuse an explanation to the police. But if an explanation is refused, the successful defendant can hardly complain if the court refuses an award of costs when an explanation might have avoided the prosecution. Again, if the manner in which the defence of a prosecution is conducted unreasonably prolongs the proceedings, for instance by a necessary cross-examination, neither justice nor reasonableness demands that the successful defendant be indemnified, at any rate as to the entirety of the costs incurred. These illustrations are in no way exhaustive but what they point up is that a refusal of costs to a successful defendant will ordinarily be based upon the conduct of the defendant in relation to the proceedings brought against him or her.

The views expressed in this judgment do not seek to fetter the discretion of the magistrate faced with an application by a successful defendant for an order for costs. But they do seek to identify considerations which are irrelevant and those which are relevant on such an application. It is unnecessary to invoke the analogy of civil actions, although the considerations identified, on the one hand as relevant, and those on the other hand as irrelevant, may prompt such an analogy. Likewise, it is unnecessary to express the guiding principles as requiring an award of costs “unless …”, though again that may be the practical consequence of the application of those principles.

19    Finally, McHugh J said at 568-9:

In civil proceedings, the relevant statute or rule often provides that costs follow the event unless the Court thinks that some other order should be made. But even when the discretion is uncontrolled, civil courts act on the basis that a successful party has a reasonable expectation of obtaining an order for costs and that the discretion to refuse to award costs should not be exercised against the successful party except for a reason connected with the case. …

In is true that the discretion to award costs in summary proceedings has to be exercised in circumstances which are not identical to those which exist in civil cases. For example, a criminal case cannot be settled, and the informant does not seek to vindicate any right or define any obligation of his or her own. Moreover, there are no written pleadings in criminal proceedings. The plea of not guilty in criminal proceedings, like its historic common law counterpart in civil proceedings, puts everything in issue. … But, despite the differences between civil and criminal proceedings, once the real issue in the summary proceedings are identified, there is no difficulty in applying in such proceedings principles akin to those applicable to the making or refusing of orders for costs in civil cases.

Nevertheless, it needs to be stressed that, subject to any contrary legislative indication, costs in summary proceedings do not follow the event and that a successful defendant in such proceedings, like a successful party in civil proceedings, has no right to an order for costs.

20    His Honour then went on to observe that:

… a successful defendant in summary proceedings has a reasonable expectation of obtaining an order for the payment of his costs because it is just and reasonable that the informant should reimburse him or her for liability for costs which have been incurred in defending the prosecution.

21    The decision in Latoudis was distinguished by the High Court in Oshlack v Richmond River Council (1998) 193 CLR 72. In that case Oshlack had brought proceedings in the Land and Environment Court, seeking to impugn a development consent. He was said to have no personal interest in the outcome of the proceedings, being motivated by a desire to preserve the habitat of endangered fauna. The proceedings were dismissed, but the judge held that there should be no order as to costs, concluding that the proceedings had been motivated by a desire to ensure obedience to environmental law and to preserve the habitat of an endangered native animal, that a significant number of members of the public supported that stance, so that there was a public interest in the outcome of the proceedings, and that the basis of the challenge was arguable and raised significant issues about the interpretation and administration of legislative provisions relating to the protection of endangered fauna. The Court of Appeal reversed the decision of the judge at first instance, ordering Oshlack to pay the Council’s costs at first instance and in the Court of Appeal, apparently relying on the decision in Latoudis.

22    Oshlack appealed to the High Court by special leave. Brennan CJ and McHugh J, both of whom were members of the Court in Latoudis, considered that the decision disposed of the case, and that the Court of Appeal was correct in ordering that the unsuccessful party pay the successful party’s costs. Gaudron and Gummow JJ (at 83-84) and Kirby J (at 119) treated Latoudis as applying only to summary criminal proceedings and upheld the appeal, restoring the orders at first instance. The effect of the majority’s decision was further to undermine the validity of any general proposition that costs should follow the event. It does not, for present purposes, undermine the authority of the decision in Latoudis. Despite the differences in emphasis discernible in the reasons of the various members of the Court in that case, it would be unwise to assume that in criminal proceedings, costs follow the event.

COSTS ON APPEAL

23    Latoudis concerned the question of costs at first instance. However the different circumstances, as between civil and summary criminal proceedings, addressed by the High Court in that case, may also affect the award of costs on appeal.

24    In the present case, the decision of the court martial has already been subject to appeal in the Tribunal, constituted by three judges, being members of superior courts of record. The Tribunal exercises a wide power of appeal. This Court has a very narrow appellate jurisdiction in matters of this kind, limited to the consideration of questions of law involved in the decision of the Tribunal. The right of appeal to this Court is, in some respects anomalous. No doubt it is the product of a compromise between the need to have an appellate tribunal which understands service conditions within the military justice system, and the need to ensure that there is provision for a form of Chapter III judicial oversight of that system that will, in most cases, relieve the High Court of being called upon, as it was in Elias and Gordon, to exercise its constitutionally entrenched original jurisdiction under s 75(v) of the Constitution. Given that this Court’s jurisdiction is so limited, it follows that many of the factual complications which are relevant to the exercise of the discretion to award costs in other areas of our jurisdiction simply do not arise. Where, on appeal, a question of law arises, it will generally involve a question which has been ventilated below. The parties will have had the opportunity to reflect upon the decision, free of the pressures of the trial. In those circumstances it seems reasonable that an unsuccessful party on appeal should pay the costs, although there may be cases where another order is justified. Where the appeal court affirms the view adopted at first instance or at a lower level of review or appeal, little can generally be said in support of the proposition that the unsuccessful party should not pay the successful party’s costs. That is the present position.

25    In this case the appellant has failed to secure a favourable outcome. We see nothing in the conduct of the respondent, at first instance, in the Tribunal or in this Court which would disentitle it to an order for costs. In the circumstances we order that the appellant pay the respondent’s costs of the appeal, including the costs of submissions concerning the issue of costs.

Associate:

Dated:    19 April 2013