FEDERAL COURT OF AUSTRALIA

Grass v Minister for Immigration and Border Protection (No 2) [2015] FCAFC 61

THE COURT ORDERS THAT:

1.    The appellant pay the first respondent’s costs as taxed or agreed.

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

REASONS FOR JUDGMENT

The Court

1    On 27 March 2015 we dismissed Mrs Grass’ appeal from orders made by Buchanan J on 23 April 2014 but invited separate submissions on the question of costs. By her written submissions dated 7 April 2015, Mrs Grass submits that the Minister should bear the costs both of the appeal before this Court and of the trial.

2    The submissions made on Mrs Grass’ behalf did not shy away from the somewhat exceptional nature of an order that a successful party on an appeal should be ordered to pay the losing party’s costs. The making of such a costs order requires highly unusual circumstances (‘…an exceptional measure’ according to Devlin J in Smeaton Hanscomb & Co Ltd v Sassoon I Setty, Son & Co (No 2) [1953] 1 WLR 1481 at 1484). It appears that one such circumstance will be provided by the disentitling conduct of the successful party: see Oshlack v Richmond River Council (1998) 193 CLR 72 at 88 [40] and 98 [70]. There is a debate as to whether the jurisdiction is only enlivened by disentitling conduct or whether it may also extend to other circumstances too, such as, for example, those obtaining where one party is seeking an indulgence. It is not necessary to engage with that debate in this appeal, however, because Mrs Grass does not suggest that there is any justification for the proposed order beyond the Minister’s alleged disentitling conduct.

3    Although there cannot be an absolute rule about this, it is unlikely that such an order would be made unless the disentitling conduct could in some way be seen to have caused the existence of the litigation or to have prolonged its continuance. This was the situation in Re Tai-Ao Aluminium (Australia) Pty Ltd; Lei v Cordukes (2004) 51 ACSR 465 at 468-469 [10]-[11], where Finkelstein J put the very existence of the proceedings at the feet of the successful defendant. There, a company had, quite wrongfully, refused to grant one of its directors access to its documents. The director’s suit for access was, at the eleventh hour, defeated by his removal from office. His Honour said (at 469 [11]):

‘In the end the plaintiff’s claim was only defeated by his impending removal from office. In all other respects the defendants acted wrongly and, in my opinion, should pay for their wrongdoing. The only punishment I can impose is to require them to pay the plaintiff’s costs.’

4    To the extent that this passage suggests, however, that the function being performed is punitive, it is contrary to established principle which locates the discourse in the domain of compensation and indemnity: Latoudis v Casey (1990) 170 CLR 534 at 543. Despite that, however, the result in Lei v Cordukes is, nevertheless, an example of a situation where the successful defendant’s conduct may be seen as the root cause of the litigation.

5    So too, it is established that a similar outcome may result where a successful defendant’s fraudulent behaviour reasonably engenders proceedings against him, even though, at the heel of the hunt, he discloses a good defence which succeeds. Speaking of one such successful defendant in GR Vaughan (Holdings) Pty Ltd v Vogt [2006] NSWCA 263, the Court of Appeal observed (at [15]):

‘…Mr Colin Vaughan participated with the testatrix in long-continued deceptive behaviour involving the production of a series of false documents, and fully achieved the deception and concealment which was the object of this course of conduct. Mr Colin Vaughan’s behaviour brought about the controversy, and made it difficult for others concerned to accept his case; and made matters worse by the way in which he conducted the proceedings and brought forward his case of fact only at a very late stage.’

6    A similar result occurred in Verna Trading Pty Ltd v New India Assurance Co Ltd [1991] 1 VR 129, although in that case the reversal of the ordinary costs rule was confined to the period up until the time at which the defendant’s true defence was revealed.

7    In this case, the Department of Immigration and Citizenship (as it was) (‘the Department’) deceived Mrs Grass by informing her that she could not be listed for a citizenship ceremony due to a long list, rather than that, as was the case, she was under investigation. Had she been told the truth it is likely that she may well have become a citizen simply by taking the oath in front of a qualified person.

8    Her ability to adopt that course only came to an end when, on 5 July 2010, the Department cancelled her citizenship approval. It was that decision which was set aside by the Federal Magistrates Court on 13 February 2013 with effect from 8 April 2013.

9    By the time the proceeding was commenced in this Court to quash that decision the full nature of the Department’s deception was known. Whilst one may readily accept that the Department’s deception is a sine qua non of the litigation, we do not accept that it is, relevantly, its cause. Mrs Grass did not commence the proceeding before Buchanan J because she was suffering under a misconception which had been induced by the Department. By that time the deception had run its course. The reason the proceeding was commenced was because she wished to contest the conclusions of the learned Federal Magistrate that s 26 of the Australian Citizenship Act 2007 (Cth) did not condition the cancellation power in s 25 and that the setting aside should only be prospective.

10    In those circumstances, we do not accept that the proceedings in this Court have been either engendered as a result of the misconduct or prolonged by it. This means that the nominated disentitling conduct has not had a prolongation effect. Assuming, without deciding, that it remains possible to make the order in those circumstances, we would not do so in any event. Although the events which originally engendered the litigation do not reflect well on the Department, the fact is that its position in this Court has been fully vindicated, without any criticism of the manner in which the litigation in this Court was conducted.

11    The order of the Court will be that the appellant pay the first respondent’s costs as taxed or agreed. No reason is shown to interfere with the costs orders made by the trial judge.

Associate:

Dated:    7 May 2015