FEDERAL COURT OF AUSTRALIA

Hurst and Devlin v Education Queensland (No 2) [2005] FCA 793

PRACTICE AND PROCEDURE – costs – whether costs follow the event – purpose of costs order – factors relevant to the exercise of Court’s discretion in making costs order.

Federal Court of Australia Act 1976 (Cth)

Latoudis v Casey (1990) 170 CLR 534 applied

Oshlack v Richmond River Council (1998) 193 CLR 72 applied

Ritter v Godfrey (1920) 2 KB 47 applied

Forster v Farquhar (1893) 1 QB 564 cited

Re The Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1996) 186 CLR 622 applied

TIAHNA HURST (BY HER NEXT FRIEND, GAIL SMITH) v EDUCATION QUEENSLAND

Q 200 of 2002

BENJAMIN DEVLIN (BY HIS NEXT FRIEND, KIM DEVLIN) v EDUCATION QUEENSLAND

Q 201 of 2002

LANDER J

16 JUNE 2005

BRISBANE

THE COURT ORDERS THAT:

1.         Tiahna Hurst’s next friend, Gail Smith, pay the respondent’s costs of the proceedings up to and including today on a party and party basis.

2.         Extend the time within which the parties have to appeal from my order made on 15 April 2005 for a period of 21 days from today.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

THE COURT ORDERS THAT:

1.         The respondent pay the applicant’s costs of the proceedings up to and including today on a party and party basis.

2.         Extend the time within which the parties have to appeal against the declaration and the orders made by me on 15 April 2005 for a period of 21 days from today.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     These matters were heard together.  On 15 April 2005 in Action No. Q201 of 2002, after making a declaration, I made an order that the respondent pay Benjamin Devlin (Ben) the sum of $64,000.  I reserved to the parties their rights to make application for costs.  In Action No. Q200 of 2002 I dismissed Tiahna Hurst’s (Tiahna) application. 

2                     Ben seeks an order that the respondent pay his costs.  He argues that he has been successful in obtaining a declaration that the respondent has been guilty of discrimination in his treatment of him and he has obtained an order for compensation payable by the respondent.

3                     In those circumstances, he says that the ordinary rule should follow and that costs should follow the event.

4                     The respondent opposes Ben’s application.  The respondent submitted, having regard to the wide provisions of s 43 of the Federal Court of Australia Act 1976 (Cth) (the Act), that costs do not automatically follow the event.

5                     An order for costs is intended to compensate the successful party not to punish the unsuccessful party: Latoudis v Casey (1990) 170 CLR 534 (‘Latoudis’) per Mason CJ at 543; per McHugh J at 567; Oshlack v Richmond River Council (1998) 193 CLR 72 (‘Oshlack’) per Brennan CJ at [1]; per McHugh J at [67].

6                     Costs, ordinarily, follow the event: Ritter v Godfrey (1920) 2 KB 47; Latoudis per Mason CJ at 542-543; per Dawson J at 557; and per McHugh J at 567-569.

7                     In Oshlack, McHugh J (who was in dissent) said that ‘[a] successful litigant is generally entitled to an award of costs’: at [66].  He cited with approval the statement of Devlin J in Smeaton Hanscomb & Co Ltd v Sassoon I Setty, Son & Co [No 2] [1953] 1 WLR 1481 at 1484 when His Lordship said:

‘Prima facie, a successful party is entitled to his costs.  To deprive him of his costs or to require him to pay a part of the costs of the other side is an exceptional measure.’

8                     McHugh J said later at [67]:

‘The expression the “usual order as to costs” embodies the important principle that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour.  The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant.  Costs are not awarded to punish an unsuccessful party.  The primary purpose of an award of costs is to indemnify the successful party.  If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did.  As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation.’

9                     However, the judgments of the majority (Gaudron, Gummow and Kirby JJ) show that there is no absolute rule to that effect: per Gaudron and Gummow JJ at [40].  At [34] Gaudron and Gummow JJ cited Dawson J in Latoudis who said (at 557), ‘[w]hilst the discretion was absolute and unfettered, it was to be exercised judicially’.

10                  I shall proceed upon the basis that the discretion is unfettered, except that it must be exercised judicially.

11                  I shall have regard to the fact that Ben’s application succeeded.  There is no suggestion that his conduct, or anyone else’s conduct, should disentitle him to an order for costs.

12                  The respondent put as its primary proposition that, because Ben’s application was heard at the same time as Tiahna’s application, it would be appropriate that either there be an order that all of the parties bear their own costs or there be an order that there be no order as to costs.

13                  Both applications were heard together.  Tiahna and Ben were both represented by the same solicitors and the same counsel.  The respondent was common to both proceedings and it was represented by the same solicitors and counsel.

14                  There were issues common to both proceedings.  There were, however, matters which were discrete to each proceeding.  First, Tiahna’s case did not include a claim that her teachers had not been skilled in Signed English.  Ben’s proceedings did.  On that issue he failed.

15                  The second matter discrete to each of the proceedings was whether or not each of the applicants could comply with the requirement that they be educated in English and without the assistance of an Auslan teacher or an Auslan interpreter.  On that issue, Ben succeeded but Tiahna failed.

16                  I do not know what arrangements have been made with their solicitors or with their counsel or with each other.  It would not be appropriate, in my opinion, to treat Ben and Tiahna as if they had identical interests.

17                  The respondent argued, in the alternative, that there are other reasons why Ben should not be awarded costs.  It was submitted that Ben had been unsuccessful in many of the issues of significance.  I have already pointed to one in relation to his claim that his teachers were not sufficiently fluent in Signed English.  He also failed to establish that it was not reasonable for the respondent not to have provided the applicant with a bilingual-bicultural program prior to 30 May 2002.

18                  Further, it was put that the point upon which Ben succeeded was not pleaded until very late in the proceedings and then only in a plea which lacked precision.

19                  It is also relevant in determining the appropriate order for costs that, in fact, Ben succeeded in part on the evidence of the respondent.

20                  It was, as my reasons show, Professor Power’s evidence, which I accepted, which established that, in my opinion, Ben should have been provided with an Auslan teacher or an Auslan interpreter prior to 30 May 2002.

21                  In that regard, the respondent established Ben’s case.

22                  All of those matters are relevant in determining whether there should be an award of costs in Ben’s favour or whether he should have some of his costs or none of his costs.

23                  It is right, as the respondent has submitted, that it is within the appropriate exercise of discretion to deprive a successful party who has failed on certain issues of his costs of those issues: Forster v Farquhar (1893) 1 QB 564.  Indeed, in some cases, it is an appropriate exercise of the discretion to order the successful party who has failed on some issues to pay the unsuccessful party’s costs of those issues.

24                  This, in my opinion, is not one of those cases.

25                  I have had regard to all of the matters to which the respondent referred but I see no reason to exercise my discretion adversely to Ben.  In my opinion, the appropriate order in this case is that the respondent pay Ben’s costs on a party and party basis.

26                  Tiahna’s claim failed.

27                  In the event that I was not prepared to make an order that the parties bear their own costs or that there be an order that there be no order as to costs, the respondent sought its costs in relation to Tiahna’s proceedings.

28                  Tiahna opposed any order for costs being made against her.

29                  It was argued that I had found that it was unreasonable for the respondent not to provide the applicant with an Auslan interpreter but Tiahna’s case failed ‘on a fine distinction within the expert evidence in the analysis of whether the Applicant could comply with a requirement or condition’.

30                  Tiahna’s case did fail because she could not establish that she could not comply with the requirement or condition but, of course, that was an essential aspect of her case.

31                  Next, it was put that the public has an interest in having the Total Communication Policy (being the policy of Education Queensland) clarified ‘as it affects the rights of numerous disabled children in the vital area of their education’.

32                  When litigation is brought in the ‘public interest’, however that term might be defined, that might in a particular case be a relevant matter to which regard should be had in the exercise of the discretion generally: Oshlack.

33                  No doubt it would be in the interests of all parties if Education Queensland’s Total Communication Policy could be understood by all persons affected in the same way.  However, in my opinion, legal proceedings are not the appropriate medium for the purpose of examining the ambiguities in an education policy.

34                  Next, it was put that there was a considerable disparity in the financial resources of the applicant and the respondent and if the Court made an order that the applicant pay the respondent’s costs ‘there is every likelihood that the appellant’s next friend will be made bankrupt which may have significant effects on the next friend’s capacity to earn a living as a hairdresser, or in any other trade or profession’.  Coupled with that submission, it was put that the next friend (Tiahna’s mother, Ms Smith) in pursuing the proceeding was motivated by Tiahna’s best interests and that Ms Smith had nothing to gain personally from the proceedings.

35                  It would be, to say the least, unfortunate if Ms Smith became bankrupt as a result of these proceedings.

36                  However, I cannot think that she was not warned that if these proceedings were maintained and failed an order for costs would be likely to be made in favour of the respondent.

37                  In Oshlack McHugh J said, after referring to the usual order for costs, at 97:

‘As a matter of policy, one beneficial by-product of this compensatory purpose may well be to instil in a party contemplating commencing, or defending, litigation a sober realisation of the potential financial expense involved.  Large scale disregard of the principle of the usual order as to costs would inevitably lead to an increase in litigation with an increased, and often unnecessary, burden on the scarce resources of the publicly funded system of justice.’

38                  In my opinion, it is not relevant that Ms Smith had nothing to gain personally from the proceedings.  Nor for the purpose of the exercise of my discretion in relation to the appropriate order for costs is it relevant that Ms Smith may become bankrupt as a result of that order: Latoudis per Mason CJ at 543; Re The Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1996) 186 CLR 622 at 628-629.

39                  Lastly, it was put that there was a significant overlap between the evidence in Tiahna’s proceedings and Ben’s proceedings and the applicants’ case added very little to the costs of the proceedings at large.

40                  There was, in fact, significant overlap in the evidence in the two proceedings and no doubt the Registrar, when taxing the costs, will have regard to that.

41                  However, that also is not a reason not to award the successful party, in this case the respondent, the costs of the proceedings.

42                  In my opinion, it would be appropriate for there to be an order that the next friend, Gail Smith pay the respondent’s costs on a party and party basis.

43                  The costs of the hearing of the argument on the costs of the trial should be, in the case of Ben’s claim, Ben’s and in the case of Tiahna’s case, the respondent’s.

44                  I make the following orders:

In Action Q200 of 2002:

1.         Tiahna Hurst’s next friend, Gail Smith, pay the respondent’s costs of the proceedings up to and including today on a party and party basis.

2.         Extend the time within which the parties have to appeal from my order made on 15 April 2005 for a period of 21 days from today.

In Action Q201 of 2002:

1.         The respondent pay the applicant’s costs of the proceedings up to and including today on a party and party basis.

2.         Extend the time within which the parties have to appeal against the declaration and the orders made by me on 15 April 2005 for a period of 21 days from today.

Associate:

Dated:              16 June 2005