FEDERAL COURT OF AUSTRALIA

Madsen v Power (No 2) [2010] FCA 686

THE COURT ORDERS THAT:

1.                  There be no order as to costs.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

1                     This is a judgment about costs.

2                     By way of background, the applicant is the biological sister of the deceased James Pope.  James Pope died without leaving a will and, in accordance with the succession laws, his estate, including his superannuation fund, was paid to his parents, as he did not have dependents.  His two sisters are challenging that decision.  In the deceased’s original member application form, he nominated his two sisters as his preferred beneficiaries.

3                     On or about 9 October 2009, the applicant lodged a complaint with the Superannuation Complaints Tribunal regarding the payment by HEST Australia of the death benefit of James David Pope, deceased, to the legal representative of the estate of James Pope.  By reason of the operation of s 22(3)(b) of the Superannuation (Resolution of Complaints) Act 1993 (Cth) (the Act), the second respondent may decide to treat a complaint as if it had been withdrawn if the second respondent thinks that the complaint is trivial, vexatious, misconceived or lacking in substance.

4                     On or about 2 December 2009, Fiona Power, who is the first respondent and director of the second respondent, informed the applicant that the second respondent was treating the complaint as withdrawn on the basis that it was misconceived, because the applicant did not meet the definition of “dependent”, and the applicant was not the “legal personal representative” of James Pope.

5                     On 26 March 2010, I upheld the application by the applicant against the Superannuation Complaints Tribunal, and ordered that the decision of the Superannuation Complaints Tribunal be set aside; the complaint be remitted to the Superannuation Complaints Tribunal to be dealt with according to law;  and, in that consideration, the applicant be entitled to put further material before the Superannuation Complaints Tribunal, directed to establishing that her complaint has merit and deposing to information on which she argues that she has established an interdependent relationship with the deceased, and that she meets the definition of “dependent”. 

6                     The respondents had filed a submitting appearance, except as to costs, on 18 February 2010.

7                     On 26 March 2010, I delivered ex tempore reasons for judgment for the orders which I made on that day, and I reserved the question of costs.

8                     On 17 May 2010, I directed the parties in the following terms:

1.         The applicant file and serve written submissions, indicating what orders as to costs the applicant wants the Court to make, and why she says the Court should make that order.  These submissions should be filed and served by 4 pm on 28 May 2010.

2.         The respondent is to file and serve written submissions in response, indicating what orders as to costs the respondent wants the Court to make, and why the respondent says the Court should make that order.  These submissions should be filed and served by 4 pm on 11 June 2010.

3.         The Court will consider these submissions, and give judgment on the question of costs at 9.30 am on Thursday, 1 July 2010.

9                     On 24 May 2010, in response to a query from the applicant, I made a further direction that:

2A.      I direct that any submissions by the applicant in reply to the submissions of the respondent be filed and served by 4 pm on 18 June 2010.

10                  The applicant’s submissions were filed on 28 May 2010; the respondents filed submissions on 11 June 2010; and the applicant filed submissions in reply on 18 June 2010.

submissions on costs

11                  The applicant submitted that:

10        As an exception to the general rule that costs follow the event, a respondent judicial or quasi judicial tribunal may not be ordered to pay costs if it does not oppose or resist an application to review its decision. (footnote omitted).

11        A review of authorities reveals that the categories of circumstances where a court may order a tribunal to pay costs (irrespective of whether it opposed the application to review its decision) include:

(a)        where the tribunal has acted in a manner calling for the strong disapproval of the court: The King v Willesden Justices; ex parte Utley [1948] 1 KB 397;

(b)               where the tribunal has acted improperly, perversely or with some disregard for the elementary principles which every court ought to obey: R v Liverpool Justices; Ex parte Roberts [1960] 1 WLR 585; City of Subiaco v Minister for Planning and Heritage (unreported, Full Court of Supreme Court of Western Australia, Kennedy, Wallwork & Scott JJ, 19 February 1997);

(c)               where the tribunal is guilty of serious misconduct, corruption or gross ignorance: City of Subiaco v Minister for Planning and Heritage (unreported, Full Court of Supreme Court of Western Australia, Kennedy, Wallwork & Scott JJ, 19 February 1997);

(d)               where the tribunal has assumed a jurisdiction it clearly does not possess: City of Subiaco v Minister for Planning and Heritage (unreported, Full Court of Supreme Court of Western Australia, Kennedy, Wallwork & Scott JJ, 19 February 1997);

(e)               Where the tribunal has knowingly and wilfully disregarded relevant legislation or binding precedents brought to its attention: City of Subiaco v Minister for Planning and Heritage (unreported, Full Court of Supreme Court of Western Australia, Kennedy, Wallwork & Scott JJ, 19 February 1997); or

(f)                the tribunal has been guilty of a flagrant denial of natural justice.

12                  The general rule is that an unsuccessful party pay the costs of a successful party.  The rationale for that general rule is to be found in the observations by McHugh J in Latoudis v Casey (1990) 97 ALR 45 at 68:

… it is just and reasonable that the party who has caused the other party to incur the costs of litigation should reimburse that party for the liability incurred.  The order is not made to punish the unsuccessful party.  Its function is compensatory.

13                  See also Cilli v Abbott (1981) 53 FLR 108 at 111 per Keely, Toohey and Fisher JJ.

14                  The applicant submits that notwithstanding that there is an exception to the general rule so that respondent judicial or quasi judicial Tribunal may not be ordered to pay costs if it does not oppose or resist an application to review its decision, nonetheless, the Tribunal  ought, in this case, be ordered to pay the applicant’s costs because “the Tribunal has acted improperly, perversely, or with some disregard for the elementary principles which every Court ought to obey”.

15                  The applicant contends that:

15        … in failing to consider the Applicant’s complaint in an equal manner to the complaint of the Applicant’ sister, Ms Anna McPherson, which was on foot at the same time and concerned materially the same issues, the Respondents acted perversely with complete disregard for the material and information provided by the Applicant.

16                  Further:

17        Notwithstanding that the Applicant has clearly flagged her contention that she considered she was “interdependent” with her brother, James Pope, the Respondents never followed up this contention.  This is in clear contrast with how the Respondents treated Ms McPherson’s complaint.  Indeed, it is apparent from the above matters that the Respondents failed to follow what seem to be the Tribunal’s own standard practices in considering the Applicant’s complaint.

18        In these circumstances, the Respondent’s failure to make further inquiry as to the relevant facts or to apply what seems to be its own standard practices in the same manner as it did with Ms McPherson’s complaint was gross.  Its failure to provide the Applicant with the same opportunities to support her complaint that it did Ms McPherson is akin to a flagrant denial of natural justice.  In failing to afford the Applicant the same opportunities as it did Ms McPherson, the Respondents acted perversely and without regard for an elementary principles which every tribunal ought to follow, namely that every person coming before a tribunal should be dealt with equally.  The Respondents’ conduct calls for the strong disapproval of the court.

17                  For the respondents, it is contended that while the decision may have been wrong and “surprising” this is not enough to warrant a costs order against a submitting Tribunal.  The respondents argue that there is no evidence of perversity on the part of the Tribunal, in a sense that it knew that the decision was wrong, nor is there any evidence of disregard for elementary principles.

18                  For the respondents, it was submitted:

7          The respondents in this case filed a submitting appearance save as to costs, consistent with the High Court’s decision in R v Australian Broadcasting Tribunal; Ex parte Hardiman (1980) 144 CLR 13.  Where a tribunal submits to the jurisdiction of a court, and the applicant succeeds in having its decision overturned, the convention is that the tribunal will not have to pay the applicant’s costs.  As Wilcox J explained in Our Town FM Pty Ltd v Australian Broadcasting Tribunal [1987] FCA 393; 77 ALR 609 at 612:

It seems to me somewhat hard for the courts at the one time to tell the tribunal that it should not actively intervene to defend its decision and, at the same time, to order the tribunal to pay costs if, without it having had an opportunity of defending its decision, the decision is held to be bad in law.

19                  On 24 March 2010, the Court did not determine that the Tribunal’s error was in treating the two complaints unequally.  The difference in treatment merely underlined that, in the applicant’s case, the Tribunal did not give proper consideration to whether the facts, or the facts on further enquiry, were such as to bring the applicant within the requirement of having an interdependency relationship.

20                  I am satisfied that, in the circumstances of this case, the applicant has not shown that the Tribunal acted perversely, or with disregard for the elementary principles which a court or tribunal ought to obey.

21                  In this case, the respondents, having submitted to the jurisdiction of the Court, should not be ordered to pay the costs of the applicant simply because the decision of the Tribunal has been held to be bad in law.  The respondents did not actively intervene to defend that decision, and, in my opinion, it cannot be said that the Tribunal “has been guilty of serious misconduct or corruption or has acted perversely”.  In a sense, a submitting Tribunal should not be ordered to pay costs, unless the circumstances are such as would, in an ordinary case, justify the ordering of costs on an indemnity basis.

22                  In my judgment, there should be no order as to costs.

Associate:

Dated:         1 July 2010