FEDERAL COURT OF AUSTRALIA

Ngarluma Aboriginal Corporation RNTBC v State of Western Australia

[2013] FCA 946

THE COURT ORDERS THAT:

1.    The first respondent pay the applicant’s costs of these proceedings.

2.    Leave to discontinue the proceedings be granted.

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

REASONS FOR JUDGMENT

The Applicant’s Position

1    The applicant, Ngarluma Aboriginal Corporation (NAC), applies for an order that the first respondent, the State of Western Australia (the State) pay the costs of the applicant, including reserved costs, to be assessed on an indemnity basis; or alternatively, that the State pay the costs of the applicant, including reserved costs.

2    The first respondent submits that there should be no order as to costs.

The facts

3    The facts are generally to be found in the court record and the affidavits of Paul John Stenson and Marcus Richard Holmes, both sworn on 17 April 2013 and filed on behalf of NAC in these proceedings.

4    NAC brought the application for declarations and injunctions to restrain the State and the second respondent, as the independent person (IP), from proceeding to hear the objection of NAC against the compulsory taking of its native title rights and interests for the “future act” of the building of the Anketell port, in Western Australia, an associated infrastructure corridor and industrial precinct.

5    The State purported to refer the objection to the IP for hearing and determination under s 24MD(6B) of the Native Title Act 1993 (Cth) (the NTA). The IP purported to take procedural steps to facilitate the hearing and determination of the objection.

6    Before and after the referral, NAC contended the State did not have any power to refer the objection to the IP and that the IP did not have the jurisdiction or power to hear it.

7    The State argued against these propositions in writing and at “directions hearings” before the IP. The hearing and determination of the objection would have continued but for an application to the Court for final and interlocutory injunctions.

8    It was this combination of facts that caused NAC to commence the action.

9    The action was commenced on 17 April 2013, seeking interlocutory and permanent injunctions and declarations in support. The application for an interlocutory injunction was listed for hearing on the afternoon of 19 April 2013.

10    I was informed that the State proposed, on the afternoon of 18 April 2013, to defer the need for the hearing of the interlocutory injunction application on the basis that the IP would not proceed to continue to hear and determine the objection, pending the final determination of the substantive application before the Court, on the basis that the Court would be able to conduct the final hearing reasonably expeditiously. NAC did not oppose this proposal. However, it depended upon the agreement of the IP to the course suggested. The IP could not be readily contacted on 19 April 2013. In the meantime NAC filed and served its written submissions in support of the interlocutory injunction.

11    The solicitors for NAC and State then fashioned consent orders to obviate the need for a hearing of the injunction application. The IP, later on 19 April 2013, agreed not to proceed with the hearing of the objection, pending the determination of the action.

12    The substantive application was then, by consent orders made on 19 April 2013, set down for hearing on 23 May 2013. There were also other consent directions made by the Court, for the exchange of submissions, and the possible intervention of the Attorneys General of the other States and the Commonwealth.

13    The matter proceeded in accordance with directions made by the Court (as amended by consent) until the afternoon before the hearing. Again, I was informed that at that time the State’s counsel informed NAC’s counsel that the State had decided to withdraw the referral of the hearing of the objection from the IP, and would write to the IP to effect this.

14    I was informed that the State wrote to the IP on 23 May 2013, the morning of the hearing of the application, to withdraw the referral of the objection for hearing and determination (the SSO letter). The State has assumed, and NAC concurred, that the IP would not now endeavour to continue to hear and determine the objection.

15    Accordingly, NAC has achieved what it desired from the taking of the Court action: the cessation of the referral to the second respondent and the hearing and determination of the objection.

16    For the purpose of the costs application the parties do not invite the Court to determine the proper construction of s 24MD(6B) of the NTA. As NAC puts it, because of the Court action the State has decided to facilitate the doing of that which NAC brought the application to enforce and restrain, which warrants a costs order in its favour.

Indemnity costs

17    The jurisdiction of the Court to award costs is conferred by s 43 of the Federal Court of Australia Act 1976 (Cth) (the FCA Act). The Court has a wide discretion, although it requires to be exercised judicially and in accordance with established principle. It includes the power to order that costs awarded against a party are to be assessed on an indemnity basis. This is as enacted by s 43(3)(g) of the FCA Act .

18    It is, equally, well established that whilst the categories of cases in which indemnity costs might be ordered are not closed, it is necessary for there to be “some special or unusual feature in the case to justify the court departing from the ordinary practice”: Alpine Hardwood (Aust) Pty Ltd v Hardys Pty Ltd (No 2) (2002) 190 ALR 121 at [11] citing Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 233. Under the general law, however, indemnity costs will not be ordered unless some harm has been inflicted on the NAC and it can be demonstrated that that harm has flowed from some deliberate and unwarranted decision or action of the party against whom the award is sought: Australian Transport Insurance Pty Ltd v Graeme Phillips Road Transport Insurance Pty Ltd (1986) 10 FCR 177 at 178.

19    Justice Tracey in Camm v Linke Nominees Pty Ltd (No 4) [2013] FCA 223 at [52] observed, correctly, that the general law principles concerning the Court’s discretion to award costs, have been modified by the enactment of ss 37M and 37N of the FCA Act. This will include the Court’s discretion to award indemnity costs.

20    Section 37M(1) of the FCA Act provides that the overarching purpose of the “civil practice and procedure provisions” (defined in s 37M(4)(a) to include Rules of Court made under the FCA Act) is to facilitate the just resolution of disputes:

(a)    according to law; and

(b)    as quickly, inexpensively and efficiently as possible.

21    Section 37M(2) provides for specific objectives of that overarching purpose.

22    Section 37M(3) of the FCA Act provides that “the civil practice and procedure provisions must be interpreted and applied, and any power conferred or duty imposed by them (including the power to make Rules of Court) must be exercised or carried out, in the way that best promotes the overarching purpose”.

23    Section 37N of the FCA Act relevantly provides that:

(1)    The parties to a civil proceeding before the Court must conduct the proceeding (including negotiations for settlement of the dispute to which the proceeding relates) in a way that is consistent with the overarching purpose.

(2)    A party's lawyer must, in the conduct of a civil proceeding before the Court (including negotiations for settlement) on the party's behalf:

(a)    take account of the duty imposed on the party by subsection (1); and

(b)    assist the party to comply with the duty.

….

(4)    In exercising the discretion to award costs in a civil proceeding, the Court or a Judge must take account of any failure to comply with the duty imposed by subsection (1) or (2).

24    In Camm (No 4) at [54], Tracey J held that:

[54]    When read together, ss 37M and 37N provide for the making of costs orders against a party or a party’s legal practitioner even where the obligations imposed by 37N have not led another party to incur loss or damage. One element of the overarching purpose is “the efficient use of the judicial and administrative resources available for the purposes of the Court”. Another is “the efficient disposal of the Court’s overall caseload”. Conduct on the part of a litigant or a practitioner which impacts adversely on the pursuit of these purposes may be taken into account when costs are awarded.

25    NAC submits this is a case where it is appropriate for the Court to conclude that harm has been inflicted on it because of a deliberate and/or unwarranted course of action by the State. This finding, it submits, can be made quite apart from the operation of ss 37M and 37N of the FCA Act. However, it contends that those provisions, in expressly enacting an overarching purpose of civil practice and procedure provisions that govern this Court, and reinforcing the consequential obligations attendant upon parties and their practitioners, add significant weight to its submission that indemnity costs ought to be ordered.

26    NAC, somewhat colourfully, submits that the State has engaged upon a “folly” that has caused NAC to incur significant legal costs. The folly, it says, has been the combination of:

(a)    The referral to the IP and, importantly, the background to and basis of that referral. At that time the State said the referral was not because NAC requested it, nor because the State was obliged to refer the objection to the IP under the NTA, but because it was a “matter of good practice”.

(b)    The indignant refusal to do other than continue with the hearing before the IP, before the Court application was commenced, despite repeated contentions by NAC that the State had no power to refer and the IP no power or jurisdiction to hear and determine.

(c)    The vigorous opposition to the Court application until the afternoon before the substantive hearing. By then NAC had complied with all pre-hearing procedures and was in the last throws of preparing for the hearing.

(d)    Deciding, the day before the hearing of the application, to not continue with the referral to the IP.

(e)    The basis of this being, implicitly albeit not expressly, that the State agreed with NAC’s constructional argument.

(f)    The State, via the State Solicitor’s Office (SSO), then writing to the IP, on the morning of the hearing, to withdraw from him the hearing of the objection.

(g)    It is apparent from the State’s actions that:

(i)    it has changed its mind on what “good practice” is; and

(ii)    as stated above, its actions demonstrate that it must now accept the correctness of what was NAC’s constructional argument all along.

Chronology

27    This folly of the State, according to NAC, is best demonstrated by the following chronology of the relevant events:

(1)    24 April 2012 - The State issues Notices of Intention to Take (NOITTs) under the Land Administration Act 1997 (WA) (the LAA).

(2)    April 2012 – The State serves on NAC a notice under s 24MD(6B) of the NTA.

(3)    2 July 2012 – NAC objects to the notices and NOITTs issued under the NTA and the LAA.

(4)    24 September 2012 – The State issues replacement NOITTs under the LAA.

(5)    9 November 2012 – NAC objects to the second set of NOITTs.

(6)    12 December 2012 – Letter from the State, via the State Solicitor’s Office (the SSO), to the NAC, that attempts to create an assumption of a request for the referral of the objection by NAC to the IP.

(7)    25 January 2013 – Letter from NAC to the SSO. In para [2] the letter affirms NAC does not withdraw its objection, nor request that it be referred to the IP for hearing. NAC reiterates that as stated in 2011, the State (presently and of its own volition) has no right to refer the objection to the IP.

(8)    4 February 2013 – Letter from the SSO to NAC’s lawyers, Land Equity Legal (LEL) – The State notes that NAC does not withdraw its objection nor request referral. The State expresses that its position is that it may now proceed to issue taking orders. However, “as a matter of good practice it will ensure the objections are heard by an independent person in accordance with s 24MD(6B)(f) of the NTA”. The letter says that although NAC is invited to participate in the hearing before the IP, even if it does not, the State will ask the IP to consider the objection and make a decision.

(9)    4 February 2013 – Letter from the SSO to the IP – asserts that the objection is referred under s 24MD(6B)(f) of the NTA and says that it is the State’s view that it may proceed to do the future act, but that as a matter of “good practice”, it would ensure the objection was heard by the IP in accordance with s 24MD(6B)(f) of the NTA.

(10)    7 February 2013 – Letter from LEL to the SSO – Refutes jurisdiction to refer to the IP.

(11)    22 February 2013 – “Directions hearing” before the IP. Counsel for the State in the independent person proceedings submits it is a referral under s 24MD(6B) of the NTA. Counsel for NAC submits there is no jurisdiction on the basis of a lack of request for a referral by NAC, but notes that from prior decisions the IP will not consider objections to jurisdiction. The IP is informed that NAC’s counsel is to consider whether Federal Court proceedings should be commenced including advising on a “lurking constitutional issue”, and a possible interlocutory injunction application. The State’s counsel says an injunction may be opposed. The IP makes directions in terms of a minute from the State, as amended by the IP at the hearing, to program the objection for hearing and determination.

(12)    1 April 2013 – LEL write to the IP to seek extension of time limits provided for in the “directions”, but reaffirms that NAC’s position is that there is no jurisdiction to hear the objection.

(13)    3 April 2013 – The SSO write to the IP opposing the request of LEL.

(14)    12 April 2013 – Second “directions hearing” before the IP. Counsel for NAC maintains the objection to jurisdiction and requests extension of time limits set to comply with the procedural “directions” made by the IP. This is on the basis that NAC has instructed its solicitors to take proceedings in the Federal Court. Counsel for the State opposes this. The IP varies directions but not to the extent requested NAC.

(15)    17 April 2013 – Originating application filed in the Federal Court. It seeks relief that the IP be restrained from hearing and determining the objection and interlocutory relief. At the request of NAC the Court lists the interlocutory injunction application and first directions hearings for 19 April 2013.

(16)    17 April 2013 – The application is supported by affidavits from Mr Holmes and Mr Stenson, the CEO of NAC. Mr Stenson at [6] explains that NAC wants the IP to be restrained from hearing and determining the objections as the “Applicant wishes to continue to consult and negotiate with the [State] to try and reach a mutually agreeable outcome about the proposed acquisition of the native title rights and interests that are held by the Applicant”. At [7](b) Mr Stenson also explains that participation in the objection proceedings would be a costly exercise for NAC.

(17)    18 April 2013 – In the afternoon, counsel for the State confers with counsel for NAC. He suggests a way to obviate the need for a hearing of the injunction application, including the IP agreeing not to proceed with the hearing of the objection until the resolution of the Court proceedings and programming for an early hearing of the substantive application (the deferral proposal).

(18)    19 April 2013 – Attempts are made to carry the deferral proposal into effect, but there are difficulties from the IP being difficult to contact.

(19)    19 April 2013 – NAC files its submissions in support of the interlocutory injunction.

(20)    19 April 2013 – Consent orders are fashioned between the SSO and LEL, which are put to Gilmour J. The IP also is contacted and agrees in writing to the deferral proposal.

(21)    19 April 2013 - Consent orders made including that costs of the interlocutory injunction application are reserved.

(22)    8 May 2013 – NAC’s outline of submissions are filed. The argument on the “constructional ground” is articulated at [128]-[132]. There is an absence of any suggestion that an objector had an effective veto under s 24MD(6B) of the NTA. There is also the submission that the State must comply with both the NTA and the LAA to lawfully take the land and all native title rights and interests.

(23)    16 May 2013 – The State’s submissions are filed and served.

(24)    21 May 2013 – NAC’s final submissions and submission in reply are filed (reply submission). The submissions make it clear that the State has misunderstood what NAC’s position was and for this reason further explained what it was.

(25)    22 May 2013 – In the afternoon counsel for the State discusses the hearing with counsel for NAC. Amongst other things counsel for the State advises that the State will now be withdrawing the referral from the IP and thus there will be no objection before him for hearing and determination, and thus no matter for determination by the Court the following day.

(26)    23 May 2013 – The State, via the SSO, writes and emails the SSO letter to the IP.

(27)    23 May 2013 – The parties appear before the Court and the substantive hearing does not take place.

28    NAC submits that the SSO letter is the final act of the State’s folly because, having referred the hearing of the objection on the basis of “good practice” it has now changed its mind on what it thinks constitutes “good practice”. Further, NAC submits that it is also manifest that the State must have changed its mind on the law – to an acceptance of the argument made all along by NAC.

29    The contentions of NAC, in summary, are that the State took it on a frolic to the IP on the basis of what it then asserted was “good practice”. It then conducted itself before the IP in such as way as to make it necessary for NAC to commence these proceedings to restrain the IP. The State vigorously opposed the Court application up to the day before hearing. Then the State decided to withdraw the referral from the IP. This, implicitly at least, must have involved acceptance that NAC’s argument about the construction of the section was correct. That is, the withdrawal implicitly involved recognition that it could not lawfully refer the objection for hearing unless requested by an objector. Further, the State had by then taken a 180-degree turnaround on what it thought was “good practice”. The State’s conduct in taking NAC on this frolic was sheer folly – and its conduct was such that the State should be ordered to pay the costs of NAC on an indemnity basis.

30    I do not accept NAC’s submissions that the State engaged in a folly.

31    At the previous hearing, senior counsel for the State explained the reason why the State withdrew the referral of this matter to the IP. It did so after it received and reviewed NAC’s submissions in reply. These were received by the State late in the afternoon on 21 May 2013.

32    I was informed that the State's decision was made and communicated to the applicants (via their counsel) on the afternoon of 22 May 2013.

33    The State's submissions dated 15 May 2013 outlined what it understood to be the issues before the Court relating to the construction of s 24MD(6B) of the NTA. They involved three alternative construction arguments.

34    First, the State set out what it understood to be NAC’s central contention; that s 24MD(6B)(f) requires that an objector request referral, and that if this does not occur a necessary precondition to the IP hearing and determining the objection has not occurred (the first construction).

35    Second, the State put a different construction of s 24MD to the effect that ss 24MD(6B)(d), (f) and (g) only require that there be an objection and an appointment of an independent person to hear and determine it (the second construction).

36    Third, the State put an alternative construction; if no request is made by an objector to the State to appoint an independent person to hear the objection, the State simply grants the title, or compulsorily acquires. If the objector does not request the State to appoint an independent person after consultation, the State simply proceeds to do the future act (the third construction).

37    Prior to receipt of NAC’s submissions in reply, the State's understanding was that NAC advanced the first construction, opposed the second construction and did not advance the third construction.

38    When NAC’s submissions in reply were reviewed, it emerged according to the understanding of the State, for the first time, that NAC did not advance the first construction, opposed the second construction and accepted the third construction.

39    When the State realised that there was common ground as to the third construction, and that NAC was not advancing the (inconsistent) first construction, there was no point in proceeding with the reference to the IP. Accordingly, the decision was made to withdraw the reference

40    The State contends that both parties are, in part, responsible for the misunderstanding by the State of NAC’s position as to construction.

Consideration

41    It is necessary to understand the source of the misunderstanding, on the State’s part as to the construction argument contended for by NAC. It is to be found in the letter dated 4 February 2013 from the SSO to the solicitors for NAC. It is in these terms:

Dear Mr Holmes

RE NGARLUMA ABORIGINAL CORPORATION (NAC) AND STATE OF WA - ANKETELL PORT AND INFRASTRUCTURE CORRIDOR – SECTION 24MD(6B) OF THE NATIVE TITLE ACT ("NTA")

Without Prejudice

I refer to the State's notices under s.24MD(6B)(c) of the Native Title Act 1993 (Cth) (NTA) dated 27 April 2012, NAC's objections under s.24MD(6B)(d) dated 2 July 2012, and your letter dated 25 January 2013.

The State notes that according to your letter dated 25 January, NAC does not withdraw its objections. nor does it request they be referred to an independent person.

The State has considered NAC's objections, and has consulted with NAC as required by s.24MD(6B)(e). The State has nevertheless decided to proceed with the future acts.

As NAC has not requested referral to an independent person despite being given the opportunity to do so, the State considers that the requirements of s.24MD(6B) of the NTA have been complied with and the State may now proceed to issue taking orders for the Anketell Port Area and Infrastructure Corridor.

However, without prejudice to the position set out above, the State has decided as a matter of good practice that it will ensure the objections are heard by an independent person in accordance with s.24MD(6B)(f) of the NTA. Enclosed is a copy of the letter of referral to Chief Magistrate Stephen Heath, who is such an independent person. The State invites NAC to participate in the hearing before Mr Heath. However if NAC chooses not to participate, the State will nevertheless ask Mr Heath to consider the objections and make a decision, and will notify you of the outcome in due course.

Yours faithfully

JEFF O’HALLORAN

SENIOR ADVISER LAND CLAIMS

42    At first blush it might be thought that the State was of the view that as NAC had not requested referral to an independent person the requirement of s 24MD(6B) of the NTA had been complied with and that the State could proceed to do the future act, namely, issue taking orders for the land in question. Further, that despite this, it proposed as a matter of good practice to ensure that the objections were heard by an independent person in accordance with s 24MD(6B)(f) of the NTA.

43    Out of context, that might have been thought to be a pointless exercise. However, the State’s misapprehension, which I accept it was then labouring under, was that the position of NAC was that without in objection being referred to the IP at its request, the State could not do the future act.

44    Understood in that way, one can see why the State proceeded in the way that it did. Although there was no request by NAC, the State considered that s 24MD(6B)(f) was not exhaustive of those who could refer an objection to the IP.

45    That the State was under the misapprehension, as I have described it, and contended for alternative constructions of the provision is clearly borne out by the content of its submissions filed in the substantive matter.

46    I do not accept NAC’s submission that by withdrawing its referral of the objection to the IP the State has implicitly accepted that NAC’s construction argument was correct. The State merely recognised, for the first time, that NAC was not contending that the future act could not be done without the objection being referred to the IP and that this could only occur if NAC requested the referral: an effective veto.

47    Moreover, NAC’s submissions as to the State changing its mind as to the construction it has put on the provision depend for their force, in part, upon my rejecting the relevant construction arguments. However, the parties, correctly in these circumstances, and consistent with authority, have expressly asked that I not resolve the construction issues.

48    Acceptance of NAC’s contentions is not a necessary corollary of the State withdrawing the referral from the IP.

49    I do not, however, accept that NAC contributed to the State’s misunderstanding. NAC was silent on the effect of its contentions as to the need for it to request referral as put to the State in correspondence. It never said, as the State wrongly concluded, that its position was that, absent a request by it to refer the objection to an independent person, the State could not do the future act. Had the State asked NAC, it would, no doubt, have put its position which would have been that the future act could be done so long as relevant statutory obligations of the State were discharged, such as the consultation required under s 24MD(6B)(e) of the NTA.

50    It follows that the proceedings would not have been necessary but for the misunderstanding. The State should pay the costs of NAC but its conduct, which I find was a genuine attempt to overcome an assumed impasse, should not be visited with an indemnity costs order. I do not regard the State as having acted unreasonably even if it acted under a misapprehension as to NAC’s position. No submission was put, indeed such a submission was eschewed, by senior counsel for NAC that the State’s alternative constructions were hopeless or bound to fail. Accordingly, I will not order costs on an indemnity basis.

51    The State should pay the costs of NAC.

52    In those circumstances and in order to finalise these proceedings, NAC is prepared to discontinue the proceedings, although it reserves its rights to issue or defend further proceedings concerning the matters in this proceeding. To the extent that leave is necessary to discontinue the proceedings, I would grant it.

Associate:

Dated:    18 September 2013