FEDERAL COURT OF AUSTRALIA

Budini v Sunnyfield (No 2) [2020] FCA 988

ORDERS

THE COURT ORDERS THAT:

1.    Mr Michael Budini’s application for an order in terms of paragraph 3 of the interlocutory application filed on 26 March 2020 is dismissed.

2.    Subject to the order in paragraph 4, Mr Michael Budini, in his capacity as the first applicant’s former litigation representative, is to pay that part of the respondents’ costs of the application for leave made in paragraph 2 of the interlocutory application filed on 22 October 2018 as is attributable to Ms Budini’s claims.

3.    Subject to the order in paragraph 4, Mr Michael Budini, in his personal capacity as the second applicant is to pay that part of the respondents’ costs of the application for leave made in paragraph 2 of the interlocutory application filed on 22 October 2018 as is attributable to his personal claims.

4.    The respondents are to bear their own costs of the subject matter referred to in Budini v Sunnyfield [2019] FCA 2164 at [125] – [132].

5.    The costs specified in paragraphs 2 and 3 of these orders are payable on an indemnity basis.

6.    Subject to paragraph 7, upon the taxation of the respondents’ costs, the attributions referred to in paragraphs 2 and 3 of these orders are to be taken to be equal.

7.    The parties have liberty to apply to vary the attribution specified in paragraph 6 of these orders, such application to be made:

(a)    to the Registrar responsible for assessing the quantum of costs;

(b)    by a date to be fixed by the Registrar.

8.    The respondents’ application for an order preventing Mr Michael Budini from having direct or indirect recourse to the Trust referred to in Budini v Sunnyfield [2019] FCA 2164 at [10] – [14] in respect of the cost liability in paragraph 2 of these orders (the Trust Application) is deferred to the trial judge.

9.    The costs of the Trust Application to date are reserved to the trial judge.

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

REASONS FOR JUDGMENT

CHARLESWORTH J:

1    These proceedings were commenced in the name of the first applicant Ms Enrica Budini by her nephew and litigation representative Mr Michael Budini. Mr Budini is named as the second applicant in the proceedings. The controversy relates to Ms Budini’s former residence at an accommodation facility operated by the first respondent, Sunnyfield. The second respondent, Dr Mark Clayton, is Sunnyfield’s former General Manager.

2    Among other things, the originating application alleged that Sunnyfield and Dr Clayton had contravened the Disability Discrimination Act 1992 (Cth) (DD Act) in their treatment of Ms Budini. I will refer to that aspect of the proceedings as the DD Act claim.

3    The applicants made an application for leave under s 46PO(3A)(a) of the Australian Human Rights Commission Act 1986 (Cth) to commence the DD Act claim (the Leave Application). The requirement for leave arose because a complaint in relation to the alleged contraventions had been lodged with the Australian Human Rights Commission more than 12 months following the events complained of and their complaint had been terminated for that reason. The Leave Application was made by Mr Budini in his capacity as Ms Budini’s litigation guardian and purportedly in his own name and right. The Leave Application was dismissed for reasons published as Budini v Sunnyfield [2019] FCA 2164.

4    The respondents have applied for an order that Mr Budini pay their costs of the Leave Application on an indemnity basis (the Indemnity Costs Application). They seek a further order to the effect that Mr Budini have no right of indemnity in respect of the costs liability from a Trust that has been established for the welfare and advancement of Ms Budini (the Trust Application). The Trust in question is that described in Budini at [10] – [14].

5    By a further interlocutory application filed on 26 March 2020, Mr Budini seeks an order that I be disqualified from determining the respondents’ application for costs on the grounds of apprehended bias (the Recusal Application).

6    Mr Budini otherwise submits that the appropriate order is that there be no order for costs on the Leave Application, or alternatively that the applicants be jointly liable for the respondents’ costs, assessed on a party/party basis.

7    Mr Budini was granted leave to act as Ms Budini’s litigation representative for the purposes of the hearing and determination of the Leave Application. On 18 June 2020 Ms Sandra Sinclair (a legal practitioner) was appointed as Ms Budini’s substitute litigation guardian. Ms Sinclair has been afforded the opportunity to be heard in relation to the Indemnity Costs Application, the Trust Application and the Recusal Application. Ms Sinclair’s submissions broadly align with those filed on behalf of Mr Budini, both on questions of fact and law.

SUMMARY OF OUTCOME

8    Upon dismissal of the Leave Application I informed the parties of my view that it would be appropriate to recuse myself from adjudicating the remaining causes of action alleged on the originating application. I now give reasons for that conclusion at [13] – [23] below.

9    For reasons given at [24] – [50] below I have concluded that I should not disqualify myself from determining the Indemnity Costs Application.

10    I have rejected the applicants’ contention that there should be no order as to costs (see [51] – [61] below) and their alternate contention that the order for costs should be made jointly and severally against Mr Budini and Ms Budini (see [62] – [73] below).

11    For the reasons given at [74] – [87] I have concluded that it is appropriate that the Trust Application be deferred to the trial judge for determination at such time as the trial judge thinks fit. It is unnecessary to decide whether I would otherwise have been disqualified from hearing that application.

12    The Indemnity Costs Application should be allowed for the reasons given at [88] – [96].

RECUSAL – THE REMAINING CAUSES OF ACTION

13    As has already been observed, the alleged contravention of the DD Act was one of several causes of action upon which the applicants intend to rely in the proceedings. As originally framed, the originating application sought relief in the nature of damages at common law, equitable compensation and damages pursuant to s 237(1) of the Australian Consumer Law. In the course of submissions, further causes of action were foreshadowed, including claims that the respondents were knowingly involved in a breach of fiduciary duty in connection with the assets of the Trust. Separate claims for monetary and other relief were asserted by Mr Budini personally and on behalf of Ms Budini.

14    Mr Budini foreshadowed the additional causes of action on Ms Budini’s behalf notwithstanding that he was appointed as her litigation representative for the purposes of the Leave Application only.

15    Broadly summarised, the Leave Application made in Mr Budini’s personal capacity was dismissed because, on the facts, Mr Budini had not complained to the Commission in his personal capacity: Budini at [40] – [43] and alternatively (if that conclusion be wrong) on the same grounds for dismissing Ms Budini’s application (Budini at [86]).

16    Ms Budini’s application for leave was dismissed because the delay in lodging the complaint was not adequately explained: Budini at [60] – [86]. Alternatively, the application was dismissed because the DD Act claim it did not enjoy reasonable prospects of success: Budini at [86]. My conclusion that the DD Act claim did not enjoy reasonable prospects of success included observations as to the nature of the factual allegations, including allegations of fraud, allegations that Sunnyfield had deliberately falsified a medical diagnosis and allegations that the respondents had deliberately starved Ms Budini to gain a financial advantage. I concluded that the applicants did not have a proper evidentiary basis for making the claims, having regard to their very serious nature. I concluded that the allegations of serious misconduct lacked a sufficient evidentiary foundation, even in the context of the threshold merits enquiry to be undertaken on an application for leave: Budini at [174].

17    In the course of the hearing, Mr Budini confirmed that the facts which the applicants alleged in support of the DD Act claim are the same as those to be alleged in support of the remaining causes of action. It is that circumstance (and only that circumstance) that leads me to the conclusion that I should disqualify myself from adjudicating the remaining causes of action, and I have done so.

18    As Rotham J observed in Karadaghian v Big Beat [2014] NSWSC 1691 (at [21]):

An understanding of the issues associated with apprehension of bias must commence with the principle that justice must not only be done, it must be seen to be done. A judicial officer, as part of the oath of office, is required to bring an impartial mind to the issues to be decided. That oath, taken on appointment, is taken extremely seriously by all judicial officers and deals with the approach to be taken by a judicial officer in the fulfilment of their duties. The purpose of the rules on bias and apprehended bias is to ensure impartiality and independent assessment, in accordance with that oath, both in fact and in appearance: Australian National Industries Ltd v Spedley Securities Limited (in liq) (1992) NSWLR 411 at 418 and following.

19    His Honour continued (at [24]):

The importance of adherence to the principle of impartiality is fundamental to the administration of justice. So too the appearance of impartiality is fundamental not only to the parties, but to the public and the integrity of the court and justice system. In the common law system, it is fundamental to the rule of law. If the public were to have the impression that partiality affected the decisions of courts, then the courts could not function in the manner that they do. In a democracy such as ours, the exercise of power, including judicial power, depends upon the legitimacy of the institution exercising it.

20    The well established test for apprehended bias is sometimes referred to as the “double might test”. It is whether a fair-minded lay observer might reasonably apprehend that the decision-maker might not bring an impartial mind to the resolution of the issue he or she is to decide: Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at [6] (Gleeson CJ, McHugh, Gummow and Hayne JJ); Isbester v Knox City Council (2015) 255 CLR 135 at [12] (Kiefel, Bell, Keane and Nettle JJ). See also ALA15 v Minister for Immigration and Border Protection [2016] FCAFC 30 at [35] – [36] (Allsop CJ, Kenny and Griffiths JJ). As explained in Burgess v Minister for Immigration and Border Protection (2018) 259 FCR 197 at [35]:

The first ‘might’ concerns the likelihood (to be assessed by the Court) of the lay observer forming the reasonable apprehension. The second ‘might’ concerns the content of the apprehension itself. It concerns the assessment (notionally made by the lay observer) of the likelihood of the decision-maker having a foreclosed mind (as opposed to having a predisposed opinion) and so deviating from the course of deciding a case on its merits.

21    It is not sufficient to demonstrate that the observer may have “a vague sense of unease or disquiet”: Jones (as President of the Victorian Farmers Federation Chicken Meat Group) v Australian Competition and Consumer Commission and Another (2002) 76 ALD 424 at [100] (Weinberg J).

22    A judge should not recuse himself or herself from hearing a case without a proper and substantial reason for doing so: Rana v Commonwealth of Australia [2013] FCA 189 at [36] (Mansfield J). However, if the conditions for recusal on the grounds of apprehended bias are satisfied, recusal is not a matter of judicial discretion. It is required as a matter of law.

23    The reasoning supporting the conclusion that the DD Act claim had no reasonable prospects of success provides a proper basis to disqualify myself from proceeding to hear the remaining claims for relief, notwithstanding that the conclusions were expressed in the context of a threshold interlocutory application. As the trial judge I would not be bound to follow the same course of reasoning in relation to the remaining claims for relief on the originating application. Among other considerations, the trial of the remaining causes will proceed on a different evidentiary basis. However, a fair-minded observer might reasonably apprehend that I might not bring an impartial mind to the resolution of the remaining issues, given the common substratum of alleged facts (particularly in relation to fraud and starvation) and my analysis of those allegations in Budini.

THE RECUSAL APPLICATION - COSTS

24    In dismissing the Leave Application I rejected in large part the explanation that had been advanced by Mr Budini for the delay in lodging a complaint with the Commission, as advanced in evidentiary material filed on the applicants’ behalf and elaborated upon in some detail in submissions. In so concluding, I had regard to Mr Budini’s conduct in the period during which he formally or informally assumed responsibility for Ms Budini’s affairs: Budini at [61] – [80]. The temporal focus of that enquiry was the period leading up to the lodging of the complaint with the Commission in February 2018. The absence of a reasonable explanation for the delay was held to be a sufficient basis for refusing the grant of leave: Budini at [83].

25    Mr Budini’s application that I should be disqualified from determining questions of costs was first made in March 2020 after the respondents belatedly confirmed that an order for costs would be sought on an indemnity basis.

26    Mr Budini submits that an apprehension of bias arises on the Indemnity Costs Application because of adverse findings he submits I have made about his behaviour and motivations in my reasons for judgment in Budini. He alleges that the findings were made “without warning” and that he was deprived of the opportunity to make submissions about the inferences that the Court might draw from the evidence. These submissions specifically relate to conclusions I have drawn about correspondence authored by Mr Budini in the period before the complaint was lodged with the Commission.

27    In determining the Leave Application, it was necessary to make substantive factual findings so as to determine whether Mr Budini’s explanations for the delay should be accepted as true and adequate. As I said in Budini (at [54]), the asserted explanation for the delay was:

… considered in light of contemporaneous correspondence, particularly correspondence authored by Michael Budini himself. That task has not entailed the Court preferring the testimony of one deponent over another. Rather, it has involved the drawing of inferences from undisputed facts and the contemporaneous communications (the authenticity of which was not questioned).

28    In his affidavit material, Mr Budini positively advanced an explanation for not lodging the complaint within 12 months of his first becoming aware of the alleged contravening conduct. A substantial portion of the hearing was devoted to that question. Mr Budini’s submissions were to the effect that the length of the delay was not unreasonable and that there was a reasonable explanation for the delay in any event. He gave evidence about the steps he had taken in the period prior to February 2018, and the knowledge he had at various times about the conduct complained of. Mr Budini did not claim to have been unaware of the timeframe specified in s 46PH(1)(b) of the Act, whether in his evidentiary materials or in the course of argument.

29    In considering the issue of delay, I had regard to contemporaneous correspondence that had been authored by Mr Budini and directed to Sunnyfield, threatening litigation and adverse media coverage in the period before the complaint was lodged. The fact, authenticity, timing and content of the correspondence was not in dispute. One of the letters authored by Mr Budini was sent to the New South Wales Civil and Administrative Tribunal. It is described in Budini at [66] as follows:

On 5 October 2016, Michael Budini sent a lengthy email to a representative of NCAT, copied to several workers at Sunnyfield. The email set out multiple detailed allegations toward Sunnyfield largely (but not entirely) encompassing the factual subject matter now sought to be agitated in this Court. The email is replete with capital letters, exclamation marks and rhetorical questions. It is immoderate in its tone. It refers to ‘proposed litigation’ including litigation founded in ‘various breaches of anti-discrimination statutes’ and asserts an entitlement to unquantified damages.

30    Mr Budini was an admitted legal practitioner at the time that the correspondence was sent.

31    In other correspondence, Mr Budini threatened that there would be television coverage causing reputational harm to Sunnyfield if it did not comply with his demand to participate in a private mediation of his asserted claim. He claimed that he had obtained counsel’s opinion and litigation funding. He asserted that Ms Budini had claims against Sunnyfield sounding in $10 million in damages. The claim ultimately filed sought financial remedies in the amount of $3 million, including a component of $1 million said to represent losses suffered by the Trust. Some of my conclusions in relation to these topics were expressed as follows:

64.    There are many complaints, some of which are multifaceted. On the whole, I am not satisfied that Michael Budini learned of the essential facts in sufficient detail to make the allegations of unlawful discrimination as recently as he claims. I find that his claims as to when he had knowledge of certain matters are either directly contradicted by, or otherwise cannot be reconciled with, his contemporaneous communications with Sunnyfield over a period spanning several years. My conclusions in this regard vary as between the many and varied alleged acts of unlawful discrimination and will be further explained in the course of considering the respondents’ submission that the claims have no reasonable prospect of success.

65.    In relation to all of the allegations, I find that from at least October 2016, Michael Budini embarked on a course of correspondence with or including Sunnyfield that was far from conciliatory. The correspondence reveals that Michael Budini was in possession of the material he needed to formulate the complaint for a significant period before the complaint was lodged. Rather than lodge the complaint, Michael Budini devoted personal time and resources to making claims for an extravagant settlement sum against Sunnyfield, including by making demands and threats of adverse publicity.

32    I went on to say this about the steps that had been taken by Mr Budini in the period before the complaint was lodged:

77.    The current affairs program Today Tonight broadcast a story on or around 20 May 2017 in which Michael Budini made serious allegations against Sunnyfield and its treatment of Ms Budini. There was some suggestion in the course of the hearing that Michael Budini did not invite media attention to his complaints. Even if I were to accept that submission it does not address the circumstance that Michael Budini willingly participated in media coverage disclosing Ms Budini’s personal circumstances. In light of his correspondence it is reasonable to infer that he did so for the purposes of inflicting reputational losses on Sunnyfield which he then suggested Sunnyfield might ‘mitigate’ by settling his claims.

…

80.    I infer from the content and tenor of the communications that Michael Budini adopted a strategy by which he delayed lodging the complaint with the Commission for conciliation because he preferred to resolve the complaint by way of amplified threats of litigation coupled with demands made in his capacity as a legal practitioner. The threats were made with a view to having Sunnyfield participate in a private mediation to answer a claim said to be valued at $10 million under the pain of exposure to damaging media coverage and a withheld report to authorities of alleged fraud. In my view, Michael Budini utilised a considerable period of time in 2016 and 2017 drafting correspondence, the content and tone of which could only have served to elevate the dispute. I find that Michael Budini delayed lodging the complaint because he elected instead to attempt to obtain a settlement sum by his own efforts and methods rather than submit the very serious and damaging allegations to the Commission for prompt conciliation. In the circumstances, I reject the submission that the length of the delay was reasonable in all of the circumstances and I reject the contention that there was a reasonable explanation for it.

33    It is submitted that these passages contain findings as to Mr Budini’s behaviour and motives, including as to the objectives and purposes underlying his pre-litigation dealings with the respondents “without any prior warning” and so without him being provided with an opportunity to adduce evidence or make submissions about them. It is submitted that the conclusions were drawn by the Court “without hearing or knowing of such alternative explanations”. In written submissions, the argument was expressed as follows:

a.    in drawing inferences, her Honour relied upon the fact that Michael Budini’s correspondence to the respondents was ‘replete with capital letters, explanation [sic] marks and rhetorical questions’ and ‘immoderate in its tone’;

b.    Michael Budini had no warning that the style and tenor of his correspondence would be relied upon in this manner, and therefore no opportunity to adduce evidence or to make any submissions in order to put forward an alternative explanation;’

c.    had Michael Budini been afforded such an opportunity, then he would … have explained that such correspondence was symptomatic of his condition at the time, and it was respectfully therefore not open to the Court to draw any other conclusions or inferences from it.

34    Reliance is placed on an affidavit of Mr Budini’s solicitor, Mr Jacob White. Mr White deposes to the evidence Mr Budini would have adduced to explain the content of his pre-complaint correspondence had he been forewarned. Mr White states that he has instructions to the effect that the following evidence could and would have been adduced:

(a)    Despite holding a practising certificate, Mr Budini performed little by way of legal work, due to persistent mental health problems associated with anxiety and depression.

(b)    His depression caused him to have suicidal ideations, and to self-medicate with alcohol.

(c)    To the extent that he did work as a lawyer, his principal field of practice had been property and development law, not litigation.

 (d)    He had little by way of experience in briefing counsel.

(e)    He knew broadly of the existence of anti-discrimination laws, but he had never worked in the area and, due to his anxiety and depression, he had no confidence in being able to research the relevant legal principles for himself.

(f)    His ‘design’ in 2017 was not to ‘inflict reputational losses on Sunnyfield’ but was, rather, to conduct a mediation with Sunnyfield, as reflected by his repeated statements in written correspondence to the effect that:

i.    he was not pursuing the media, but rather they were pursuing him; and

ii.    he wished to mediate in preference to speaking with the media.

(g)    When he eventually did speak with the media, his objective was not to ‘inflict reputational losses on Sunnyfield’ but, rather, to shine a light on what he perceived to be the abuses that were occurring in aged/disability care facilities, being an objective with which he feels vindicated having regard to the fact that Royal Commissions were subsequently established to enquire into those sectors.

(h)    To the extent that his attempts at arranging a mediation were clumsy or unconventional, that was merely because of his lack of experience as a litigator and his general lack of confidence in life stemming from his anxiety and depression.

(i)    To the extent that his correspondence was long-winded, ‘replete with capital letters, explanation [sic] marks and rhetorical questions’ and ‘immoderate in its tone’ (being the findings at [66] of the Decision), that reflected, in part Michael Budini’s usual emotive writing style, but also the circumstances in which Michael Budini was experiencing symptoms of stress, anxiety and depression and was deeply frustrated about the conduct of the respondents. It therefore did not represent an element of any supposed strategy or design on his part.

(j)    He did not know of any lawyers in Adelaide who were experienced in discrimination matters and, had he known of such a lawyer, he would have engaged that lawyer early in 2017.

(k)    In mid-2017, his current counsel, Mr Hurren, suggested that he approach my firm.

(l)    Michael Budini had wished, all along, to engage solicitors and to follow their advice, but he was initially unsure how he would be able to afford to do so. Having eventually found and having engaged my firm, he did in fact set about following our advice (rather than following or implementing any strategy or ‘design’ of his own).

(m)    In referring to the steps that Michael Budini took to engage, and to follow the advice of, my firm, neither I nor Michael Budini intend to waive legal professional privilege. With that qualification, I say that, in June 2017, my firm expressly advised Michael Budini to:

i.    renew his guardianship of Enrica Budini through NCAT;

ii.    apply to NCAT for the necessary ‘status’ to take legal proceedings on behalf of Enrica Budini;

iii.    speak further with potential witnesses to confirm whether they were willing to provide statements; and

iv.    provide my firm with a raft of background documents.

(n)    The time then taken for those events to occur reflected no more than a desire by Michael Budini to follow and to implement our advice, rather than a negotiating strategy or design on his behalf.

(o)    Michael Budini had been unaware of a requirement to make a complaint to the Australian Human Rights Commission (AHRC) within 12 months.

(p)    He did not ‘design’ a strategy that involved avoiding or delaying the making of such a complaint and, to the contrary, he would have tried to make a complaint sooner had he been aware of the relevant time constraint for doing so.

(q)    He did not persist with any claim for $10million or even $6million and, instead, he instructed my firm to approach the solicitors for the respondent to indicate that he and Enrica Budini would settle for an amount well below $1million.

(r)    In particular, on 21 March 2018 (some 7 months before these proceedings were instituted), Michael Harmer had a teleconference with Mr Clark, solicitor for the respondents, in which:

i.    Michael Harmer proposed that the parties participate in a mediation;

ii.    Mr Clark referred to the fact that Michael Budini had previously made a demand of $10 million;

iii.    Mr Harmer said words to the effect of ‘we are not talking about $10 million. We are not even talking about $1 million. It would settle for a sum well below $1 million’;

iv.    Mr Clark said words to the effect that he would get instructions in relation to the proposed mediation and revert to Michael Harmer.

(s)    After the said telephone conference on 21 March 2018:

i.    Stuart Clark did not revert back to Michael Harmer;

ii.    the respondents informed the AHRC that they did not wish to participate in any mediation with the applicants (I refer to the email from Hyun Joo Lee, Conciliator, to me dated 20 June 2018, which is annexed and marked JW-10).

(original emphasis)

35    The applicants submit that recusal is warranted in this case for the same reasons identified by the English Court of Appeal in Mengiste v Endowment Fund for the Rehabilitation of Tigray and Ors [2013] 5 Costs LR 841. In that case, the Court of Appeal set aside the judgment of a primary judge refusing to recuse himself from determining a wasted costs application brought against the appellant’s solicitors. In his reasons for judgment in the principal proceeding, the primary judge had expressed strident criticisms about the conduct of the solicitors. The criticisms and findings were not relevant to any substantive issue to be determined in the substantive cause. They were expressed in conclusive terms and they included findings of fact about the solicitors’ conduct in respect of which they had not been afforded any opportunity to be heard. There was, in that case, an “inevitable collision” between the principle of wasted costs and the application for recusal because the wasted costs order could not be made unless there was some basis for criticising the solicitors’ conduct.

36    Giving judgment for the Court of Appeal, Arden J “reached the clear conclusion that this was an exceptional case and that there was apparent bias stemming from the facts of the case” which required the recusal of the primary judge (at [59]). Her Honour gave three reasons for that conclusion. First, it was not necessary for the primary judge to make critical findings about the conduct of the solicitors in order to evaluate the evidence and determine the issues in the principal proceeding. There was no need, her Honour said, to make the criticisms without inserting an appropriate qualification that they were provisional views or views based on limited evidence “thus being seen to leave the door open to the possibility that there might be another explanation”. Her Honour said that the fair minded observer would ask rhetorically why that had not been done. Second, the conclusive manner in which the criticisms were expressed, coupled with the failure to afford the solicitors an opportunity to be heard, conveyed an impression of bias because it suggested that no explanation would be considered. The impression of bias was “further confirmed by the making of findings of this nature when it can be foreseen that an application for a costs order, with serious consequences for the solicitors, may result”. Third, the case was one in which there had been six occasions of criticism in the reasons for judgment. The primary judge had then made further criticisms of the solicitors for bringing the recusal application at the time that they did, describing the timing as “tactical”. In their accumulative effect, the criticisms were “extreme” and “unbalanced”: see Locabail (UK) Ltd v Bayfield Properties Ltd [2000] QB 451.

37    I do not consider there to be a proper basis to recuse myself from determining the question of costs in this case, whether on the basis identified in Mengiste or on any other basis.

38    The fair minded observer must be taken to be aware of all of the circumstances of the case, including the nature of the issues to be determined on the Leave Application and the manner in which the parties presented their respective cases. The fair minded observer must also be taken to be informed about the exchanges that occurred between the Court and Mr Budini’s counsel in the course of the hearing, particularly in circumstances where it is alleged that no “prior warning” had been given of the inferences the Court ultimately drew on the evidentiary material before it.

39    Unlike the circumstances in Mengiste, Mr Budini’s state of mind and conduct in the period leading up to February 2018 was a relevant issue to be determined in the substantive proceeding to which the present cost application relates. The subject was dealt with extensively in evidence and submissions. At issue was whether Mr Budini had a reasonable explanation for lodging the complaint at the belated time that he did. Mr Budini’s pre-complaint correspondence was in evidence and all parties made submissions about the inferences that might be drawn from it.

40    It is convenient at this juncture to extract some portions of the transcripts of the hearing relating to the correspondence. References to Counsel in these extracts are references to Counsel appearing for Mr and Ms Budini. The extracts have been numbered for the purposes of the analysis that is to follow.

Extract 1

THE COURT:    … one of the critical issues for me to decide is what was the reason for the application not being brought within 12 months, or the complaint not being lodged within 12 months. And Mr Budini has put on a good deal of evidence about that, much relating to what he knew in earlier times and what his role was in earlier times; what steps he was taking upon discovering matters that he says now support his claim. And so I will be making substantive findings of fact in relation to those topics and the parties might wish to press their objections to material that bears on that issue.

    …

Extract 2

THE COURT:    … And this all in the context of then making a demand for $10 million under threat of media publicity, I’m having great difficulty understanding what proper basis there could be for a $10 million assertion, unless it’s just an ambit claim to get somebody to the table. This is from a legal practitioner. We now have claims for $1 million made for both Mr Budini and Ms Budini, and the affidavit evidence on Mr Budini’s case is that there has been about $300,000 paid by the trust to Sunnyfield, as I understand his allegation.

 COUNSEL:    No, that’s not the evidence, your Honour.

 THE COURT:    Now - - -

 COUNSEL:    Your Honour, I can address every point you’ve raised.

 THE COURT:    Yes.

COUNSEL:    Your Honour obviously has a concern that $10 million was demanded under threat of media - - -

THE COURT:    Yes. I suppose my concern is that there’s a degree of immoderation in the language. There’s a degree of immoderation and a lack of personal detachment in the way that Mr Budini has dealt with this matter in the period when he could and should have been lodging a complaint with the Commission.

 COUNSEL:    Yes.

THE COURT:    And having regard to the detail in which he was making these assertions to Sunnyfield, rather than lodging a complaint promptly, I’m having some difficulty understanding what it is that he didn’t know in the period between, say, 2015 through to 2017, when he was using his time to make threats in relation to a $10 million claim by reference to television coverage.

 COUNSEL:    But - - -

THE COURT:    These things are concerning to me, and I’m simply raising them so that you can use your time to address them.

    …

Extract 3

THE COURT:    … The concern that I expressed was that the quantum of the claim, as stated in the originating application – quite specifically $1 million - - -

 COUNSEL:    Yes.

THE COURT:     - - - didn’t seem to me to have a proper foundation in the evidentiary material, and I’m looking at that in the context of an earlier assertion that it was a $10 million claim. Now, a tendency of a person in Mr Budini’s position to exaggerate the quantum of a claim, I will take into account because it might give colour to the kind of proceedings that are to follow. That there will be allegations made without proper regard to the evidentiary basis for them.

 COUNSEL:    Yes. What I would like to do – yes.

THE COURT:    Now, at the time of the drafting of the originating application, I’m concerned to know what was the evidentiary basis for the claim that $1 million had been lost as a result of the contraventions.

COUNSEL:    Yes.  …  Now, when Mr Budini put forward a figure of $10 million it wasn’t just the large amount that had gone missing year after year together with compounding interest that of itself would be in the millions, but it also expressly – it was stated in the correspondence – was put as an amount that would reflect a claim for punitive or exemplary damages. Your Honour is surprised that such a claim should have been put, but I want to take your Honour now - - -

THE COURT:    It was some – the amount of the claim together with the immoderation in the language was of concern to me.

 COUNSEL:    But – and might I address both of those - - -

 THE COURT:    Yes.

COUNSEL:     - - - now, your Honour, by – by the facts, because the – the – what I wish to put to your Honour now as to the – the extent, the nature and extent of the shocking things that occurred might aid your Honour in understanding, first, why it is claimed that this will be a case for exemplary damages, but secondly, your Honour, why Mr Budini might have used immoderate language. He was furious and he said as much in his second affidavit. He was beside himself with rage that his lifelong friend and relative had been treated in this way and the first example I want to take your Honour to is this: would your Honour please take up my written submissions?

    …  We say that Enrica’s life was being imperilled on a routine basis and that it is an outrage and, your Honour, he was angry. He was absolutely furious. It didn’t get any better when his concerns got short shrift and Sunnyfield engaged one of Australia’s largest law firms to tell him to go away. So, your Honour, is it any wonder? These are matters of human concern. This is not a business matter. This is not a matter where Mr Budini is acting as a lawyer representing a client and needing to adhere to – strictly to his duties as a lawyer. This is Mr Budini writing as a very, very upset relative.

    …  So in a sense, your Honour, it almost negatives the delay completely. It almost renders the so-called delay irrelevant because one might rhetorically ask, ‘What difference, really, did it make, Sunnyfield being given a long letter in March 2017 setting out all the allegations; big letter to Clayton Utz a couple of months later? What difference, really, is there between that and the issuing of this claim in February – sorry, the lodgement of the formal complaint in February the following year?”

41    On the basis of that material, I reject the contention that Mr Budini or his representatives could have laboured under the view that the Court would not proceed to make substantive findings about his conduct and motivations in the period leading up to the lodging of the complaint by reference to the content and tenor of his contemporaneous correspondence. To the extent that it was necessary to do so (which is doubtful) the Court made it plain that it would proceed to make findings about Mr Budini’s reasons for not lodging the complaint at an earlier time and the steps he had taken in the pre-complaint period (Extract 1).

42    Counsel was also given express notice that the content and tenor of the correspondence was under the Court’s consideration, including because of the threatened media coverage, the apparent exaggeration of the value of the threatened claim and the immoderate language Mr Budini had employed having particular regard to his status as an admitted lawyer (Extract 2). To the extent that it was necessary for the Court to disclose its thought processes prior to judgment, it was plainly foreshadowed that the correspondence might support an inference that Mr Budini had devoted his time to making improper threats rather than lodging the complaint with the Commission for conciliation (Extract 2). In response, Counsel expressly acknowledged that the Court appeared to have concerns about the apparently exaggerated worth of the claims and Mr Budini’s dealings with the media in connection with them (Extract 2) and in relation to the manner in which the correspondence was expressed (Extract 3).

43    Counsel did in fact make substantive submissions on the subject matter of the Court’s intimations (Extract 3). To the extent that it is now suggested that Mr Budini’s contemporaneous correspondence did not fairly reflect his subjective motivations (whether because of mental illness, lack of confidence in life or otherwise), Mr Budini had every opportunity to provide instructions to his advisers in relation to it. Among other things, Counsel had the opportunity to submit, and did in fact submit, that Mr Budini had been pursued by the media (as recorded in Budini at [69] – [77]). Counsel submitted that the tenor of the correspondence reflected Mr Budini’s usual emotive writing style (Extract 3). The immoderate tone of the correspondence was said to be explicable because Mr Budini was “absolutely furious” and “very, very upset” (Extract 3). It was open to Mr Budini to give an alternative explanation to that which was given.

44    As to the other evidence Mr White deposes might have been adduced, Mr Budini positively advanced evidence that he had suffered from a mental illness in the past, which explained a defined period of time in which he did not hold a practicing certificate. He had every opportunity to explain that he continued to suffer from a mental illness affecting his conduct following his readmission, such that any associated delay should be viewed sympathetically.

45    I reject the contention that Mr Budini lost an opportunity to submit that his manner of corresponding or the delay more generally were in some way attributable to his lack of knowledge, confidence or expertise in discrimination law. As to the time at which Mr Budini obtained legal advice from other practitioners, that topic was the subject of affidavit evidence, submissions and ultimately the subject of the following findings about which no discrete complaint is made:

78    On 30 May 2017, Michael Budini forwarded to Sunnyfield’s solicitors an email from a litigation funder. The author of the email states that he has ‘read through the material you have provided including counsel opinion, quantum of loss report and legal representation fee estimate’. The email goes on to express an interest in funding the proposed claim and proposes the terms of their arrangement. I infer that the email was forwarded to Sunnyfield to lend force to Michael Budini’s threat of litigation, including by reinforcing that he had obtained counsel opinion and prepared a report of some kind quantifying alleged losses.

79    On the material before me I find that Michael Budini, himself a legal practitioner, had engaged independent counsel from as early as October 2016. Counsel participated in an interview with the ‘informant’ in November 2016 (over which a claim of legal professional privilege is now asserted). There is other material before the Court to confirm that Michael Budini was in communication with counsel in familiar terms in February 2017 when dealing with Sunnyfield about the return of Ms Budini’s possessions.

46    Nor was Mr Budini deprived of the opportunity to give evidence to the effect that the delay was explained by his ignorance of the timeframe in which a complaint should be lodged with the Commission. Mr Budini was legally represented in this action and in his dealings with the Commission. His body of evidence proceeded from the footing that he was aware of the time statutory frame but delayed lodging the complaint for reasons including the various nature of the allegations and the time required to attend to the necessary legal and practical tasks to prepare and lodge the complaint. It would be an entirely different case to now suggest that the delay was explicable in any part by ignorance of the statutory time period, whether on his part or the part of his lawyers.

47    Finally in relation to the reliance on Mengiste, to the extent that there is criticism of Mr Budini’s conduct expressed in the reasons for judgment in Budini, the criticism goes no further than was warranted for the disposition of the issues arising on the Leave Application. The reasons contain no criticism of Mr Budini in his later conduct of this litigation. To the extent that the reasons are disapproving of Mr Budini’s conduct prior to the litigation the criticisms are not extreme, nor are they imbalanced.

48    It is true that the respondents have sought to rely on Mr Budini’s pre-litigation conduct (among other things) as a basis for an application for an award of costs assessed on an indemnity basis. However, as Counsel for the applicants correctly submitted, the conduct of Mr Budini leading up to the lodging of the complaint in 2018 is not relevant to my assessment of whether an order for indemnity costs should be made. On an application for indemnity costs, the Court’s focus is on acts or omissions warranting an award that would serve to indemnify the successful party for its costs in successfully defending the proceedings. The Court’s focus on the Indemnity Costs Application is on Mr Budini’s conduct as a litigant in this action, as and from (or perhaps immediately prior to) 22 October 2018. Unlike the legal context in Mengiste there is no inevitable collision between the issues decided on the Leave Application and the issues arising on the respondents’ application for indemnity costs.

49    I have not overlooked the applicants’ contention that the respondents should not have their costs because they have unreasonably refused to engage in alternative dispute resolution processes. I understand that submission to include a contention that Sunnyfield unreasonably refused to participate in the private mediation on the terms demanded in Mr Budini’s correspondence of 2017. I do not consider there is a proper basis to recuse myself from hearing and deciding that question. Whether Sunnyfield has acted unreasonably will turn on how a reasonable person in Sunnyfield’s position ought to have responded to the correspondence they received. It is not suggested that Sunnyfield was aware of any fact or circumstance that would require them to interpret Mr Budini’s correspondence to mean something other than what it said. Whether Sunnyfield unreasonably rejected overtures to mediate is to be assessed on the objective facts as to how, when and on what terms the overtures were made. It does not turn upon any subjective issues explaining Mr Budini’s choice of language.

50    Apart from the passages from Budini extracted above, the applicants have not drawn the Court’s attention to any other part of the reasons for judgment that may properly form the basis for an order that I disqualify myself from deciding the Indemnity Costs Application.

COSTS TO FOLLOW THE EVENT

51    The respondents accept that they should bear their own costs in connection with factual matters dealt with in Budini at [125] – [132]. What follows in these reasons is to be understood as excluding that subject matter.

52    The applicants’ primary submission is that there should be no order as to costs on the Leave Application.

53    The originating application sought relief under the Act both for the benefit of Ms Budini as a person said to have been discriminated against, and for the benefit of Mr Budini, as a person said to have suffered personal injury as a result of the alleged contraventions of the DD Act. For the purposes of costs, the two applications should be considered separately, even though they were heard concurrently.

54    Both applicants were unsuccessful on the Leave Application, although not for identical reasons. In the ordinary course, costs should follow the event: r 40.03 Federal Court Rules 2011 (Cth).

55    It is not disputed that the respondents did not agree to participate in the private mediation proposed or demanded by Mr Budini. However, the respondents are the successful parties on the Leave Application. It is not a case in which an unsuccessful party refused a reasonable offer of compromise, nor a case of a successful prosecuting party rejecting a financial offer in an amount larger than an award subsequently achieved.

56    Moreover, in my view a reasonable person in the respondents’ position would be justified in refusing the proposals to mediate, such as they were. That is principally because the proposals were made in circumstances that did not engender a spirit of compromise. The proposals were made in relation to allegations that Sunnyfield had deliberately falsified a medical diagnosis, deliberately defrauded the National disability Insurance Scheme (NDIS) and deliberately starved Ms Budini for its own financial gain. The medical claims, in particular, were advanced in extreme terms and without substantiation by any qualified medical opinion having even prima facie force. As acknowledged by Counsel for Mr Budini, the correspondence conveyed a sense of “fury”. Considered objectively, the correspondence amounted to a threat to inflict reputational harm on Sunnyfield by reference to the serious allegations if it did not agree to a private mediation on terms demanded by Mr Budini. It matters not whether the objective characteristics of the correspondence might be explained by mental illness causing a lack of discipline on Mr Budini’s part. The respondents were entitled to interpret the emails as meaning what they said, signed as they were by a person expressly asserting his status an admitted legal practitioner.

57    I have had regard to the circumstance that the respondents have not complied with the requirements of s 7 of the Civil Dispute Resolution Act 2011 (Cth). It requires that a respondent who is given a copy of a genuine steps statement by an applicant in the proceedings must file a genuine steps statement before the first hearing date. The applicants submit that the fact of the respondents’ failure to file a genuine steps statement supports their position that costs should follow the event. I have weighed the fact of the respondents’ non-compliance with s 7 of the Civil Dispute Resolution Act in the context of the conduct of the parties in the litigation as a whole. I am not satisfied their non-compliance is a sufficient factor to depart from the usual rule. The non-filing of the statement does not constitute, nor does it evidence, an unreasonable stance on the respondents’ part toward the non-litigious resolution of the dispute. They are not to be criticised for refusing to participate in alternative dispute resolution procedures with Mr Budini for so long as Mr Budini objectively displayed a lack of professional detachment from the underlying subject matter.

58    There is otherwise no basis for concluding that costs should not follow the event of the Leave Application. The respondents should have the benefit of an order for costs in their favour.

QUANTUM

59    The respondents have adduced evidence going to the quantum of their costs. I accept that they have done so in response to a submission by the applicants that the costs said to have been incurred by them in the proceedings are not reasonable.

60    I do not consider it appropriate to make any assessment of the reasonableness of the costs alleged to have been incurred by the respondents. The quantum of costs payable in satisfaction of the costs order (and the reasonableness of any amount claimed) will be a matter for taxation in accordance with Div 40.2 of the Rules. An award of indemnity costs would not entitle the respondents to be compensated for costs that have been incurred unreasonably: King v Yurisich (No 2) [2007] FCAFC 51 at [20] – [21]. As disputes as to quantum may be deferred to the taxation officer, I will not read the respondents’ affidavit material as to quantum: Affidavit of Alan Edward Livingstone Flick sworn 20 March 2020.

61    Nor have I read any offer of compromise contained in the affidavit material, principally because there was no offer to compromise solely related to the Leave Application forming the subject matter of the costs application now before me. I will hear from the parties as to whether the evidence of settlement proposals should be kept confidential.

NO JOINT LIABILITY

62    Mr Budini’s alternate submission is that costs should be ordered jointly against him and Ms Budini, so creating a joint and several liability between them to satisfy the order. Mr Budini’s position in this regard is supported by the substitute litigation representative, Ms Sinclair. I reject the submission for the following reasons.

63    To the extent that the respondents’ costs are attributable to defending the claim brought in Mr Budini’s own name and right, that part of the costs should be separately apportioned and assessed. There is no proper basis for Ms Budini or her property to be exposed (whether directly or indirectly) to liabilities for costs relating to that part of the action taken exclusively for Mr Budini’s personal benefit. There should be an apportionment of the respondents’ costs as between Mr Budini’s two capacities to make the different legal bases of his liability plain. To that extent, I reject the submission of both litigation representatives to the effect that the proceedings were commenced wholly for Ms Budini’s benefit. Plainly they were not.

64    It is appropriate to adopt a broad brush approach to apportionment rather than have the parties incur yet further costs in respect of the issue. Having presided on the Leave Application it is my preliminary view that it is appropriate to apportion the respondents’ costs equally as between Mr Budini’s application and Ms Budini’s application. That preliminary view is informed by Mr Budini’s personal reliance on the alleged acts of discrimination, coupled with the circumstance that some time and expense was devoted to the question of Mr Budini’s standing to sue.

65    The appropriate apportionment was a matter not dealt with in the parties’ written submissions. It is a matter in respect of which they may wish to be heard. Orders will be fashioned to provide for the possibility of a different apportionment, to be made by a Registrar, should any party consider the equal apportionment to be productive of unfairness.

66    As to that part of the costs attributable to the Leave Application brought for Ms Budini’s benefit, it is to be remembered that Ms Budini is a person suffering from a mental incapacity. She is not a person against whom a costs order could or should be directed or enforced. Neither Mr Budini (as the former litigation representative) nor Ms Sinclair (as the present litigation representative) suggested how the Court’s processes could apply in the event that Ms Budini does not comply with any order in terms imposing a joint and several liability upon her to pay the respondents’ costs, or with any demand for contribution that may be made against her by Mr Budini.

67    The suggestion by the former and current litigation representatives that Ms Budini could be made jointly liable for the respondents’ costs is contrary to law. As Williams J said in Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 113, in relation to infant plaintiffs:

… the infants could only have duly applied, if the application had been commenced in their names by a next friend, and their interests had been protected by the presence of a next friend who would have been responsible for the proper conduct of the proceedings on their behalf, and subject to the supervision which the court exercises over a next friend in the conduct of the proceedings.

68    His Honour went on to cite Bowen LJ said in Rhodes v Swithenbank (1889) 22 QBD 577 at 579 where his Lordship said:

The only reason that the next friend of an infant is entitled to bind the infant in matters connected with the cause is that he is the officer of the Court to take all measures for the benefit of the infant in the litigation in which he appears as next friend.

69    Williams J went on to confirm (at 113) that a purpose of appointing a next friend is to have a person on the record who is personally liable for costs. See also Ex parte Davis [1901] NSWStRp 71; (1901) 1 SR (NSW) 187 at 189.

70    The same principle applies to a litigation representative appointed in accordance with r 9.61 of Rules in respect of a person suffering from a legal incapacity. As Allsop CJ said in BUG15 v Minister for Immigration and Border Protection (No 2) [2018] FCA 860 at [6], if a litigation representative is not prepared to expose him or herself to costs, it may be that the litigation must be struck out.

71    In the present case, Mr Budini (as litigation representative) is to be regarded as an officer of the Court appointed to safeguard the interests of Ms Budini: Rhodes at 579 (Bowen LJ); Dey at 113 – 114 (Williams J). He derived his authority to bind Ms Budini not from Ms Budini herself, but from this Court: Stephenson v Geiss [1998] 1 Qd R 542 at 557 (Lee J). His consent to act as litigation representative was not conditional upon there being any order protecting him from the usual outcome that he bear personal liability for costs: cf Smith v NRMA Insurance Limited [2016] NSWCA 250.

72    In accordance with established principle, any order for payment of that part of the respondents’ costs attributable to Ms Budini’s unsuccessful application will therefore be expressed in terms creating a personal liability in Mr Budini to pay.

73    The existence and nature of any right of recourse Mr Budini may have at general law to the property of Ms Budini in respect of that costs order is another source of dispute.

THE TRUST APPLICATION

74    The general law in relation a next friend’s right of indemnity in relation to a plaintiff litigant was summarised by Gleeson J in Challenger Life Company Limited v Estate of the Late Robert John Real (No 2) [2017] FCA 1059 at [52]:

… It is well-established that if an action brought by a plaintiff under a disability is dismissed, and the defendant is awarded costs, the next friend of the plaintiff is personally liable to the defendant for the costs. It is also well-established that if the next friend has acted properly, he or she is entitled to an indemnity from the plaintiff or out of any fund to which the plaintiff is beneficially entitled: Farrell by her next friend Waugh v Royal Kings Park Tennis Club (Inc) [2007] WASCA 173 at [17]; NSW Insurance Ministerial Corp v Abualfoul [1999] FCA 433; (1999) 94 FCR 247 at [28].

75    See also Pritchard v Roberts (1873) LR 17 Eq 222.

76    The respondents submit that Mr Budini has not acted “properly” in the proceedings. By minutes of order dated 27 February 2020 (now marked MFI1), they seek an order (as amended) as follows:

The Second Applicant pay the respondents’ costs payable on an indemnity basis, to be paid by the Second Applicant personally and without recourse to the Trust established in or about September 2005 to sustain the First Applicant.

…

77    After an initial oral hearing, and in light of the COVID-19 pandemic, the Court determined that the outstanding applications then before it were to be determined on the papers.

78    However, the phrasing of the Trust Application prompted the Court to seek further submissions and clarification from the parties. Those submissions were sought because it was not immediately apparent to the Court that Mr Budini would have an entitlement at general law to have recourse to the Trust, irrespective of whether he had acted properly in the relevant sense. At the time of inviting further submissions, neither party had addressed the Court on the terms of the Deed constituting the Trust, nor on the question of whether the assets of the Trust were assets to which Ms Budini was beneficially entitled. It was also necessary to invite submissions from Ms Budini’s substitute litigation guardian, Ms Sinclair, in respect of the legal and factual issues arising on the application, and on the question of whether I should disqualify myself from determining it.

79    Having now read the supplementary submissions, I have concluded that the Trust Application is more appropriately determined by the trial judge, that judge having due regard to the ongoing conduct of the proceedings. The various circumstances informing that conclusion are as follows.

80    For the applicants it is submitted that this Court does not have jurisdiction to make orders interfering with the discretion of the Trustee or construing the Trust Deed, nor to exercise any of the procedural powers vested in the Supreme Court of New South Wales under the Trustee Act 1925 (NSW). Without expressing a concluded view, I have some difficulty with that submission given that the authority of the litigation representatives to bind Ms Budini in these proceedings (including in ways that result in adverse costs orders) is derived from their appointment by this Court. As has been mentioned, a litigation representative appointed pursuant to r 9.61 of the Rules is an officer of the Court and subject to its supervision. The submissions as to jurisdiction did not address the effect of s 79 of the Judiciary Act 1903 (Cth), nor did they address the principles stated by the High Court in Rizeq v Western Australia (2017) 262 CLR 1. Given that the same legal issue is very likely to arise before the trial judge in connection with the substitute litigation representative, it would not be efficient to fragment the question by inviting yet further written submissions from the parties on questions of competence and deciding the question. The position adopted by Ms Sinclair on the Trust Application, including on questions of competency, tends me to the view that the trial judge supervising the conduct of Ms Sinclair should decide the question as it affects both litigation representatives.

81    Whilst Mr Budini accepted that he could not, in law, have direct recourse to the Trust, he did submit that he had a personal claim against Ms Budini (described as a “debt”) who in turn had a claim against the Trust, which would result in him being fully indemnified. Again, it is significant that the same submission was advanced by Ms Sinclair, not only in connection with the Leave Application but, I presume, on her own behalf in relation to the remainder of the proceedings. The legal mechanism by which Mr Budini or Ms Sinclair might cause Ms Budini to seek recourse to the Trust is presently unclear. Their respective appointments as Mr Budini’s litigation representative do not confer on them general powers of agency to bind Ms Budini in her dealings with them or with third parties, such as the trustee. There is a very high likelihood that legal issues such as these will arise again in the proceedings before the trial judge.

82    As to the remainder of the proceedings, much may depend on whether allegations are made on Ms Budini’s behalf in respect of the performance of the trustees in the administration of the Trust. As I have mentioned, Mr Budini has asserted a breach of trust by the Trustees in which the respondents were knowingly concerned. It is anticipated that Ms Sinclair will advance the same claims on Ms Budini’s behalf in asserting other causes of action. Mr Budini is not the trustee of the Trust and he was not appointed Ms Budini’s litigation representative in this Court in respect of any claim for breach of trust she may bring as a beneficiary of it. Moreover, Mr Budini did not seek any remedy for the restoration of Trust funds consequent upon the alleged breach. The claim for relief in respect of the remaining causes of action includes a claim for damages comprising:

$1,000,000 to reinstate (to the First Applicant) distributions made to her (from the trust fund of the Budini Trust), which distributions were paid to the First Respondent purportedly on behalf of the First Applicant.

83    It was Mr Budini’s case on the Leave Application that damages paid directly into the hands of Ms Budini pursuant to such an award may be held and managed by him in his capacity as her legal guardian, thus bypassing the Trust.

84    It would seem to be a peculiar result if Mr Budini (and for that matter Ms Sinclair) were to receive an indemnity for their cost liabilities in the action through Ms Budini at the expense of the Trust, should the suit related to the Trust fail at trial. I express no concluded view on the question. It is enough to identify that the issue is more appropriately determined by the trial judge, so that a single answer to it may be given by reference to the whole of the proceedings.

85    In the meantime, it should not be assumed that the assets of the Trust are property to which Ms Budini is beneficially entitled. Relatedly, it should not be assumed that the trustees of the Trust would be compelled under the terms of the Trust to pay to Mr Budini amounts sufficient to indemnify the litigation representatives in respect of any costs liability they may owe to the respondents pursuant to the Court’s costs orders. Nor should it be presumed that the Court’s orders as to costs give rise to a “debt” owed to Mr Budini by Ms Budini, whether for the purposes of the Trust deed or otherwise. Such questions remain in dispute. They appear to be matters in respect of which the Trustee is entitled to be heard.

86    As to timing, I consider it desirable that the remaining causes of action proceed to trial free of the distraction of disputes as to the rights of the litigation representatives at general law vis a vis Ms Budini and vis a vis the Trust. The litigation representatives are on notice of the respondents’ position on those questions. Neither has sought the certainty of a declaration as to their rights of indemnity at this stage of the proceeding.

87    I do not consider the respondents to be prejudiced by the deferral of the questions to a later time. In accordance with r 40.13 of the Rules, the order for costs will not proceed to taxation until the final resolution of the proceedings. Until then, the respondents will have no present entitlement to demand payment from Mr Budini in any capacity.

INDEMNITY COSTS

88    In the ordinary course, costs will generally be awarded as between party and party: Rules, r 40.01. However, the Court has the discretion to award costs on an indemnity basis where an unsuccessful party has engaged in some relevant delinquency in the conduct of the litigation: Rules, r 40.02; Federal Court of Australia Act 1976 (Cth), s 43(3)(g). The purpose of such an order is not to punish an unsuccessful party, but to compensate the successful party: Oshlack v Richmond River Council (1998) 193 CLR 72 at [44] (Gaudron and Gummow JJ). Indemnity costs may be awarded in circumstances where an unsuccessful party has made false or irrelevant allegations of fraud, caused an undue prolongation of proceedings by groundless contentions, or deliberately refused to comply with court orders: see, respectively, Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd [1991] FCA 225 (at [8] (French J)), Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 (at [24] (Sheppard J)) and O’Keefe v Hayes Knight GTO Pty Ltd [2005] FCA 1559 (at [35] (Nicholson J)).

89    There are three aspects to Mr Budini’s conduct in the litigation said by the respondents to warrant an order for indemnity costs against him.

90    First, it was submitted that Mr Budini acted improperly in the period of time preceding the lodging of the complaint with the Commission in February 2018. For reasons given earlier, the respondents are not entitled to be compensated for their costs of dealing with Mr Budini in the period ending some eight months before the commencement of proceedings, no matter how financially burdensome those dealings might have been.

91    I have taken into account Mr Budini’s pre-complaint communications with the respondents for the limited purpose of rejecting his submission that the respondents should bear their own costs because they have acted improperly by declining his invitations to participate in a private mediation of his claims. I do not consider that refusal should deprive the respondents of an award of indemnity costs.

92    Secondly, it was submitted that Mr Budini, by his legal representatives, contravened nearly every order the Court made for the orderly progression of the Leave Application to a hearing. The defaults relied upon are set out the respondents’ written submissions and I do not propose to list them here. I accept that there was non-compliance with several of the Court’s orders, but not all.

93    I do not consider the degree of non-compliance to be so severe as to warrant an order for indemnity costs in and of itself. The instances of non-compliance with ordered timeframes may have caused the respondents’ legal representatives to be inconvenienced and to defer work that could otherwise have been performed at a later time.

94    In my view, the applicants’ defaults are to be explained in part by the manner in which the proceedings unfolded. The respondents defended the Leave Application by adducing a considerable volume of evidence to show that the serious allegations against them had no proper evidentiary foundation and to show that there was no reasonable explanation for the delay in lodging the complaint with the Commission. It is to be accepted that on an application for leave, consideration of the merits of the proposed proceeding is not to be undertaken with a view to substantively determining them. As explained in Budini at [50], the threshold to be met by the leave applicant is a low one. However, mindful of the correct test, it remains open to a respondent to oppose a leave application by demonstrating that the proposed claim has no reasonable prospects of success. It is reasonable to infer that if the respondents were late in filing materials within the ordered timeframes that is in some part due to the nature of the case advanced by both parties. I accept that the applicants may not have expected their Leave Application to have been defended as vigorously as it was. But the respondents are not to be criticised for taking the approach that they did, especially given the seriousness of the allegations that had been made against them. The evidence they adduced was not disproportionate in light of the applicants’ claims. The applicants’ failure to meet the Court’s deadlines in response to that body of evidence is, to some extent, understandable. It is not the non-compliance per se that warrants an order for indemnity costs.

95    Thirdly, and relatedly, the respondents positively rely on the nature of the allegations that were sought to be made in support of the DD Act claim and the conclusions of the Court in Budini in respect of them. They submit that the Leave Application put them to the considerable expense of demonstrating that there was no proper evidentiary basis for the serious allegations that had been made against Sunnyfield both in respect of its financial dealings with the Trust (as to which see Budini at [88] – [132]) and in respect of the provision of care and medical treatment (as to which see Budini at [133] – [168]). I do not propose to repeat the conclusions made in respect of those topics in these reasons. In broad summary, the applicants raised an array of factual allegations without demonstrating the existence of a proper evidentiary foundation for them. My conclusions in this regard are especially directed to the allegations amounting to aspects of equitable fraud on the Trust (Budini at [88] – [116]), the alleged false dementia diagnosis and fraud on the NDIS (Budini at [136] – [147]), alleged unlawful restrictive practices (Budini at [164] – [167]) and alleged “virtual starvation” (Budini at [148] – [156]). These subject matters (together with the question of delay) consumed a large portion of the hearing time. In my view, the respondents ought not to have been put to the expense of defending an application for leave to commence the DD Act claim in respect of allegations of that kind in all of the circumstances I have described in these reasons and in Budini, which need not be repeated here. I am satisfied that the circumstance justifies an order that the respondents be compensated for all costs they reasonably incurred on the Leave Application.

96    I venture no opinion as to whether the same circumstances might warrant the order sought on the Trust Application.

Associate:

Dated:    15 July 2020