Federal Court of Australia

Karmakar v Minister for Health (No 3) [2021] FCA 1254

ORDERS

THE COURT ORDERS THAT:

1.    In respect of the interlocutory application heard on 19 September 2019 for summary judgment or the strike-out of pleadings and without prejudice to the order of 19 September 2019 that the applicant is to pay to the respondents the costs thrown away as a result of the further amendments to the Statement of Claim and Originating Application, there be no further order as to costs.

2.    Save as provided for by Order 1, the applicant pay the first, second and fifth respondents’ costs of and incidental to the proceedings to be fixed by a registrar if not agreed.

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

REASONS FOR JUDGMENT

(REVISED FROM TRANSCRIPT)

LOGAN J:

1    On 6 August 2021, I dismissed a judicial review application brought by the applicant, Dr Anchita Karmakar (Dr Karmakar), against the respondents: Karmakar v Minister for Health (No 2) [2021] FCA 916. These reasons for judgment must be read in conjunction with the principal judgment.

2    The active party respondents in the proceedings have sought an order for costs against Dr Karmakar. The making of such an order has been opposed by Dr Karmakar. Alternatively, she submits that there should be some percentage discounting of any costs order made in favour of the active party respondents. In the further alternative, she submits that the costs of and incidental to a strikeout summary judgment application filed by the active party respondents on 19 July 2019 should be excised from any order in respect of reserved costs also following the event in the proceedings.

3    Each of the active party respondents is an officer of the Commonwealth. That being so, a necessary starting point in relation to the application for costs made by them is s 64 of the Judiciary Act 1903 (Cth) (Judiciary Act), which provides:

Rights of parties

In any suit to which the Commonwealth or a State is a party, the rights of parties shall as nearly as possible be the same, and judgment may be given and costs awarded on either side, as in a suit between subject and subject.

[emphasis added]

4    “Suit” is defined inclusively in the Judiciary Act, and includes an original proceeding. The proceeding instituted by the originating application for judicial review is an original proceeding. What follows from this is that the active party respondents enjoy, in respect of an application for costs, the same rights as would a subject who had been successful in litigation.

5    The Court’s power to award costs is found in s 43 of the Federal Court of Australia Act 1976 (Cth) (Federal Court of Australia Act). Subject to particular exceptions, none of which is presently relevant, that section confers a broad discretionary power on the Court in respect of the awarding of costs, but that discretion must be exercised judicially. It is well settled that, in the ordinary course of events, a judicial exercise of that discretion is that costs follow the event.

6    It was put on behalf of Dr Karmakar that there were more than her particular private interests at large in the proceeding. That proposition was not accepted by the active party respondents. The Health Insurance Act 1973 (Cth) (Health Insurance Act) does not confer any broad standing in respect of challenges to the operation of Pt VAA. Rather, a judicial review proceeding can only be instituted by a person aggrieved. Dr Karmakar was such a person. In this sense, it is true that she was the only person who might have instituted a judicial review proceeding in respect of the practitioner review regime, as it applied to her.

7    It is possible to conceive of circumstances where that singularity of standing, notwithstanding a particular practitioner, might be representative of a class of practitioners affected by a particular course of administrative conduct, but there is no evidence that Dr Karmakar acted in such a representative capacity in respect of such a class. The case could not be characterised in that sense as a test case. None of this is to hold that the proceeding was instituted other than in good faith, but that in itself is no reason at all to exercise the costs discretion other than in the usual way.

8    It was put on behalf of the active party respondents that the proceeding concerned Dr Karmakar’s private interests. The accuracy of that submission may very well depend on the lens through which one views the proceeding. It undoubtedly concerned the application of Pt VAA to the circumstances of Dr Karmakar’s particular case. In that sense, her private interests in terms of findings made by the committee and a determination made by the determining authority, were uniquely personal.

9    But as I highlighted in the principal judgment, the incentive for practitioners to participate in the scheme for the payment of benefits under the Health Insurance Act is a powerful one, and the regime in Pt VAA, as its objects indicate, serves public interests both in terms of efficient expenditure from consolidated revenue, as well as the avoidance of inappropriate practice in the delivery of services which attract benefits. Viewed from that perspective, there is a public interest served by any judicial elucidation of the operation of Pt VAA in a particular case. That public interest, however, is no different to that which attracted these observations by the Full Court in Save the Ridge Inc v Commonwealth (2006) 230 ALR 411 (Save the Ridge), at [13]:

13    The present appeal did not, however, raise questions of the same nature as those at issue in Ruddock v Vadarlis; it concerned two points of statutory construction the ramifications of which were, although not unimportant, much more limited in their application. As in South Melbourne City Council v Hallam (No 2) (1994) 83 LGERA 307 (in which the Supreme Court of Victoria made an order for costs against an unsuccessful plaintiff), the case “involved a relatively conventional, though interesting and not altogether straightforward, exercise in statutory interpretation” (per Tadgell J at 308-309). As Heerey, Whitlam and North JJ observed in Hollier v Australian Maritime Safety Authority (No 2) [1998] FCA 975 at [13]:

‘In a common law jurisdiction decisions of the courts, in private as well as public law, often clarify the law or lay down new law for the benefit of citizens, taxpayers, traders, patentees, insurers and insureds, landlords and tenants, etc etc. To that extent, much litigation has a public interest going beyond the interests of the parties. But this feature is inherent in common law litigation and provides no ground for departure from the usual rule as to costs.’

10    There was, of course, a constitutional dimension to the case in the form of the challenge made by Dr Karmakar to the validity of s 106ZR of the Health Insurance Act. I do accept that the question of the validity of a law of the Commonwealth necessarily does entail more than a private interest, but for all that, I do not see that it removes the case from the kind described in the passage from Save the Ridge set out already. As I observed in Wide Bay Conservation Council Inc v Burnett Water Pty Ltd (No 9) (2011) 194 FCR 250, at [7], in a passage subsequently cited with approval by the Full Court in Bob Brown Foundation Inc v the Commonwealth (No 2) (2021) 387 ALR 219, at [15], if there is to “be a departure from the usual order as to costs”, it must be found not in some general, nebulous, public interest litigation exception but rather in some special feature of this case.

11    As I have indicated, it is possible to discern a public interest in the interpretation and application of the Health Insurance Act, but that is no reason in itself not to make the usual order as to costs. Further, whilst there may be some overlap between considerations which might, for example, inform a Minister of state charged by His Excellency the Governor General under administrative arrangements with the administration of the Health Insurance Act, to decide as a matter of public policy to instruct the solicitors for the active party respondents not to seek costs, that overlap could never be complete, and the judicial role must be distinguished from the exercise of executive power in making, perhaps for public policy or political value judgement reasons, decisions not to seek costs. Once costs have been sought by the Commonwealth, the Commonwealth is, as I have already indicated, just as entitled as any subject to an order for costs.

12    The present case, therefore, is one where in the application of provisions within Pt VAA to Dr Karmakar’s particular circumstances, an absence of any jurisdictional error was found. Equally, it was found that a feature of the regime, namely, the secrecy for which s 106ZR provides, was within legislative competence. These features in themselves, in my view, merely warrant the ordinary exercise of a judicial discretion, which is that costs follow the event. I readily accept that in some circumstances, judges have been disposed, notwithstanding a conclusion that costs ought to follow the event, to discount the amount of costs by a percentage.

13    There is certainly power in s 43 of the Federal Court of Australia Act to do that. One basis of discounting may well be that both private and public interests were served, such that there should be some apportionment, but I do not see this as a case where such an apportionment is warranted. At the risk of repetition, it merely exhibits like features to those highlighted in the passage set out from Save the Ridge.

14    There remains a question as to what ought to be done in respect of the costs of and incidental to the interlocutory application filed on 19 July 2019. In the end, the need to determine that was obviated by a particular course consensually adopted by the parties, which saw yet a further amendment to the statement of claim.

15    It was put on behalf of the active party respondents, both in respect of this and, for that matter, more generally, that the conduct of the litigation by or on behalf of Dr Karmakar exhibited some departure from the overarching duty found in s 37N of the Federal Court of Australia Act. I do not accept this. The consensual disposition of the application filed on 19 July 2019 is proof perfect in my view of a conscientious attention by those then acting for Dr Karmakar to that overarching duty. It obviated a need to determine whether there was merit in the summary judgment and strikeout application.

16    The active party respondents have already been the beneficiaries of an order that costs thrown away by the amendment be theirs. To bring a summary judgment and related strikeout application in a judicial review proceeding where, by that stage, attention has been given to the state of pleadings by legal practitioners can be a fraught exercise. Very often, on reflection, a more prudent course and the one, for that matter, more in keeping with an overarching duty of the kind embraced by the active party respondents, is merely to meet the case as pleaded on its merits. There will often be very little difference in the judicial time necessary to determine that, compared with determining whether the case meets the more exacting standard for summary judgment.

17    I have the benefit now, which I did not have obviously in 2019, of looking back in time in relation to that particular application. Certainly with the benefit of hindsight, the application would better have been brought, if at all, only after an express invitation accompanied with a detailed critique had been politely put to those acting for Dr Karmakar, with the suggestion that the pleadings might warrant amendment, failing which an application of the kind which was made would be made. There is no evidence that the application was preceded by such an invitation. In my view, in relation to that application, the respondents have been appropriately compensated already in relation to costs thrown away, and will also be appropriately compensated by the disposal on the merits with an order for costs of Dr Karmakar's case as it came to be amended. I consider that there should be no order as to costs in respect of costs of and incidental to that summary judgment and strikeout application, subject to orders already made in respect of costs thrown away.

18    The costs result might seem a harsh one for Dr Karmakar, but it is no part of an order for costs that it have any punitive quality. The intent is to compensate within limits a successful party for the costs incurred in successfully resisting an application. This the active party respondents have done. For these reasons, I consider that the appropriate exercise of the costs discretion, subject to the exception which I have mentioned, is that the applicant pay the active party respondents' costs of and incidental to the proceedings, to be fixed by a registrar if not agreed.

19    For completeness, and as to those reserved costs, I should indicate that my intention is that those reserved costs include costs reserved in respect of a discovery application made late in the proceedings by Dr Karmakar. That application failed. It failed for two reasons. The first was I had the view that it was in the nature of a fishing exercise but, in any event, the application was made so late and so proximate to a date fixed for hearing in respect of a case which had not proved possible earlier to hear, for reasons which I set out in the principal judgment, that it carried with it the likely prospect of yet a further adjournment. In a court where the proceedings are case managed and which, as I have mentioned in the principal judgment, had been delayed in its hearing, I considered that that in itself was antithetical to the interests of justice. The application having failed and costs having been reserved, they should merely form part of the reserved costs which follow the event.

Associate:    

Dated:    15 October 2021

SCHEDULE OF PARTIES