Federal Court of Australia

Campbell v Northern Territory of Australia (No 4) [2021] FCA 1413

ORDERS

THE COURT ORDERS THAT:

1.    Subject to any interlocutory cost orders to the contrary, the Applicant is to pay the Respondents’ costs of the proceedings on a party-party basis.

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

REASONS FOR JUDGMENT

WHITE J:

1    On 9 September 2021, I published judgment dismissing multiple claims brought by the applicant arising out of his detention as a youth in detention centres in the Northern Territory between 7 April 2011 and 23 August 2012: Campbell v Northern Territory of Australia (No 3) [2021] FCA 1089 (the Principal Judgment). The judgment followed a trial extending over 10 days in September and December 2019.

2    When delivering judgment, I made orders for the filing of affidavits and written submissions on the issue of costs and said that, subject to any further order, the Court would determine the issue of costs on the papers. Both parties made submissions and the respondents filed an affidavit on 24 September 2021. Following an issue raised by the Court, the respondents provided further submissions on 28 October 2021, together with a further affidavit.

3    This is my judgment on the issue of costs.

Brief overview of the Principal Judgment

4    In the Principal Judgment, I found that the applicant had not been falsely imprisoned in the Alice Springs Youth Detention Centre (ASYDC) as he alleged on the night of 7 April 2011; had not been falsely imprisoned in the Don Dale Detention Centre (Don Dale) as he alleged between 27 and 29 December 2011; had not been falsely imprisoned at the Darwin Correctional Centre (DCC) as he alleged between 28 December 2011 and 2 January 2012; and that, while he had been falsely imprisoned in Don Dale between 2 and 9 January 2012, his claim for damages in respect of that false imprisonment was time barred. As the applicant abandoned in his final submissions any claim for an extension of time, that meant that that claim also failed.

5    I also found that the applicant’s claims of battery, assault and negligence in the use of spit hoods on him on three occasions in the DCC; his claims of battery and assault in incidents on 29 May 2012; and his claims of false imprisonment by reason of being held at Don Dale after November 2011, instead of being returned to the ASYDC, had not been made out. I rejected the applicant’s claim that the Territory had been negligent in failing to assess the applicant’s eyesight and rejected the claim that the failure to transfer the applicant from Don Dale to ASYDC constituted racial discrimination in contravention of the Racial Discrimination Act 1975 (Cth).

6    I did reject two defences of the respondents (the Northern Territory of Australia and the Superintendent of Don Dale), namely, the claim that the Superintendent exercised an independent statutory authority in Don Dale with the consequence that the Territory could not be directly or vicariously liable for any breaches of duty by the Superintendent. I also rejected the respondents’ claim that the Superintendent had the good faith defence for which s 215(2) of the Youth Justice Act 2005 (NT) (the YJ Act) provides, in relation to the unlawful detention of the applicant at Don Dale in the period between 2 and 9 January 2012.

The respondents’ claim for costs

7    The respondents, as the successful party, seek an order that the applicant pay their costs of the proceedings on a party-party basis until 9 August 2019 and thereafter on an indemnity basis. The respondents attach significance to the date 9 August 2019 because it was on that date that they filed and served their written opening submissions for the trial. They contend that those submissions detailed why the applicant’s claim would fail so that thereafter it had been unreasonable for the applicant not to have accepted a Calderbank offer they had made on 23 January 2019. That unreasonable failure meant, the respondents submitted, that they should be entitled to costs on an indemnity basis after 9 August 2019.

The applicant’s position

8    The applicant contends that, other than with respect to the interlocutory costs orders made to date by the Court, the appropriate order for costs is that each party bear their own costs. He contends in the alternative that, if an order for costs is to be made in favour of the respondents, then it should be for costs on a party-party basis.

General principles

9    The jurisdiction of the Court to award costs is contained (relevantly) in s 43 of the Federal Court of Australia Act 1976 (Cth) (the FCA Act). Section 43 provides that, except as may be provided in another Act, the award of costs is in the discretion of the Court. That discretion is to be exercised judicially. Generally it means that an unsuccessful party will be required to pay the costs of the successful party: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [66].

10    Costs are awarded in order to compensate the successful party for the costs it has incurred in the proceedings and not as a penalty. Usually, the Court awards costs on a “party and party” basis: Colgate-Palmolive Company v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225 at 232. However, there are circumstances in which it is appropriate for the Court to award costs on some other basis, whether on a solicitor-client basis or on an indemnity basis: Colgate-Palmolive at 233. However, before the Court makes such an order, it should be satisfied that there is some “special or unusual feature of the case justifying the departure from the ordinary practice”: Colgate-Palmolive at 233. Unreasonableness in the conduct of a litigation by a party has been recognised as one such special circumstance: Hamod v New South Wales [2002] FCAFC 97, (2002) 188 ALR 659 at [20]; Rosniak v Government Insurance Office (1997) 41 NSWLR 608 at 616; and Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353 at [117].

11    The pursuit and/or late abandonment of claims which have no reasonable prospect of success is a recognised circumstance in which it may be appropriate to depart from the usual rule that costs be paid on a party-party basis. On this topic, Woodward J said in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401:

I believe that it is appropriate to consider awarding “solicitor and client” or “indemnity” costs, whenever it appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law. Such cases are, fortunately, rare. But when they occur, the Court will need to consider how it should exercise its unfettered discretion.

The pre-trial offers of settlement

12    Each of the applicant and the respondents made two pre-trial offers of settlement.

13    Following the Court ordered mediation held on 15 November 2018, the applicant served an offer to compromise in accordance with Pt 25 of the Federal Court Rules 2011 (Cth) (the FCR) by which he offered to settle the whole proceedings by payment by the Territory (then the sole respondent) of $60,000 inclusive of interest in addition to costs to be agreed or assessed. The offer was open for 14 days.

14    On 19 December 2018, the Court ordered each of the parties to serve on the other, by 21 January 2019, their best offer to settle the action expressed as an amount exclusive of costs and which was to comply with the requirements of Pt 25 of the FCR. The Territory had indicated that it did not oppose that order being made.

15    In compliance with the order of 19 December 2018, the applicant served a second Notice of Offer to Compromise, again in the sum of $60,000 in addition to costs and with that offer open for acceptance for 14 days.

16    The respondents purported to comply with the Court’s order of 19 December 2018 by an offer served on the applicant on 23 January 2019. That was outside the period fixed in the Court’s order of 19 December 2018 but that is not a matter of consequence presently. The more significant matter is that the respondents “offer” was for the applicant’s action to be dismissed and for him to pay their costs. This was not an offer to compromise to which Pt 25 of the FCR refers as it required complete capitulation by the applicant. Offers of that kind are not offers of compromise: see Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd (No 2) [2011] FCAFC 141 at [19]; and Australian Health & Nutrition Association Ltd v Irrewarra Estate Pty Ltd [2012] FCA 892 at [9].

17    The respondents’ solicitor has deposed that they were prompted to make an offer in those terms because they did not wish to have an open-ended liability for costs to the applicant, which they perceived would be the case if they offered an amount plus party-party costs to be taxed.

18    The non-compliance by the respondents with the Court’s order is a matter of regret. It had been open to the respondents to offer an amount in addition to a fixed amount for costs. Alternatively, as the respondents’ solicitor now acknowledges they could have objected to the Court making the order. Alternatively again, if the respondents did not wish to comply with the Court’s order, they should have made an appropriate application to the Court to be relieved from doing so. It is understandable in this circumstance that the respondents do not now seek to rely upon this “offer”. This does not mean, however, that the respondents’ non-compliance with the Court’s order of 19 December 2018 is a matter of no consequence.

19    The respondents made a second offer of settlement by letter to the applicant’s solicitors on 23 January 2019. This offer purported to be a Calderbank offer. The terms of the respondents’ settlement proposal were:

(i)    the proceedings be dismissed with no order as to costs and all existing costs orders be vacated;

(ii)    without an admission of liability, the Territory pay to the applicant $30,000 inclusive of costs;

(iii)    the parties undertake not to disclose the amount paid by the Territory, unless required by law; and

(iv)    the parties enter into a Deed of Settlement and Release in terms agreed by the parties.

20    I note that, as at 23 January 2019, there had been interlocutory costs orders made in the proceedings in favour of the Territory and against the applicant.

21    As will be seen, the respondents sought to rely upon this offer in relation to its application for costs.

Should each party bear their own costs?

22    It is convenient to consider first the applicant’s contention that each party should bear their own costs. His counsel advanced four considerations in favour of this contention:

(a)    the proceedings involved claims for breaches of human rights and had a “significant public interest dimension”;

(b)    the proceedings were in the nature of a test case;

(c)    the proceedings had been properly commenced and maintained; and

(d)    the respondents’ rejection of his own settlement offers.

23    In support of the submission that the proceedings involved claims for breaches of human rights having a public interest dimension, counsel for the applicant referred to Delta Electricity v Blue Mountains Conservation Society Inc [2010] NSWCA 263 and to Oshlack. In relation to Oshlack, I understood counsel to be referring to the considerations to which Gordon and Gummow JJ referred at [20]; to which McHugh J referred at [49]; and to which Kirby J referred at [137]-[139]. In relation to Delta Electricity, I understood counsel to be referring to the principles emerging from the authorities to which Basten JA referred at [55]-[62]. Counsel could also have referred to the decision of Mortimer J in DBE17 v Commonwealth of Australia (No 2) [2018] FCA 1793.

24    The difficulty with this submission of the applicant is that the human rights claim which he pursued, i.e, the claim of racial discrimination, did not, on any reasonable view, have reasonable prospects of success and should have been recognised as such. With respect to those representing the applicant, both the pleading of that claim and its pursuit seemed to have been ill thought out. That became particularly evident during the final submissions when counsel had difficulty in articulating a realistic factual basis upon which it could be found that the impugned conduct of the respondents had been based on race: see the Principal Judgment at [708]-[774].

25    The fact that proceedings are brought as a test case with a view to determining the position for other litigants with like claims can, in some circumstances, be relevant to the exercise of the cost discretion: Commissioner of Australian Federal Police v Zhang (No 2) [2016] VSCA 191; (2016) 310 FLR 482 at [17]. However, the suggestion that the applicant brought his proceedings as a test case of this kind has not been supported by evidence. So far as the Court is aware, it was raised for the first time in counsel’s submissions concerning costs. There had been no previous indication that either party regarded the proceedings as a test case and, with due respect to counsel, the manner in which the proceedings were conducted did not suggest that they were of that kind. Moreover, the fact that a substantial class action had been commenced in the Court by different solicitors (Jenkings v Northern Territory of Australia Action NTD64/2016) before the applicant commenced his proceedings on 26 May 2017 seems to militate against a view that this action was regarded as a test case. There was some, but by no means substantial, overlap between the applicant’s claim and the claims in the class action.

26    The reasoning applied by the Court of Appeal in The State of Western Australia v Collard [2015] WASCA 86 is apposite presently. The Court (Buss, Newnes and Murphy JJA) said:

[60]    … In our view, the circumstances of this case could not be considered to be of the 'rare and exceptional character' that might justify a departure from the usual order as to costs … The claim was brought primarily to advance the respondents' private interests. It raised some novel issues of importance to those Aboriginal people who had been made wards of the State in similar circumstances and their parents, but that did not sufficiently distinguish it from other litigation commonly before the courts that clarifies the law for the benefit of third parties.

(Citation omitted)

27    In submitting that the proceedings had been properly commenced and maintained, counsel referred to the applicant’s statutory right to commence the proceedings granted by s 46PO of the Australian Human Rights Commission Act 1986 (Cth) (the AHRC Act). He also submitted that “these proceedings made a claim which could not be properly articulated as a representative action in other proceedings”.

28    I accept that the ability to bring proceedings granted by s 46PO is an important element in the armoury for the enforcement of human rights and should not be lightly circumscribed. However, the applicant had, as a minimum, to be able to establish an arguable basis upon which he alleged the human right involved (the right not to be subject to racial discrimination) had been contravened. In my view, it should have been apparent that this claim was not reasonably arguable. As indicated above, the racial discrimination claim of the applicant seems to have been ill thought out.

29    There are other matters bearing upon the merit of the submission that the proceedings had been properly commenced and maintained. The most obvious is that the applicant was not a reliable witness and, as the Principal Judgment indicates (at [56]), there were several matters on which his evidence was not accepted. On some matters the applicant must have known that he had given misleading accounts, e.g, his account of his conduct in the Boxing Day incident.

30    There is in addition the remarkable development on the afternoon of the last day of trial when counsel for the applicant abandoned the claims for an extension of time in which the applicant could commence the proceedings. As I noted in the Principal Judgment at [897], this was an astonishing development in the trial. Even now, it has not been properly explained.

31    Finally, I refer to the submission of counsel concerning the respondents’ rejection of the applicant’s offers of settlement. Counsel submitted:

[20]    Fourthly, the rejection of the Applicant’s cost offers in circumstances where the Respondents knew that the Applicant was a prisoner and had been so since a child demonstrates that the Respondents were unconcerned about the costs of defending these proceedings. That fact calls for explanation. None is offered. In particular, no attempt is made to tell the Court that these proceedings were not being used by the Respondents as a vehicle to test their defences in advance of the representative proceedings to follow.

[21]    The Court is entitled to find that the Applicant made two reasonable offers of settlement which were rejected and the reason why the Respondents elected to defend these proceedings at trial is not explained. The inference is that the Respondents wished to test the Applicant’s claims. As a test case, it is open to the Court to make an order that, apart from the existing costs orders, each party should pay their own costs.

32    Given that the applicant failed in the proceeding altogether, I decline to attach significance to the respondents’ rejection of the applicant’s costs offers. It could hardly be said to have been unreasonable in those circumstances for the respondents to have wished “to test the applicant’s claims”. Moreover, a wish to test the applicant’s claims does not mean that this action was a “test case”. I also observe that the applicant’s offer involved the respondents paying the whole of his party-party costs (other than those which had been the subject of interlocutory orders) despite the applicant himself recovering only a modest sum. These costs appear to have been substantial so that the applicant’s overall offer cannot be regarded as modest.

33    In the circumstances, there is no reason for the Court not to exercise the costs discretion in the usual way by requiring the applicant, as the unsuccessful party, to pay the respondents’ costs of the action.

34    There remains the question of the scale on which the applicant should pay those costs.

The respondents’ claim for indemnity costs from 9 August 2019

35    As noted, the respondents attach significance to the date 9 August 2019 because it was on that date that they filed and served their written opening submissions. The consideration of those submissions should, they submitted, have caused the applicant to consider (or reconsider) the reasonableness of the Calderbank offer of 23 January 2019.

36    In the view I take, it is unnecessary for the Court to canvass the reasonableness of the applicant’s conduct in this respect. That is because of the uncertainty in the respondents’ Calderbank offer or, as put by Spender J in Smallacombe v Lockyer Investment Co Pty Ltd (1993) 42 FCR 97, “the genuine doubt as to the worth of the offer”. As noted, the offer included a term that the parties enter into a Deed of Settlement and Release “in terms agreed by the parties”. The respondents did not attach to their offer their proposed terms and, accordingly, it is not known what terms and conditions the Territory would have sought to impose as a condition of the settlement. This means by itself that the Court is not in a position to assess the reasonableness of the respondents’ Calderbank offer. This is sufficient to dispose the respondents’ claim for indemnity costs.

37    There is an additional discretionary matter. The respondents need to have the Court embark on an assessment of the reasonableness of the applicant’s conduct following his receipt of their written opening submissions only because they had not complied with the order made by the Court on 19 December 2018 that each party serve on the other their best offer to settle the action in accordance with the requirements of Pt 25 of the FCR. Had the respondents done so, by filing a true offer of compromise in accordance with Pt 25 of the FCR, the present issue concerning the reasonableness or otherwise of the applicant’s conduct from 9 August 2019 is unlikely to have arisen. The Court would then have the more conventional task contemplated by r 25.14. That is to say, the respondents have brought the present position on themselves.

Conclusions

38    For these reasons, I am satisfied that the appropriate costs order is that the applicant pay the respondents’ costs of the proceedings on a party-party basis. That is the order of the Court.

Associate:

Dated:    16 November 2021