Federal Court of Australia

MetLife Insurance Limited v Australian Financial Complaints Authority (No 3) [2022] FCA 849

ORDERS

THE COURT ORDERS THAT:

1.    There be no order as to the costs of the proceedings.

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

REASONS FOR JUDGMENT

COLVIN J:

1    The Australian Financial Complaints Authority (AFCA) is the operator of a scheme for the resolution of disputes. The scheme was established to give effect to laws introduced into the Corporations Act 2001 (Cth) by the Treasury Laws Amendment (Putting Consumers First - Establishment of the Australian Financial Complaints Authority) Act 2018 (Cth). The legislation amalgamated three previous schemes under the single umbrella of AFCA. The content of the consolidated scheme to be administered by AFCA was required to be approved by the Minister.

2    AFCA is a private body with financial services licensees as its members. Any person who is the holder of a financial services licence and who provides certain types of services specified in the Corporations Act must be a member of the scheme. Metlife Insurance Limited (Metlife) is a member of AFCA.

3    Two complaints were made by Mr Brian Edgecombe concerning the conduct of Metlife. They were determined by AFCA in favour of Mr Edgecombe. Metlife claimed that AFCA had no authority to determine the complaints and commenced proceedings in this court seeking declaratory relief to that effect. It commenced those proceedings against AFCA and Mr Edgecombe.

4    Mr Edgecombe filed a submitting appearance. He did so after receiving an email communication from the company secretary at AFCA in the following terms:

… I have handled many of these types of matters in the past for AFCA's predecessor schemes. Should you have any concerns of queries through this process, please feel free to contact me at any time.

You have been served [with the documents in the proceedings] because your rights are potentially affected by the outcome of the proceedings should Metlife proceed and be successful. This is a requirement of the court process. However, in the majority of these types of court case, the consumer puts in what is called a 'submitting appearance', noting that they have been served, but undertaking to merely comply with the judgment of the court and otherwise taking no actions in the proceedings. This protects from any adverse costs orders, but does not give you an opportunity to put forward any submissions in the proceedings. Given that this is a technical legal argument about AFCA's jurisdiction, you may be satisfied that this is acceptable.

It is a matter for you though and you should seek independent legal advice should you wish to properly understand your situation as I am not permitted to provide you with legal advice.

… You should be aware though that the Determinations made by AFCA are binding on Metlife unless they can establish that they were improperly arrived at. Their current argument is that AFCA did not have authority to deal with your complaints. We strongly disagree and will maintain this position should the matter proceed to trial.

5    AFCA actively defended the proceedings and also commenced a cross-claim against Metlife claiming an order for specific performance in the terms of its own determination. By its defence to the claim by Metlife, AFCA advanced claims of estoppel and acquiescence. It also advanced a defence to the effect that if the complaints had not been determined under the scheme then there had been separate ad hoc agreements by which Metlife, AFCA and Mr Edgecombe had agreed that AFCA should have the power to determine the complaints. Those additional affirmative allegations did not form part of the basis for the cross-claim.

6    There were a number of interlocutory steps, including a dispute concerning the provision by AFCA of particulars of that part of its defence that concerned the additional affirmative allegations. In due course, the claim and cross-claim were listed for final hearing on 17 June 2021. At that time, issues were raised as to whether it was appropriate for Metlife to pursue the additional affirmative allegations in its defence. In the circumstances, an order was made for the determination of a separate question (which did not include the claims of estoppel or acquiescence, but did include the claims that there were ad hoc agreements). It was expressed in the following terms:

The question whether in the events which have occurred and on the proper construction of the relevant statutory provisions and the AFCA Rules, the first respondent had jurisdiction or authority to make a determination in respect of the complaints 600361 and 507677 each dated 12 April 2019 be separately determined.

7    Thereafter, on 27 January 2022, I determined that AFCA had authority to make the determinations: MetLife Insurance Limited v Australian Financial Complaints Authority [2022] FCA 23 (Principal Reasons). I did not uphold the claims made by AFCA in the alternative that there were ad hoc agreements pursuant to which it made the agreements.

8    An issue now arises as to the appropriate order as to costs to be made in respect of the proceedings. Metlife seeks an order that AFCA bear its own costs of the proceeding. It contends that an order of that kind should be made because, so it says, AFCA failed to adopt a position of neutrality of a kind that it was required to adopt in the proceedings brought by Metlife. AFCA contends that it was appropriate to take the course which it did in the proceedings and, as it has been successful, an order should be made to the effect that Metlife pay AFCA's costs of the proceeding including the costs of the cross-claim.

The Hardiman principle

9    The issue between the parties turns on the extent to which the principle articulated in R v Australian Broadcasting Tribunal; Ex parte Hardiman (1980) 144 CLR 13 at 35-6 applies to AFCA. In that case, the High Court described the Tribunal as having taken 'the unusual course of contesting the prosecutor's case for relief … by presenting a substantive argument'. As to that course, the High Court said:

In cases of this kind the usual course is for a tribunal to submit to such order as the court may make. The course which was adopted by the Tribunal in this Court is not one which we would wish to encourage. If a tribunal becomes a protagonist in this Court there is the risk that by so doing it endangers the impartiality which it is expected to maintain in subsequent proceedings which take place if and when relief is granted. The presentation of a case in this Court by a tribunal should be regarded as exceptional and, where it occurs should, in general, be limited to submissions going to the powers and procedures of the Tribunal.

10    Significantly, those comments were made concerning the appropriate steps to be taken on behalf of a statutory tribunal conducting an adjudicative process in which there were contradicting parties presenting submissions before the tribunal. Although the rationale for the principle was expressed in terms of the prospect of remitter (being a prospect that was open in that case), there are other reasons why a concern may arise about impartiality if a tribunal becomes a protagonist in review proceedings. It is likely to be inconsistent with the independent role of a statutory tribunal for it to be seen to be taking a partisan position or that it have an interest in defending its own decision. To adopt such a posture gives rise to an apprehension that the tribunal is not undertaking the appropriate role as a disinterested independent adjudicator. Conduct of that kind, though engaged in after the event, casts doubt over whether the tribunal properly discharged its function when it made its decision. That is so even if there is no prospect of remitter.

11    In Muin v Refugee Review Tribunal [2002] HCA 30 at [25] (Gleeson CJ) the obligation was described in the following way (without reference to remitter): '… this Court has taken pains to discourage tribunals and members from endangering their impartiality by assuming the role of protagonist in proceedings challenging their decisions'. See also the statements in Harding v Her Worship Ms B Lane SM [2001] WASCA 37 at [17] (which concerned an appeal in respect of a statutory decision to be made as arbitrator). However, compare the reasoning in Viscariello v Legal Profession Conduct Commissioner [2015] SASC 132 at [61].

12    Of course, the statement of general principle submits to the particular circumstances. There may be an aspect of the statutory provisions that requires the tribunal to take up the role of contradictor in the event that administrative review is sought of its decision: TXU Electricity Limited v Officer of the Regulator General [2001] VSC 4; (2001) 3 VR 93 at [39] (Astley J). Further, as explained by Greenwood J in Ogawa v Australian Information Commissioner [2014] FCA 229 at [23], 'the application of the Hardiman principle requires some adapted flexibility to the particular circumstances which present themselves to the Court for consideration'. One such circumstance is where the natural contradictor enters a submitting appearance: Fagan v Crimes Compensation Tribunal (1982) 150 CLR 666; Freedom Pharmaceutical Pty Ltd v Minister for Health (No 2) [2021] FCA 1250 at [6] (Burley J); and Ogawa at [24]. Another is where the proceedings before the tribunal were not inter partes: Ogawa at [25]. A substantial factor counting the other way is where there is a prospect of remitter. Where there is no proper contradictor and a prospect of remitter then it may appropriate for the attorney-general to seek to intervene to respond to substantive claims. Alternatively, the court may seek the assistance of amicus curiae. As to these matters see Dilatte v MacTiernan [2002] WASCA 100 at [3] (Malcolm CJ), TXU Electricity at [19], [42], [45] (Astley J); and Police Integrity Commission v Shaw [2006] NSWCA 165; (2006) 66 NSWLR 446 at [40]-[43] (Basten JA), but see [36] (Hodgson and Giles JJA agreeing).

13    In those cases where there is no proper contradictor and the attorney-general does not intervene, the tribunal should take a measured approach by explaining the basis for its decision and addressing matters of power and procedure: Bankstown City Radio Co-Operative Ltd v Australian Communications and Media Authority [2007] FCA 2053 at [5]-[6] (Sackville J).

14    In the present case, there is a significant additional factor. There are good reasons why AFCA should be agnostic as to whether Mr Edgecombe may have other causes of action if indeed the determinations are not enforceable under the scheme. It is required to be independent in adjudicating disputes under the scheme. It is not a regulator. It is not entrusted with any responsibility to assist claimants or members in resolving disputes. Indeed, any such responsibility would be inconsistent with its ongoing role as an independent decision-maker. It has an ongoing responsibility to determine complaints made under the scheme against any of its members. Therefore, it is quite conceivable that it will be required to adjudicate future disputes in which complaints are made against Metlife. These are all matters that bear upon the approach that was appropriate for AFCA to take in response to the application by Metlife for declaratory relief.

The legal status of AFCA

15    The status of AFCA is somewhat unusual. It is not a statutory body. It operates consensually (noting that the holder of a financial service licence must participate in the scheme as a condition of the licence and such a condition is imposed by the Corporations Act). Members of AFCA agree to submit to AFCA's determination of complaints made within the terms of the scheme administered by AFCA. Yet, as I explained in my Principal Reasons, certain statutory authority is conferred by the terms of the Corporations Act upon AFCA in respect of superannuation complaints. Nevertheless, in the particular circumstances of the present case, I determined that AFCA exercised consensual authority (and not legislative authority): Principal Reasons at [135].

16    As I also explained in my Principal Reasons, once the scheme has been authorised by the Minister, membership of the scheme becomes mandatory for the holder of a financial services licence. Therefore, it is inaccurate to describe the scheme as being voluntary in any meaningful sense. A person carrying on a financial services business of a kind that is regulated must be a member of the scheme. These matters give AFCA attributes of a statutory decision-maker. It conducts a process whereby both the person making the complaint and the member are allowed to make submissions. It then makes a decision based on those matters raised in those submissions. In some instances it can require information to be provided for its decision-making purposes where AFCA is considering a superannuation complaint: s 1054A.

The operational requirement to take reasonable steps to ensure compliance with the scheme

17    There is a further aspect that assumes significance for present purposes. It concerns the 'operational requirements' for the scheme. They are specified in s 1051(4) of the Corporations Act. One of those operational requirements is that 'reasonable steps are taken to ensure compliance by members with [the determination of complaints made under the complaints mechanism of the scheme]': s 1051(4)(d). The operational requirements form part of the 'mandatory requirements for an external dispute resolution scheme': s 1051(1). Section 1052 provides:

AFCA must ensure that the mandatory requirements for the AFCA scheme under section 1051 are complied with.

18    Also, in order for the scheme to be authorised for the purposes of the Corporations Law, the Minister must be satisfied that the mandatory requirements under s 1051 will be met: s 1050(1).

19    Therefore, AFCA has a statutory obligation to ensure that the requirement that reasonable steps are taken to ensure compliance by members with AFCA's determinations under the scheme is 'complied with'. The legislation does not provide, in terms, that it is AFCA that must take those reasonable steps. However, it may be readily inferred that AFCA as the party responsible for the administration of the scheme will have a responsibility to take those reasonable steps that it can take to ensure compliance with the scheme by its members. One such step would be for a non-complying member to be removed from the scheme (which would then have consequences for the conditions of the member's financial securities licence).

20    Another step may be referring the conduct to the Australian Securities and Investments Commission (ASIC) as the regulator entrusted with responsibility to supervise compliance with the Corporations Act by the holders of financial securities licences. A person who carries on a financial services business must hold a financial services licence: s 911A. If the financial services provided by the holder of licence are provided to persons as retail clients then that person must have a dispute resolution system that complies with the requirement of s 912A(2): see s 912A(1)(g)(i). Those requirements include membership of the AFCA scheme: s 912(2)(c). Therefore, it may be that a failure to give effect to the determinations of AFCA would be a failure to comply with the requirements of the licence.

21    As to whether AFCA can itself take any action in a case where a member simply flouted the determination and refused to give effect to its terms, the members agree with AFCA to participate in a scheme in which AFCA has a role of ensuring that its determinations are given effect. In circumstances where, according to the terms of the scheme, the party making the complaint has accepted the determination, the issue is whether AFCA has a right that would entitle it to seek specific performance (as distinct from some form of declaratory order).

22    In Investors Exchange Limited v Australian Financial Complaints Authority Limited [2020] QSC 74 at [106], it was said that:

AFCA has an interest in ensuring that its determinations are performed. The order for specific performance which it seeks is a simple way in which to enforce performance of the tripartite contract. Therefore, I propose to make an order generally in accordance with paragraph 1 of AFCA's application.

One of the issues in those proceedings was whether the application by AFCA for specific performance of one of its determinations should be refused on the grounds that AFCA lacked jurisdiction. In that respect it has some similarity to the present case. The analysis to support the availability of an order for specific performance rested upon the proposition that there was an agreement between AFCA and its member that meant AFCA could take steps to enforce its terms, particularly the agreement that the determination of AFCA would be final and binding. This is evident from reliance being placed upon the reasoning of Le Miere J in Utopia Financial Services Pty Ltd v Financial Ombudsman Service Ltd [2012] WASC 279 at [55]-[56].

23    In Utopia the Court was concerned with a determination made by a predecessor to AFCA. The relevant scheme, which was administered by Financial Ombudsman Service Ltd (FOS), had similar characteristics to the AFCA scheme. Utopia was a member of FOS. It was common ground that the terms of the constitution of FOS and the terms of reference for a particular dispute (with a Mr and Mrs Rees) gave rise to a binding contract between Utopia and FOS: at [6]. In Supreme Court proceedings Utopia claimed that the decision made by the FOS panel was beyond power and contrary to the terms of reference: at [8]. Mr and Mrs Rees gave notice that they would abide by the result: at [10]. There was a provision in the constitution of FOS that the terms of reference in respect of a dispute shall form a binding contract between Utopia and FOS: at [27].

24    The claims made by Utopia were rejected. Like AFCA in the present case, FOS had brought a counterclaim. It sought an order for specific performance of the terms of the determination in favour of Mr and Mrs Rees: at [54]. As to the counterclaim, Le Miere J observed:

It is common ground that upon Utopia becoming a member of FOS, Utopia became bound by the contract established by the FOS Constitution. Utopia pleads, and FOS admits, that Utopia was obliged by the contract to resolve disputes and complaints in accordance with the provisions of the Constitution and the Terms of Reference.

25    Then, as to a claim by Utopia that the court could not order specific performance, Le Miere J found as follows (at [56]):

Utopia submitted that the court should not order specific performance because there is a lack of mutuality in the obligations. It is an equitable principle that specific performance may be denied for want of mutuality. The principle is that a contract, to be specifically enforced, must as a general rule be mutual, that is to say, such that it might at the time it was entered into, have been enforced by either of the parties against the other of them. There is no lack of mutuality in the contract between Utopia and FOS. The contract can be enforced by Utopia against FOS. It is not to the point to enquire whether or not Utopia can enforce any agreement or obligations against the Rees. It is FOS not the Rees who seek to enforce the contract.

26    It appears that his Honour's reasoning is to the effect that the contract established by the terms of the constitution was being enforced. However, that was not a contract to which Mr and Mrs Rees were a party and was not the contract pursuant to which the determination was made. Rather, there was an agreement brought into existence when Mr and Mrs Rees submitted their dispute to FOS. The terms of that agreement were determined by the scheme administered by FOS (being a scheme to which its members agreed to submit where a dispute of the requisite kind was brought to FOS) as well as the conduct of the persons bringing the dispute in identifying their claim (the terms of reference).

27    There is no reasoning in Utopia as to why an independent decision-maker like FOS who has agreed to make a determination of a dispute between its member and a person making a claim has a contractual right to enforce the terms of its own determination. Nor is there any explanation in the reasoning in Investors Exchange as to why a party in the position of FOS or AFCA with a responsibility to make decisions would itself have a contractual or other interest in enforcing those decisions. Certainly, an arbitrator appointed by agreement, would have no interest in taking up the sometimes complex task of seeking to enforce an arbitral award. Indeed, for an arbitrator to seek to do so would raise serious questions about the arbitrator's independence.

28    There are two important aspects of the AFCA scheme (and similar schemes that govern members) that make them different to arbitrators.

29    Firstly, AFCA is the operator of the scheme in the interests of all members. As participants in an industry where the members are required to submit to the scheme, all members have an interest in ensuring that the determinations are carried into effect. As such, AFCA is not simply determining the dispute at hand. It is also administering a scheme which, as part of its operational requirements, must involve AFCA in ensuring compliance with its determinations.

30    Secondly, unlike an arbitrator who is appointed pursuant to the terms of an agreement to arbitrate made between the parties to the dispute, AFCA as the decision-maker makes its agreement with its members. It is the existence of that agreement that provides the mechanism for particular parties to then submit disputes. The primary agreement is made between AFCA and the member. As part of that primary agreement, in order to conform to the operational requirement that AFCA ensure that its members comply with the scheme, each member agrees that AFCA may take action to enforce the determination. Therefore, each member might be said to have agreed to AFCA undertaking such a role where the member fails to give effect to a determination. In those circumstances, not without some doubt, I accept that AFCA has a contractual right to seek specific performance by a member of one of its determinations where that member is not giving effect to the determination. The contractual right of AFCA is against its member to enforce the contract that the member will give effect to the scheme (including any determination under the scheme against the member). This enables AFCA to obtain specific performance in terms that will benefit a party like Mr Edgecombe in circumstances like the present.

31    AFCA relied upon the fact that it had participated in a substantive way in other proceedings. Particular note may be made of the decision in QSuper Board v Australian Financial Complaints Authority Limited [2020] FCAFC 55; (2020) 276 FCR 97 in which issues were raised as to whether AFCA exercised judicial power. In those proceedings the Commonwealth attorney-general intervened. However, it appears that was by reason of the constitutional issues raised and not because of any consideration of what may be appropriate having regard to the principles in Hardiman. The appeal was unsuccessful and AFCA was awarded its costs: at [205]. There is no indication that the issues raised by Metlife in the present case concerning the role of AFCA and its significance for the approach to costs were raised in that case. Also, the decision may be distinguished on the basis that the main issues in the case were concerned with the constitutionality of the AFCA scheme. Although the constitutional issues were raised in the context of a particular decision, they did not concern matters which might lead to concerns about the impartiality of AFCA. The arguments concerned the character of the scheme as a whole. An award of costs in favour of AFCA may be expected in those circumstances. In the present case, the jurisdictional issues raised by Metlife were not of general application.

32    AFCA also made reference to other instances where Financial Ombudsman Service Ltd as the operator of an earlier scheme participated in an active way in court proceedings. However, AFCA did not suggest that the issues raised by Metlife in the present case were considered in any of those cases which, in any event, concerned a different scheme. As has been explained the AFCA scheme has particular attributes. Significantly, they afford a statutory character to the decisions made by AFCA and, in relation superannuation complaints, confer statutory power.

Giving effect to the determinations in favour of Mr Edgecombe

33    The central issue that was raised by the proceedings in this court was whether AFCA actually had authority to make the determinations. If it had no such authority then the failure by Metlife to conform to the determinations would not be a failure to comply with a determination made under the scheme. Further, Metlife was not simply refusing to give effect to the determination. Rather, it had commenced proceedings in this court seeking declaratory relief.

34    In those circumstances, Metlife submitted that it did not present as a party who was being disobedient to the scheme nor as a party who would not comply with the scheme if this court decided that each of the determinations were within the authority of AFCA. Indeed, when it was determined that AFCA had the authority to make the determinations, Metlife paid the money in accordance with one determination and sought a stay pending an appeal in respect of the other determination.

35    Therefore, it might be said, that the commencement of the proceedings by Metlife did not provide a basis for a concern on the part of AFCA that would invoke the operational requirement as to the taking of reasonable steps to ensure compliance with the scheme. However, AFCA's contractual interest in the performance of its determinations was at least sufficient to cause it to take steps to ensure that the proceedings were progressed with due expedition and the court was properly informed as to the nature of the scheme and the statutory regime under which it was established. Further, it might be said that it was appropriate for AFCA to seek relief (as it did by way of cross-claim) to the effect that Metlife was required by the terms of the scheme to perform the determinations. This was to do no more than ensure, in circumstances where Metlife was raising an issue about the enforceability of the determinations, that any basis for not performing the determinations was adjudicated. It was a convenient way of ensuring that all issues were resolved in a single proceeding. If indeed Metlife relied only on the jurisdictional question then that could be made clear, as indeed it was, in the course of the proceedings.

36    For those reasons, I would distinguish the reasoning in Cairns Port Authority v Albietz [1995] 2 Qd R 470 at 479-480 which was relied upon by Metlife.

The affirmative defences advanced by AFCA

37    However, the steps taken by AFCA to advance the affirmative defences are in a different category. They sought to rely upon conduct by Metlife to support grounds other than the contractual right to enforce the AFCA scheme as the basis upon which Metlife was not entitled to disregard the determinations. By advancing those grounds, AFCA maintained that even if the determinations were not binding under the AFCA scheme there were other reasons why Metlife should not have the relief that it sought. This was to assert claims beyond the administration of the scheme and the enforcement of determinations made under the scheme. Those claims were advanced in circumstances where AFCA had taken steps, in effect, to assure Mr Edgecombe that he need not participate. If Mr Edgecombe maintained that there was some cause of action other than the contractual rights created by the scheme itself that meant that Metlife was bound to give effect to the determinations then that was a matter for Mr Edgecombe. It was not a matter that affected the administration of the scheme or compliance with the scheme itself by members of AFCA.

38    The claim that there had been an ad hoc agreement depended upon evidence as to the dealings between Metlife and AFCA with the knowledge of Mr Edgecombe. There was some controversy as to what was said in a conversation between employees of Metlife and AFCA. I determined that the claim should not be accepted.

39    As to the affirmative defences of acquiescence and estoppel, there were interlocutory steps taken as to the particularisation of those claims. Therefore, there were costs associated with those defences. However, as I have explained they have not been determined. Neither Metlife nor AFCA urged an issues-based allocation of costs.

Metlife's position concerning the Hardiman issue

40    The issue as to whether AFCA was required to adopt a position informed by the principles stated in Hardiman was raised early on in the proceedings by lawyers acting for Metlife. The issue was raised in the context of the then foreshadowed position of AFCA that it proposed to file a cross-claim. Metlife invited AFCA to adopt a position in the proceedings that was consistent with the statements by the High Court in Hardiman on the basis of its contention that AFCA's role was 'as an independent decision-maker under the AFCA Rules'. Metlife indicated that it reserved its rights in relation to costs in the event that AFCA did not adopt such a position. AFCA maintained that it was not required to adopt such a position.

41    In support of its position that there should be no order as to costs, the submissions for Metlife were developed by way of analogy. The adjudicative function entrusted to AFCA was said to give rise to similar issues to those that required statutory tribunals (and judicial officers) to limit their role in any supervisory proceedings. It was submitted that AFCA could not be said to be aggrieved by a failure by Metlife to give effect to the determinations, particularly in circumstances where Metlife had brought the proceedings in this court. Reliance was placed upon the approach adopted in various cases concerned with decisions made by arbitrators and the proper course to be adopted by an arbitrator.

42    The position of AFCA was summarised in the following written submission on the question of costs:

To the extent that AFCA also defended the determination on other specific bases, beyond the general principles pertaining to its standing jurisdiction and powers under the AFCA Rules and the Corporations Act, they were alternative defences. None of them involved any witnesses being cross-examined by AFCA. Even the matters going to AFCA's alternative estoppel and acquiescence defences did not require a 'partisan' approach, but simply pointed to obvious, objective and uncontroversial matters, in support of the proposition that the parties carried on with the AFCA decision-making process acting on the assumption and/or induced by Metlife's representation that AFCA had jurisdiction and power to determine that matter.

In any event, those particular estoppel and acquiescence defences (or which Metlife makes most complaint in support of its proposed special costs order) were never tried, by reason of the order for a separate question. Metlife has not sought an issues-based costs order, and, given the success of AFCA on the primary question of jurisdiction and power under the AFCA Rules, there is no basis for making a special costs order (let alone one of the kind sought by Metlife) on account of AFCA's pursuit of those other alternative defences that were ultimately not determinative.

43    It is appropriate to differentiate between four categories of costs, namely:

(1)    The costs associated with the question whether AFCA had jurisdiction to make the two determinations.

(2)    The costs associated with the cross-claim by which AFCA sought specific performance of the determinations.

(3)    The costs associated with the claim that there were an ad hoc agreements to the effect that AFCA would make the determinations.

(4)    The costs associated with the affirmative defences of acquiescence and estoppel.

The distinction is appropriate because the factors that bear upon the appropriate cost order are different in respect of each category. I address the position in relation to each of the categories below. But first, I address matters of general principle.

General principles

44    The award of costs is discretionary: s 43 of the Federal Court of Australia Act 1976 (Cth). The discretion is unconfined, but must be exercised judicially, that is according to relevant considerations and taking account of the contextual features and facts of the litigation: Kazar (Liquidator) v Kargarian; In the matter of Frontier Architects Pty Ltd (In Liq) [2011] FCAFC 136; (2011) 197 FCR 113 at [4]. Settled principle guides the exercise of the discretion which is to be exercised judicially: Norbis v Norbis (1986) 161 CLR 513 at 519; and Oshlack v Richmond River Council (1998) 193 CLR 72 at [65] (McHugh J, Brennan CJ agreeing), [134] (Kirby J). Generally, the discretion is exercised in favour of the successful party: Foots v Southern Cross Mine Management Pty Ltd [2007] HCA 56; (2007) 234 CLR 52 at [25]; and Firebird Global Master Fund II Ltd v Republic of Nauru (No 2) [2015] HCA 53 at [6]. The exercise of the discretion involves the making of a broad evaluative judgment and factors other than success may have a significant claim on the exercise of the discretion: Gray v Richards (No 2) [2014] HCA 47 at [2].

45    Ordinarily, a tribunal that abides by the Hardiman principle and does not actively intervene to defend its decision will not be ordered to pay costs: Our Town FM Pty Ltd v Australian Broadcasting Tribunal (No 3) (1987) 77 ALR 609 at 612 (Wilcox J).

46    Further, the convention is that the court will make no order as to costs where a decision-maker simply submits to the order of the court or adopts a neutral position. In such cases, the decision-maker is treated as being like an amicus curiae who neither receives nor pays costs. As to these matters, see Lawrie v Lawler (No 2) [2016] NTCA 4 at [25] (Heenan AJ, in dissent as to the result but not as to general principle); Campbelltown City Council v Vegan [2006] NSWCA 284; (2006) 67 NSWLR 372 at [64] (Basten JA); AIT18 v Australian Information Commissioner [2018] FCAFC 192; (2018) 267 FCR 93 at [131] (Logan, Griffiths and Farrell JJ); and Muswellbrook Shire Council v Hunter Valley Energy Pty Ltd [2019] NSWCA 216 at [67] (Basten JA).

47    Nevertheless, there are instances where a respondent decision-maker who has conformed to the requirements of the Hardiman principle and was also the proper contradictor in proceedings where the applicant was unsuccessful, may obtain an order for costs: Hastwell v Legal Services Commissioner [2021] NSWCA 20.

Categories (1) to (4)

48    As to (1), it was consistent with the Hardiman principle for AFCA to make submissions in answer to Metlife's claims that AFCA lacked jurisdiction, at least to the extent that those submissions concerned the nature of the AFCA scheme and its legislative context. Much of the substantive content of the submissions advanced for AFCA was of that character. Those submissions were advanced consistently with the requirements of the Hardiman principle. They are especially appropriate in circumstances where Mr Edgecombe as the proper contradictor filed a submitting appearance. Even if Mr Edgecombe had taken an active role it would still have been appropriate for AFCA to make the submissions that were the subject of category (1). In the usual course, the appropriate order as to such costs is that there be no order as to costs.

49    As to (2), as has been explained, this was not a case in which Metlife was simply refusing to conform to the determinations. Nor was it suggested by AFCA that the contentions advanced by Metlife as to why there was no jurisdiction were so lacking in merit that, in substance, this was a case where AFCA was bringing the cross-claim in order to ensure that the determinations were given effect. No party urged an assessment on the basis that there were separate costs that related to the cross-claim. The cross-claim did not raise the additional defences. By reason that Metlife raised no matter in response to the cross-claim other than its contention that AFCA lacked jurisdiction, the cross-claim was simply the obverse of the application for declaratory relief. This was reflected in the way in which the case was presented by Metlife: see Principal Reasons at [48].

50    In those circumstances, I am not persuaded that the bringing of the cross-claim is a reason why the costs of AFCA assisting the court as to matters relating to its jurisdiction should mean that the appropriate order is that there should be an order for costs in favour of AFCA. Such an order would only be appropriate where a member of the scheme was simply failing to give effect to a determination. The conduct of Metlife in raising the issues of jurisdiction was not of that character.

51    As to (3), for reasons that have been given, AFCA had no interest in advancing a claim that there had been ad hoc agreements which bound Metlife to the terms of the determinations. If there had been such agreements then they would fall outside the statutory aspects of the AFCA Scheme. In that event, it would be matter for Mr Edgecombe to seek enforcement. As with any consensual arbitrator, AFCA would have no interest in seeking to enforce its own determination. Metlife was successful on the issue as to whether there had been ad hoc agreements. It was also a claim (or defence of Metlife's claim) that required evidence to be advanced. The fact that AFCA was required to lead evidence beyond the failure by Metlife to conform to the determinations is a further reason why it was not a claim that AFCA, as independent adjudicator under a process whereby Metlife and Mr Edgecombe each presented submissions to AFCA, could pursue consistently with its role. Therefore, it is not a matter that supports the claim by AFCA for an order for costs.

52    As to (4), the existence of those additional defences as part of the answer advanced by AFCA could not be a reason why there should be a costs order in favour of AFCA. They have not been determined. They resulted in interlocutory applications by Metlife in which it was successful in obtaining further particularisation of the points being made by AFCA. Even though the merits of the additional defences were not adjudicated, both parties made submissions on the basis that the appropriate order as to costs was one which dealt with the whole of the proceedings (either by making no order as to costs or by ordering that Metlife pay AFCA's costs of the proceedings). The fact that there were costs associated with the additional defences is not a reason to make the costs order sought by AFCA.

Submissions by analogy to cases concerned with arbitrators

53    In the result, there is little assistance to be gained by reasoning by analogy from the arbitrator's cases. Most of those cases are concerned with instances where an arbitrator takes an active part in court proceedings in which an issue is raised as to the propriety of actions taken by the arbitrator. There are no instances where, as here, the arbitrator might be said to have taken an active stance to enforce the award. An arbitrator who takes an active role in proceedings in which the propriety of the arbitrator's actions is under challenge will be liable for costs if unsuccessful. However, that is not the nature of the present case. There is no analogy.

54    The authority exercised by AFCA in the present case has some of the attributes of an arbitrator appointed by agreement to resolve a disputes. Upon appointment an arbitrator becomes a party to the arbitration agreement concluded between the parties and thereby assumes the quasi-judicial office of arbitrator, must conduct the arbitration according to the agreed process and is entitled to remuneration. In consequence, it is usual to view the appointment of the arbitrator as giving rise to a tri-partite agreement of a particular character, namely one in which the role of the arbitrator is quasi-judicial: see K/S Norjarl A/S v Hyundai Heavy Industries Co Ltd [1992] QB 863 at 884-5 and ARI v WXJ [2022] EWHC 1543 at [15].

55    However, there is an important point of difference. In the case of an arbitrator, the parties agree that they will submit their disputes to arbitration. Then, pursuant to their agreement to arbitrate, the arbitrator is appointed. Even though the result may be characterised as the making of a tri-partite agreement, it is an agreement that is made in circumstances where the role of the arbitrator is entirely quasi-judicial. In the case of AFCA, the initial agreement is between AFCA and the member. It is an agreement which from the outset contemplates that the member will submit to the determination of AFCA under the terms of a scheme that confers upon AFCA a role in ensuring that the member gives effect to AFCA's determination. It is this dual role of AFCA that means that it acts in a capacity that is different to that of an arbitrator. It is an attribute of the AFCA scheme in which a person chooses to participate by making a complaint to AFCA about the conduct of a member.

Conclusion

56    In all the circumstances, for reasons I have given, the appropriate order is that there be no order as to costs.

Associate:

Dated:    20 July 2022