Federal Court of Australia

Knowles v Commonwealth of Australia (No 2) [2022] FCA 1003

ORDERS

THE COURT ORDERS THAT:

1.    The applicants in the proceeding, being Cienna Knowles, John Harding, Harding Electrical Pty Limited, Murat Temel, Michael Temel Hair Pty Limited, Antoine Sandroussi, Mikailah Lehmann, Serafine Nichols and Alison Zerk, pay the costs of the respondents in the following lump sums:

(a)    as to the Commonwealth $50,000;

(b)    as to the State of New South Wales $39,023;

(c)    as to the State of Victoria $50,000;

(d)    as to the State of Tasmania $15,000;

(e)    as to the State of Western Australia $20,000;

(f)    as to the Northern Territory of Australia $20,000; and

(g)    as to the State of Queensland $20,000.

2.    Each applicant be jointly and severally liable for each of the lump sums costs which are the subject of order 1.

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

REASONS FOR JUDGMENT

MORTIMER J:

1    On 27 June 2022 the Court made orders for summary judgment in favour of respondents, together with a number of ancillary orders: see Knowles v Commonwealth of Australia [2022] FCA 741 (summary dismissal reasons). The Court made orders that any costs to be awarded in the proceeding are to be fixed by way of a lump sum, and giving the parties an opportunity to agree on lump sum costs orders, or file submissions in support of the orders they proposed, if they disagreed.

2    The Court was not notified of any agreement, and the parties filed competing submissions. The parties sought and were granted an extension of time for compliance with the orders.

3    In a consolidated submission, all of the respondents contend the applicants should be ordered to pay their costs, fixed by way of lump sum in the amount of $363,492.67, consisting of:

(a)    $56,885 to the Commonwealth of Australia;

(b)    $55,746.91 to the State of New South Wales;

(c)    $93,055 to the State of Victoria;

(d)    $20,000 to the State of Tasmania;

(e)    $52,746.50 to the State of Western Australia;

(f)    $45,059.26 to the Northern Territory of Australia; and

(g)    $40,000 to the State of Queensland.

4    The respondents rely on seven affidavits filed in support of their application, one on behalf of each respondent State and the Northern Territory:

(a)    an affidavit of Cameron John Retallick affirmed and filed 18 July 2022;

(b)    an affidavit of John Kenneth McDonnell affirmed and filed 18 July 2022 (NSW Affidavit);

(c)    an affidavit of Janine Margaret Hebiton affirmed and filed 18 July 2022 (Victorian affidavit);

(d)    an affidavit of Mark Christopher Jehne affirmed and filed 18 July 2022 (Tasmanian affidavit);

(e)    an affidavit of Robert John Beattie affirmed 18 July 2022 and filed 19 July 2022;

(f)    an affidavit of Jared Donald Clow affirmed 14 July 2022 and filed 18 July 2022 (Northern Territory affidavit); and

(g)    an affidavit of Timea Havas sworn and filed 18 July 2022 (Queensland affidavit).

5    For each respondent, those affidavits set out how the costs claimed have been calculated. The Victorian affidavit also deposes to internet pages hosted by the applicants’ legal representatives, which advertise this proceeding and seek “donations” from members of the public for “our quest to re-claim your freedom your liberty and your right to choose”. The advertisement also states:

We have been involved in legal challenges to bring sense and reason to Australia’s Covid-19 response, but we need your help with the costs of these actions.

6    And:

We have been preparing legal challenges to help bring about sense and reason to Australia’s Covid-19 response, your help and generosity will assist legal costs in maybe one of the biggest challenges for freedom in the history of Australia. Unity and courage in our current situations for future generations depends upon it.

7    And:

By making this donation you understand that AFL [Ashley, Francina, Leonard & Associates] Solicitors will use these funds as they see best to achieve the desired court outcome.

8    There is no evidence whether any money has been raised through these advertisements, and if so, how much. Nor is there any evidence as to what funds have been applied. The applicants did not seek leave to respond to this affidavit material.

9    Some of the affidavits exhibit correspondence between the various respondents and the applicants about costs. From this correspondence, it can be seen that:

(a)    NSW offered to accept $53,000 (inclusive of GST) in full satisfaction of its costs claim (NSW affidavit at annexure JKM-7);

(b)    the Northern Territory offered to accept $20,000 in satisfaction of its costs in the proceeding (Northern Territory affidavit at annexure JDC-3);

(c)    Queensland offered to accept $40,000 in full and final satisfaction of its costs and outlays of and incidental to the proceeding (Queensland affidavit at annexure TH-1); and

(d)    Tasmania offered to accept $20,000 in full and final satisfaction of its costs of the proceeding (Tasmanian affidavit at annexure MJ2).

10    In addition, an affidavit of the applicants’ solicitor Matthew Hopkins, sworn 11 July 2022 and filed 18 July 2022 (Hopkins affidavit), shows that:

(a)    the Commonwealth offered to accept $56,885 in full and final satisfaction of the Commonwealth’s costs in the proceedings (Hopkins affidavit at annexure MH-2);

(b)    Victoria offered to accept $102,360 (including GST) in full satisfaction of its costs in the proceeding (Hopkins affidavit at annexure MH-7); and

(c)    Western Australia offered to accept lump sum costs in the sum of $45,000 (Hopkins affidavit at annexure MH-10).

11    Taken together, the respondents were therefore prepared to accept $337,245.

12    The respondents submit that the authorities demonstrate it is “basic justice that a successful party should be compensated for expenses it has incurred because it has been obliged to litigate by the unsuccessful party”, quoting Northern Territory v Sangare [2019] HCA 25; 265 CLR 164 at [27]. The respondents also cited Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 at [68] per McHugh J in support of this “general rule”. Oshlack, of course, was a case where the majority of the Court (Gaudron and Gummow JJ, Kirby J agreeing) decided that such a “general rule”, if it existed, required a different outcome.

13    The respondents also contend, correctly, that as a general proposition the financial position of the person subject to a costs order is not relevant to the Court’s discretion as to costs. As I explain below, that general proposition may not recognise the way a party’s financial circumstances might be factored in to the Court’s consideration of whether, in public interest litigation, there should be a departure from the general position that costs should follow the event. The respondents also dispute the applicants’ characterisation of this proceeding as “public interest litigation”, on the basis that each of the applicants sought to vindicate private rights, and contrast this with the position in Oshlack.

14    Relying on statements in the Court’s summary dismissal reasons at [270] and [272], the respondents contend that the applicants:

brought and prosecuted a case that was misconceived from the outset.

15    As to the evidence in the Victorian affidavit regarding funding, the respondents submit:

to the extent that the applicants submit it would be unfair or unjust for them personally to bear the burden of an order to pay the respondents’ costs having regard to the claimed public interest nature of the proceeding, then they ought to provide evidence explaining the extent and terms of the fundraising and whether the funds have been fully expended.

(Footnotes omitted.)

16    The respondents refer to a number of authorities about how lump sum costs should be calculated, and then proceed to explain, by reference to the affidavit material, why each of the lump sums sought is justifiable and reasonable. They point to the discounts applied by each respondent to the actual costs incurred, in some cases almost 50% (Queensland). They make the point that, as the Court noted in its reasons at [29], if the matter had gone to trial the costs in terms of public funds and human resources would have been considerable.

17    The applicants contend that no order “should or can” be made for lump sum costs in favour of any respondent. At [2] of their written submissions, they advance four substantive reasons in support of that submission:

(a)    insufficient evidence has been filed by the respondents under order 9 of the orders of 27 June 2022 apart from “perfunctory letters of demand”;

(b)    a lump sum cannot be assessed on the material provided by the respondents;

(c)    it is procedurally unfair to require the applicants to answer the 10 page submissions of the respondents “yet to be received and upon evidence they have not seen, and in respect of an order they had no opportunity to oppose”; and

(d)    the public importance of the issues raised support an order that there be no order as to costs.

18    The applicants contend that “Order 8 [of the orders of 27 June 2022] is not an order for costs”. Order 8 stated that:

Any costs to be awarded in the proceeding are to be fixed by way of a lump sum.

19    The applicants rely on their personal circumstances as disclosed in two affidavits filed with the Court:

(a)    an affidavit of Cienna Knowles sworn and filed 18 July 2022 (Knowles affidavit); and

(b)    an affidavit of Antoine Sandroussi sworn and filed 18 July 2022.

20    They submit in respect of Ms Knowles that she:

had no choice but to be injected under the laws challenged in this Court by her as beyond constitutional power.

21    The applicants rely on the Hopkins affidavit. In that affidavit, amongst other matters, Mr Hopkins deposes to the following matters:

(a)    The written offers to settle the respondents’ costs claim received from each of the respondents, and the fact that most did not contain an itemised bill or indicate how the costs had been calculated. I note however at least some of the respondents’ solicitors, including the Commonwealth’s solicitors, offered to provide further substantiation.

(b)    A counter offer, on behalf of the applicants, to pay a lump sum of $70,000 in full and final settlement of costs. Mr Hopkins deposes that the amount of $70,000 reflected what was proposed in correspondence to the respondents dated 2 March 2022 in respect of the applicants’ cost capping application.

(c)    In his correspondence to Tasmania, Mr Hopkins made a number of points about the circumstances of some of the applicants, the widespread effects of the COVID-19 restrictions and measures and that:

Many Australians have sought to ascertain through the Courts, where the lawful boundary of the unprecedented encroachment upon ordinary rights might be drawn. Perhaps the Respondents may reflect upon the rejection of mediation put forward by the Applicants in this case, and upon the absence of any real alternatives to Court proceedings being available to the millions affected by the Respondents’ measures.

(d)    Correspondence making the same points as those outlined in [21(c)] above was also sent to the Commonwealth.

22    The Knowles affidavit was made by the current first applicant, Cienna Knowles. Ms Knowles deposes that she is 20 years old. She deposes that she has a full history of vaccinations from childhood but was concerned about the COVID-19 vaccine. She was required to be vaccinated to continue in her employment, so she had two doses. After her second dose, she deposes to severe adverse reactions and evidence of elevated clotting levels in her blood. She deposes to being admitted and then readmitted to hospital with serious side effects (including damage to her heart and lungs), and to having been told by her treating doctors that her injuries may be life long, including affecting her ability to have children. She deposes to not being able to return to employment since these episodes, and to being financially reliant on her parents. She deposes she has made a claim under the COVID-19 Vaccine Claims Scheme administered by Services Australia.

23    Antoine Sandroussi is an interstate truck driver, and the sixth applicant. He lives in NSW. In his affidavit, he deposes to having not initially been vaccinated against COVID-19 because he was “concerned the vaccines were not properly tested for safety”, and that this resulted in him not being able to work as an interstate truck driver, and moving onto Centrelink payments. He deposes that he, his wife and son could not afford to live on the Centrelink payments so he, his wife and son all took two doses of vaccination. He deposes that over the Christmas 2021 period he was offered work to deliver a truck to a warehouse in Queensland, which he accepted. However, he was prevented from entering Queensland in the truck by Queensland police as he had not provided a negative test result for COVID-19. He describes going back to Tweed Heads to get a test, the need to sleep in his truck for more than one night, and the delays and inconvenience of the testing regime, all of which led to him deciding not to continue with any interstate work. From this point onwards he indicated to his employer he would only accept work within NSW, but received no subsequent offers of work. He deposes that in January 2022 he, his wife and son all contracted COVID-19 despite being fully vaccinated and deposes they had high fever and were confined to their home for two weeks.

24    There is no evidence from any of the other applicants, including as to their financial position.

25    In their costs submissions, the applicants also return to the arguments made on their behalf in the proceeding itself about the ineffectiveness of COVID-19 vaccines, by reference to material which postdates the Court’s reasons. I infer this is put forward as some kind of justification for the commencement of the proceeding.

Resolution

26    In my opinion it is just and appropriate that there be costs orders in favour of the respondents. The respondents successfully persuaded the Court that the applicants’ causes of action had no reasonable prospects of success. They successfully persuaded the Court that the flaws in the causes of action went beyond the way they were pleaded and therefore no leave to re-plead should be granted. They took this position at an early stage in the litigation. They gave the applicants a reasonable opportunity to consider discontinuing the proceeding. They sought to conduct the summary dismissal process in a coordinated way. While I accept that the litigation had a public interest aspect, and that should be taken into account in the exercise of the costs discretion, I do not consider that aspect overwhelms all other considerations so that the just and appropriate order is that the parties bear their own costs. The respondents also individually advanced offers to the applicants to settle for discounted sums in payment of their costs. All these offers were made in advance of the applicants putting on any submissions on costs, and I am satisfied the applicants had adequate notice of the position advanced by each respondent.

27    I consider the correct approach is to look at the evidence and circumstances of the claims for each respondent against the applicants. The evidence and circumstances vary considerably.

28    For completeness, no party sought that any costs order made be made differentially between the applicants. I have proceeded on the basis that the parties accept if there are any costs orders, the applicants are jointly and severally liable for those costs. See Royal v El Ali (No 3) [2016] FCA 1573 at [53], and the authorities there referred to.

No procedural unfairness

29    The applicants are correct that order 8 of the Court’s orders made on 27 June 2022 is not an order “for” costs. The order is structured in the way it is because the Court had not heard the parties’ positions on costs, if the respondents were successful in their applications. Therefore, the orders gave the parties a full opportunity to make submissions about whether there should be any order for costs at all, and if so what that order should be, by way of a lump sum. The applicants have not sought to suggest that the drawn out process of taxation should be undertaken instead of the Court’s publicly preferred process of lump sum orders. That would be contrary to the Court’s present practice: see Jadwan Pty Ltd v Rae & Partners (A Firm) (No 2) [2020] FCAFC 95 at [10], and the reference to Paciocco v Australia and New Zealand Banking Group Ltd (No 2) [2017] FCAFC 146; 253 FCR 403.

30    Contrary to the applicants’ third submission extracted above, it is not correct the applicants have had no opportunity to oppose a costs order. Further, the applicants could have, but did not, seek leave to file answering affidavit material on costs, or to make reply submissions to the respondents’ submissions. The applicants are represented by experienced practitioners and the Court can assume their legal representatives understood such courses were open to them. Counsel and solicitors for the applicants have been through this costs process in not dissimilar circumstances in the Kassam and Henry litigation: see Kassam v Hazzard [2021] NSWSC 1320; 393 ALR 664 (Kassam); Kassam v Hazzard (No 2) [2021] NSWSC 1599 (Kassam (costs)). The Court can infer they are well familiar with the forensic options open to them. During the summary dismissal proceeding the applicants filed several documents and at least one submission without any orders being in place authorising that filing, and without leave having been granted. I infer the applicants’ legal representatives well understand the Court’s processes and that the seeking of leave to file further material if they considered they had not had a fair opportunity to answer the material was a course open to them. Indeed, they have demonstrated a capacity to file material upon which they wish to rely without leave.

31    The applicants proposed, and the respondents accepted, a variation to the orders for evidence and submissions on costs, to extend time for compliance. The Court granted the variation sought. I am satisfied there has been no unfairness to the applicants in the process of determining whether costs orders should be made, and if so, what those orders should be.

Relevant principles from the authorities

32    It is well established that in making a lump sum costs order, it is appropriate for the Court to apply a “broad brush” to the determination of costs: see Zreika v Royal (No 2) [2019] FCAFC 237 at [27]. The task is one of “estimation or assessment and not of arithmetic”, so that the Court should:

avoid, in effect, carrying out a taxation under the guise of performing a lump sum costs assessment.

(Billingsley v Napoli, in the matter of Biometric Identity Systems Pty Ltd (administrators appointed) (No 2) [2021] FCA 526 at [85(4)], and the authorities there referred to.)

33    While the starting point for fixing a lump sum may be the charges rendered by the costs applicant’s solicitors, the costs fixed should be proportionate to the nature, including the complexity, of the case: see Innes v AAL Aviation Ltd (No 2) [2018] FCAFC 130 at [17] and the authorities there referred to.

34    The authorities recognise the Court may apply a discount to the sum of costs claimed when making a lump sum order, but the appropriateness of any discount and the amount by which the lump sum is to be reduced is dependent on the facts of each case: see Coshott v Burke (No 2) [2018] FCAFC 81 at [21]. Here, I have applied discounts for several reasons as I explain below, principally to maintain proportionality between the costs awarded and the fact this proceeding ended at an early stage after an interlocutory decision, to maintain some substantive consistency between the respondents in terms of the lump sums awarded while reflecting the burden each did or did not undertake during the summary dismissal process, and lastly to recognise the proceedings had a public interest element.

The Kassam proceeding

35    I have considered the reasons for judgment of Beech-Jones CJ at CL in his Honour’s reasons for judgment on the costs applications by the respondents in Kassam (costs), and the proceeding heard and determined with it, Henry. His Honour ordered that the Kassam plaintiffs pay 60% of the costs of what I might call the State parties to the proceeding, and 100% of the costs of the Commonwealth. The difference was largely because of the different views his Honour took of the merits of the arguments made. I respectfully agree with a number of the factors taken into account by his Honour. Some of his observations are with respect also pertinent, as I explain elsewhere in these reasons.

General findings

36    I have taken into account the following general matters in determining what lump sums are appropriate:

(a)    the public interest contentions;

(b)    the applicants’ means and the structure of the proceeding;

(c)    the Court’s findings about the prospects of each cause of action;

(d)    the evidence about crowdfunding;

(e)    the relevance of other proceedings challenging COVID-19 pandemic restrictions;

(f)    the cost capping application and the applicants’ costs offer based on it; and

(g)    the fact that this proceeding was terminated early at the summary dismissal stage, that the costs should be proportionate to a dismissal at this early stage, and that the respondents carried, by agreement between them, different burdens in the presentation and development of the arguments on summary dismissal.

37    These factors tend in different directions, as I explain.

38    In favour of the applicants’ position on costs, I accept that the proceeding had a public interest element. I recognised this in the summary dismissal reasons at [30]. The vaccination requirements, and the border restrictions, affected a large proportion of the Australian community, in a myriad of ways. While ultimately the Court found none of the causes of action had reasonable prospects of success (a matter which tends in favour the respondents’ costs arguments), that does not negate the public interest in understanding whether the kinds of challenges made on behalf of the applicants were legally arguable. It is apparent on the material before the Court that it was not only the applicants who held some of the beliefs set out in the pleadings.

39    The respondents’ submission that the applicants were only advancing private interests does not present a complete picture. As Beech-Jones CJ at CL explained in Kassam, individuals in the position of the applicants, like the plaintiffs in Kassam, need to have some kind of special interest in the effect of the impugned instruments in order to have standing to bring a claim at all: Kassam at [107], citing Australian Conservation Foundation Inc v Commonwealth [1980] HCA 53; 146 CLR 493 at 530-531, Gibbs J. Thus, they sought redress in respect of the way the impugned instruments had affected them, but again the effects they experienced were likely to be common to many members of the community, even if the effects to which Ms Knowles deposed were more severe than those experienced by many members of the community. I respectfully agree with the observations of Beech-Jones CJ at CL in Kassam (costs) at [21] that one rationale for refusing a costs application against unsuccessful litigants is not to inhibit the bringing of proceedings concerning issues affecting the community or a sector of it. However, that rationale has less work to do where the claims are found to have no reasonable prospects of success than when arguable claims go to trial and are not successful. What the rule of law should promote is access to the courts for all members of the community where they have a grievance that the law recognises as arguable. It is in cases of that nature that any chilling effect from prospective costs orders can be antithetic to the rule of law. Nevertheless, there are rare cases, Ruddock v Vadarlis [2001] FCA 1329; 110 FCR 491 being one example, where the merits of the claim may not matter as much as the important principle of preserving ready access to the courts where fundamental human rights are at stake – such as the right to liberty, and to claim asylum, being the rights in issue in Vadarlis. This is not the same kind of case as Vadarlis.

40    I am satisfied it is appropriate to impose some discount on the costs to be awarded to recognise that although the Court has found none of the causes of action had any reasonable prospects of success, the factual sub-stratum to the causes of action, and the instruments impugned, were relevant across the Australian community, and their validity was a matter of public interest at a general level.

41    I also find the existence of the cost capping application tends in favour of the applicants. The applicants made this application promptly after the filing of the amended statement of claim and the joinder and removal applications. At the hearing of the summary dismissal applications, the Court indicated its view that the cost capping application should await the outcome of the summary dismissal applications. No party objected to this course. Nevertheless, the applicants cannot be said to have had no prospects of securing a cost capping order, if their substantive causes of action had withstood a summary dismissal.

42    While it appears that the applicants’ solicitors have sought to raise funds for this proceeding through crowdfunding, there is no evidence about how much has been raised or, if any funds have been raised, what they have been applied to. That is unlike the situation in Kassam (costs), where there was more detailed evidence, even if ultimately the Court found the amount of evidence left material gaps: see at [40], and the Court’s observations about the two ways in which evidence about the use to which funds raised in this manner might be put could bear on the costs discretion. However, the Court’s observations at [42] are ones with which I respectfully agree:

Second, in similar circumstances it is to be expected that if a submission to the effect that it is “unfair and unjust” for a party to personally bear the burden of a costs order is made to the Court and crowdfunding has been undertaken, then that party will provide evidence to the Court explaining the extent and terms of the fundraising, especially when they are given the express opportunity to do so. Had that been undertaken in this case and had the explanation revealed that, for example, a reasonable portion of the funds set raised was set aside to meet or defray the Henry plaintiffs’ costs exposure then the Court could have considered whether to make an order limiting the costs recoverable from the plaintiffs to that amount or something similar (UCPR, 42.4(1)). However, in view of the way in which the costs application was conducted such an approach could not be considered.

43    There was no evidence on behalf of the applicants about the crowdfunding for this proceeding. This is despite two of the applicants, and their solicitor, going into evidence on other topics for the purpose of the contentions about costs. Given the state of the evidence, I am not satisfied that the confined evidence adduced by Victoria on the costs application can be factored in one way or the other. It is insufficiently probative of any fact that might be relevant to how the costs discretion should be exercised.

44    The early stage at which this proceeding was terminated means, in my opinion, the Court must be careful to ensure the costs are proportionate to the process by which summary dismissal was obtained. This is an interlocutory process. While the complexity of the applicants’ case caused more costs to be incurred, it is nevertheless a summary process. In the circumstances of this proceeding, the sums awarded should, as much as reasonably practicable, reflect the fact the proceeding ended early after an interlocutory hearing. While there were costs thrown away because of the unsustainable nature of the initial originating application and statement of claim, the applicants did act responsibly to amend their pleadings.

45    Tending against the applicants’ primary position that there be no orders as to costs are the Court’s findings on the summary dismissal applications. The causes of action, and contentions supporting them, were found to have no reasonable prospects of success, and in many instances were found not to be more than mere assertions. The Court found some of the amended pleadings were no more than statements of the applicants’ beliefs which, even if genuine, did not contribute to any arguable cause of action (see summary dismissal reasons at [272]). In those circumstances, there is a compelling basis for the respondents to receive compensation for costs incurred in a proceeding where that was the view taken by the Court of the causes of action, as pleaded.

46    The structure of the proceeding also tends against the applicants’ costs contentions of a single lump sum. The applicants elected to bring a wide-ranging proceeding against all States except one, and against the Northern Territory. That was a forensic choice on their part, and the Court can assume in the absence of evidence to the contrary that it was made on advice. The result was a challenge of considerable breadth to a large number of measures related to the COVID-19 pandemic across most of Australia. This inevitably resulted in a complex structure to the proceeding. For the respondents it meant a considerable exercise in unpicking the generalised allegations made in the pleadings and then responding to them. The breadth of respondents that the applicants elected to name, and the number of instruments they elected to challenge, were matters of forensic choice for the applicants, but these factors have resulted in seven costs claims, rather than one or two costs claims: cf Kassam (costs). Inevitably, even with the Court applying a fair discount as part of the lump sum process, including a discount to recognise that the proceeding had a public interest element so that the costs burden on the applicants should be eased somewhat to reflect that feature, this has elevated the total costs payable into a considerable sum.

47    The respondents sought to co-operate in the presentation and development of the arguments, which was of great assistance to the Court. The costs orders should reflect the role adopted in the summary dismissal process by each respondent. I explain my more specific findings about that matter in the sections below. I also consider that in the absence of any particular explanation or circumstances being demonstrated on the evidence, there should be some general consistency, and restraint, in the components of the lump sums awarded as between respondents. That is especially so since they are all government respondents. In other words, I consider that it is appropriate to undertake something of a comparative exercise about the level of costs claimed. In summary, I consider that while the Commonwealth took the largest burden in the summary dismissal process, what it claims reflects the most reasonable level of costs in terms of fees, and therefore its claim should be used as the appropriate comparator.

48    There is insufficient evidence about the applicants’ means for this to be taken into account by the Court as part of any consideration of the public interest nature of this proceeding. At least in some cases, it may be legitimate for the means of unsuccessful parties to be factored into the exercise of the costs discretion on this limited basis, because for persons of limited or modest means seeking to bring what is properly characterised as public interest litigation, the chilling effect of costs orders is all the greater: see Ruddock v Vadarlis (No 2) [2001] FCA 1865; 115 FCR 229 at [13], Black CJ and French J. However, here there is simply insufficient evidence beyond assertion for the Court to assess the applicants’ means as a group, let alone give this factor any weight, even if it were appropriate to do so.

49    Further, these proceedings were continued, in the face of the summary dismissal applications, despite the existence of a number of unsuccessful challenges which shared some features in common with the way the causes of action and contentions were put in this proceeding on behalf of the applicants. I have set out those decisions at [34]-[48] of the summary dismissal reasons. In total there were seven such proceedings determined unfavourably to the moving party before the hearing of the summary dismissal applications. That count did not bode well for the applicants’ arguments, but they pressed on.

50    Finally, prior to the summary dismissal applications being filed, the evidence shows that both Tasmania and the Northern Territory contacted the applicants (on 22 October 2021 and 29 October 2021, respectively) indicating that if the applicants discontinued the proceedings against those respondents, those respondents would be willing to bear their own costs incurred up to that date: see Tasmanian affidavit at annexure MJ1; Northern Territory affidavit at annexure MJ2. Queensland made a similar offer on 8 November 2021: see affidavit of Paul Andrew Lack sworn and filed 28 January 2022 at annexure PAL-2.

Against which applicants should the costs orders be made?

51    NSW alone made a specific contention (at [9] of the affidavit in support of its costs claim) that the Court should order all persons who have been applicants in the proceeding, including those removed by the orders of 27 June 2022, to pay their costs.

52    No other respondent advanced such a submission. NSW did not develop how the Court had power to order costs against persons who were formerly applicants but, at the time the costs discretion is to be exercised, were not parties to the proceeding. Given the arguments were not developed, and therefore the applicants had no chance to respond, nor were the former applicants put on notice of the argument, it would not be appropriate to consider this point any further. The orders for costs will be made against the existing applicants.

Findings in relation to each respondent’s costs claims

53    In determining the appropriate lump sums for each respondent I have taken into account the factors set out above, and where I have discounted the amounts claimed I have done so to reflect those general factors I have identified as favouring the applicants.

54    It would not be appropriate in this proceeding to simply award one lump sum to be divided between the respondents. The applicants’ offer was structured this way. Such an approach is likely to result in some unfairness and in any event places each respondent in a difficult position. The fairer approach is to consider each respondent’s claim for costs separately, on the basis of the evidence before the Court, together with the Court’s own assessment of the conduct of the proceeding.

Commonwealth

55    The Commonwealth claims $56,885 in costs.

56    On 29 June 2022 the Commonwealth wrote to the applicants’ solicitors and offered to settle its costs claim for $56,885.

57    Mr Retallick expressly deposes that the Commonwealth is not claiming more than it will pay for costs and disbursements in relation to this proceeding. I infer, therefore, that the Australian Government Solicitor has charged the Commonwealth for the legal services it provided; cf some of the other circumstances I discuss below. Mr Retallick deposes that the total costs of the Commonwealth are approximately $69,375.92, and what is claimed represents around 74% of the legal fees and 100% of the disbursements, including counsel’s fees, meaning an overall discount of around 18%. He deposes to counsels’ fees being paid at Commonwealth rates, which on any view are modest. Of the total, $21,752.42 is for disbursements, including counsels’ fees, transcript and filing fees.

58    I consider the applicants should pay the Commonwealth’s costs fixed in the sum of $50,000. This allows for disbursements in their entirety and a reasonable proportion of solicitors’ costs. The Commonwealth carried the burden of many of the arguments on which the applicants placed the greatest emphasis in the proceeding, and in argument in the summary dismissal applications. Its level of fees is appropriately modest for a model litigant. I consider its costs claims provide the most appropriate comparator for the other government respondents.

Victoria

59    Victoria claims $93,055 against the applicants. Ms Hebiton deposes that is approximately 66% of the costs validly incurred by Victoria. The total costs incurred are said to be $140,993, consisting of solicitor fees of $63,757.50, counsel fees of $73,500 and filing and transcript fees of $3,735.50. She deposes to the rates for senior and junior counsel, which are considerably higher than those of Commonwealth counsel. It can be observed that the amount claimed for counsel by Victoria is almost three times that claimed by the Commonwealth.

60    On 6 July 2022 Victoria wrote to the applicants’ solicitors and offered to settle its costs claim for $102,360.

61    Like the Commonwealth, Ms Hebiton for Victoria expressly deposes that Victoria is not claiming more than it is liable to pay the Victorian Government Solicitor’s Office for provision of legal services.

62    It is true that Victoria also carried a significant burden in terms of submissions on behalf of the respondents. Victoria took the lead in submissions particularly on the negligence claims. However, it did not carry any greater burden than the Commonwealth, and perhaps less so. I consider that the amounts claimed by Victoria are not proportionate for a summary dismissal application, even one with some complexities as this proceeding had. Relatively to the costs claimed by the other respondents, Victoria’s claimed costs are also considerably higher. Aside from simply higher rates for counsel and somewhat higher rates for solicitors’ costs, the reason for this is not explained in the affidavit material, nor was it explained in the correspondence to the applicants. I consider it is appropriate to apply a significant discount to both solicitor and counsel costs claimed, to bring them more into line with the costs charged by the other respondents, while still recognising the burden carried by Victoria in terms of the aspects of the summary dismissal proceeding for which its counsel took responsibility. I consider Victoria should recover 40% of its counsel fees, and 30% of its solicitor fees, together with 100% for the other disbursements it paid for transcript and filing fees. That represents a total of $29,400 for counsel and $19,127.25 for solicitors’ costs. With the filing and transcript costs, that totals $52,262.75 which I would round down to $50,000. I do not consider Victoria should recover more than the Commonwealth against the applicants.

NSW

63    NSW claims $55,746.91 in costs against the applicants. On 4 July 2022 NSW wrote to the applicants’ solicitors and offered to settle its costs claim for $53,000. Mr McDonnell deposes at [8] that:

The invoices in this matter were issued to the “NSW Self Insurance Corporation” (“SICorpJ”). SICorp manages the Treasury Managed Fund (“TMF”) and provides self-insurance to the State of New South Wales and its agencies. The NSW respondents are relevantly insured by the SICorp in respect of their costs liabilities in these proceedings, and the invoices are therefore paid by SICorp from the TMF.

64    The term “NSW respondents” includes the individuals who were the tenth and eleventh respondents until their removal on the application of the applicants. Mr McDonnell deposes that the amount claimed by NSW “does not exceed the amount for which SICorp is liable to pay and has in fact paid”. Mr McDonnell makes the point at [22] of his affidavit that a “particular feature of this matter was the relatively large amount of correspondence and conferral between respondents”. He deposes:

I consider that those amounts were properly incurred, as they resulted in work being distributed between the respondents where practicable and an efficient presentation of the respondents’ cases, reducing the preparation and hearing time of these applications. I consider that the overall costs incurred on behalf of all respondents is likely to be lower than if that approach had not been taken.

65    That point is well made and is clearly reflected in the solicitor costs. However, in my opinion it is still of more weight that this was only a summary dismissal application and not a trial.

66    NSW claims $28,002.22 in solicitor costs, which reflects on Mr McDonnell’s evidence 85% of professional fees. It seeks $27,744.69 in disbursements including counsel fees, which is 100% of counsel fees. Mr McDonnell deposes that the “Crown rates” charged by both counsel represent a “substantial discount on counsel’s ordinary commercial rates”. That is clear from the amounts set out in Mr McDonnell’s affidavit.

67    NSW played a relatively significant role in submissions on the summary dismissal application, although less than the Commonwealth and Victoria. Counsel for NSW was responsible for addressing the Kassam decisions, which were important to the respondents’ arguments and ultimately to the Court’s reasons. Counsel for NSW also made detailed submissions about the legal unreasonableness challenges, and the principles relevant to determining summary judgment and strike out applications, which were adopted by other respondents.

68    Despite the relatively modest levels of fees for counsel, they still exceed the Commonwealth’s counsel fees. I consider the role played by NSW in the proceedings was less than the Commonwealth and Victoria, but more than the other States and the Northern Territory. I consider what is just and appropriate is to apply a discount of 30%. That results in a lump sum, rounded up, of $39,023.

Queensland

69    Queensland claims $40,000. On 7 July 2022 Queensland wrote to the applicants’ solicitors and offered to settle its costs claim for this sum.

70    Ms Havas deposes that Queensland has applied approximately a 45% discount to its professional costs incurred, those actual costs being $77,456.60. Of this sum, $65,621 consists of solicitor fees, $8,500 is counsel’s fees and then there are transcript fees also paid.

71    Queensland played a modest role in the summary dismissal proceedings. However, like the other respondents, it nevertheless had to answer the applicants’ claims in respect of instruments particular to the Queensland government. To keep the costs more proportionate to first, the fact this was a summary dismissal, and second the smaller role played by Queensland, it is appropriate to apply a discount so Queensland recovers no more than the other States, and the Northern Territory, who all played a commensurate role. As I explained above, there should also be some overall consistency in comparison with the Commonwealth’s costs. Queensland’s lump sum costs should be fixed at $20,000.

A preliminary issue for Tasmania, Western Australia and the Northern Territory

72    In the affidavit material for each of these three respondents, it is clear that some or all of the legal costs now being claimed against the applicants have not been in fact charged to the respondent, and the respondent has not incurred any liability, or has incurred only a reduced liability, to pay for the professional services it has received. In other words, the legal representatives for these three respondents are employees of the respondents, and the work they have performed has been carried out as part of their employment, for which they are paid a salary.

73    The affidavits of Mr Jehne for Tasmania, and Mr Beattie for Western Australia establish that is wholly the case. For the Northern Territory, Mr Clow’s affidavit establishes that fact for the solicitor fees, but not for counsel fees, as a member of the Northern Territory Bar was briefed for the Northern Territory.

74    In their submissions, the respondents submitted:

Salaried solicitors. In the case of the fourth, fifth and sixth respondents, no charges have been rendered. It does not follow that the fourth, fifth and sixth respondents are prevented from recovering costs. It has been accepted since the decision in Attorney-General v Shillibeer [(1849) 6 Exch 606; 154 ER 1356] that the Crown may recover the costs of legal services provided by salaried solicitors.

For the purposes of establishing a “starting point”, in the absence of charges having been rendered, it is appropriate to adopt the "traditional approach" and to award costs on a basis comparable to the costs which would have been incurred and allowed on taxation had an independent solicitor been engaged. Where a scale applies to the applicable services, the court may order costs in accordance with that scale.

(Original emphasis, footnotes omitted.)

75    The continuing application of these principles were confirmed by the High Court in Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29; 269 CLR 333 at [46]-[50], Kiefel CJ, Bell, Keane and Gordon JJ and at [68], Gageler J. The subject matter of this appeal was the so-called ‘Chorley exception’ to the prohibition on self-represented litigants recovering sums on account of legal costs. The Chorley exception related to a self-represented litigant who happens to be a solicitor; the name deriving from London Scottish Benefit Society v Chorley (1884) 13 QBD 872 at 877. The Court found the exception an anomaly, and determined it should not be extended to barristers, and should not be recognised as forming part of the common law of Australia: Bell Lawyers at [3] (Kiefel J, Bell, Keane and Gordon JJ), [63] (Gageler J), [93] (Edelman J).

76    At [50], the plurality said that this decision:

would not disturb the well-established understanding in relation to in-house lawyers employed by governments and others, that where such a solicitor appears in proceedings to represent his or her employer the employer is entitled to recover costs in circumstances where an ordinary party would be so entitled by way of indemnity.

77    And at [68], Gageler J said:

The general rule is engaged on the basis that the costs of using the employed solicitor are still awarded as indemnity for professional legal costs actually incurred in the conduct of litigation by the employer who is a party to the litigation, albeit that those professional legal costs are incurred in the form of an overhead and are therefore not reflected in a severable liability.

78    These are the principles a single judge of this Court is bound to apply, even if there is some apparent inconsistency with the indemnity principle. Therefore, I accept the respondents’ submissions that Western Australia, Tasmania and the Northern Territory are able to recover professional costs on the same basis as the other respondents.

Northern Territory

79    The Northern Territory claims $45,059.26. On 5 July 2022 the Northern Territory wrote to the applicants’ solicitors and offered to settle its costs claim for $20,000. The Northern Territory played a proportionately small role in the proceedings, but as the summary dismissal reasons reveal, the Court found its submissions helpful. Like the other respondents it nevertheless had to defend its own instruments which were under challenge.

80    The Northern Territory claims $20,404.38 in disbursements for transcript and counsel’s fees. It claims $24,654.88 in solicitor fees.

81    Given the smaller role played by the Northern Territory in the summary dismissal applications, and the fact it was prepared to settle for the sum of $20,000, I consider that would be an appropriate sum to award the Northern Territory.

Western Australia

82    Western Australia claims $52,746.50. A small amount is claimed for disbursements being filing fees and transcript ($3,335.60). The remainder are costs attributable to the lawyers employed in the State Solicitor’s office, including Mr Andrew Shuy who appeared at the summary dismissal hearing, and who is a Senior Assistant State Counsel in the Western Australian State Solicitor’s Office. The hourly rate used was the scale rate that would be applicable in the Supreme Court of Western Australia, being $495 per hour for senior practitioners, under and in accordance with the Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2020 (WA). It is unclear why this rate was used instead of the Federal Court scale, which starts at $425 for counsel for interlocutory hearings, although that difference may be minor in the ultimate figure.

83    On 8 July 2022 Western Australia wrote to the applicants’ solicitors and offered to settle its costs claim for $45,000.

84    Proportionately to the contributions made to the summary dismissal proceeding, I consider Western Australia’s claim for costs is too high. As with the other respondents, it was compelled to defend its own instruments under challenge. It also had an interest in advancing arguments about the applicability of the High Court’s decision in Palmer v Western Australia [2021] HCA 5; 95 ALJR 229.

85    However, I do not consider Western Australia should recover any more than the Northern Territory and Queensland. I fix Western Australia’s lump sum costs at $20,000.

Tasmania

86    Tasmania claims $20,000. That represents a discount of over 50% on the legal fees it contends it incurred. It seeks no sum for disbursements. As I explain above, that is because the lawyer who appeared for Tasmania, Mr Paul Turner SC, is employed by the Office of the Solicitor-General (Litigation) by the State of Tasmania, as is Mr Jehne, being the other lawyer in respect of whose services costs are sought. Despite both being employee solicitors, Tasmania has calculated its legal costs at the rates of $800 per hour for Mr Turner and $300 per hour for Mr Jehne.

87    On 1 July 2022 Tasmania wrote to the solicitors for the applicants offering to settle its costs claim for $20,000. That is the same amount as was offered by the Northern Territory.

88    However, Tasmania also made an unsuccessful standing argument against the applicants which occupied most of its oral submissions, and a material part of its written submissions. I consider it is fair and appropriate that it not recover the same amount as the Northern Territory, Queensland and Western Australia because of this. I consider an appropriate lump sum for Tasmania’s costs is $15,000.

Total

89    The total amount for which the applicants will be liable is $214,023. While that is a very considerable amount of money to most members of the Australian community, it is a substantial discount on the actual costs incurred by the respondents. An adverse award of costs if the applicants were unsuccessful was always a real prospect, and the Court can assume that the applicants were properly advised of this risk. It is a large sum of money for a proceeding that was terminated at an early stage, but the size of the sum, as discounted, largely reflects the forensic choices of the applicants, as they were advised, in terms of the breadth of the proceeding they sought to prosecute.

Associate:

Dated:    29 August 2022

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