Federal Court of Australia

MetLife Insurance Limited v Australian Financial Complaints Authority (No 4) [2022] FCA 1020

ORDERS

THE COURT ORDERS THAT:

1.    The application to vary the order as to costs made on 20 July 2022 is dismissed.

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

REASONS FOR JUDGMENT

COLVIN J:

1    Metlife Insurance Limited brought proceedings against the Australian Financial Complaints Authority (AFCA) and Mr Brian Edgecombe seeking declaratory relief to the effect that a determination made by AFCA in favour of Mr Edgecombe in respect of two complaints made by him to AFCA concerning the conduct of Metlife was without authority. AFCA actively defended the proceedings and brought a cross-claim. Mr Edgecombe filed a submitting appearance. I determined that AFCA had authority to make the determinations.

2    An issue arose as to the appropriate order as to costs having regard to what is often described as the Hardiman principle.

3    On 16 February 2022 I made orders to give effect to the substantive determination and also made directions requiring the parties to file and serve written submissions as to what further orders should be made and any evidence as to costs. The orders provided for Metlife to go first, with a response from AFCA and then submissions and any evidence 'strictly in reply' by Metlife.

4    Metlife filed submissions seeking an order that AFCA bear its own costs of the proceedings. AFCA responded seeking an order that MetLife pay AFCA's costs of the proceeding, including AFCA's costs of Metlife's application and AFCA's costs of the cross-claim, and including any reserved costs. Metlife filed submissions in reply which concluded with the following:

The Court should order AFCA to pay Metlife's costs of and incidental to the question of costs and otherwise order the parties to bear its or his own costs of these proceedings.

5    On 30 May 2022, I heard oral submissions as to the appropriate cost orders. Submissions for Metlife began with the following:

In our submission, the court should order AFCA to bear its own costs of this proceeding because it failed to adopt a position of neutrality of the time that this court should expect AFCA to take in proceedings of the present kind.

6    Later, the position was put in the following way:

We respectfully say the approach that commends itself is for your Honour to make an order that AFCA bear its own costs of the proceedings in circumstances where we say AFCA has gone outside of its proper role. Now, that, indeed, is the order that the court would likely have made, we say, if AFCA did adopt its proper role by, for example, filing a submitting appearance but make itself available to the court either by way of, in effect, general offer or by way of an application for leave to be heard, notwithstanding the submitting appearance, to assist on matters such as powers and its procedures. If it proceeded in that fashion - and this seems to be common ground - if it proceeded in that fashion, the ordinary exercise of discretion with respect to costs would be for AFCA to neither be ordered to pay costs, nor for it to receive costs, regardless of the ultimate answer given by the court.

We respectfully say in circumstances where AFCA has, we say, gone beyond its proper role, that's also the appropriate order for your Honour to make in this case. Although my client failed in receiving - in achieving the primary relief that it sought, and although AFCA succeeded in achieving the relief that it sought, it did so, we say, in circumstances where it went outside the appropriate approach to and posture of neutrality that it should have taken, and in those circumstances, in our submission, the court should firstly opine on that question of the appropriate role of AFCA in proceedings such as the present kind, but further indicate its disapprobation of the way in which AFCA has proceeded in these proceedings by making an appropriate cost order, which we say the appropriate cost order is an order that AFCA bear its own costs of these proceedings. If the court pleases, those are our submissions in chief unless we can assist further in chief.

7    There was no oral submission to the effect that there should be an order of the kind set out at the end of Metlife's written submissions in reply.

8    The submissions for AFCA commenced:

Our primary position is that the court, in the ordinary way, should order that MetLife pay AFCA's costs of the proceeding. As to the general question as to whether Hardiman principles might otherwise apply to AFCA in proceedings concerning its determinations, it's our submission that your Honour need not determine that in this proceeding. The reason for that is that, in the particular circumstances of this case, we say that costs would still follow the event, even applying the Hardiman principles, and, therefore, it's unnecessary for your Honour to give an opinion on the broader question of whether Hardiman principles apply to AFCA in all cases of this nature.

9    In the course of those submissions, a submission was made to the effect that there were strong factors in favour of not penalising AFCA for costs, which led me to observe:

Well, there's no submission that you should be penalised; the order that's sought is no order as to costs. There's no order sought against AFCA.

10    In oral submissions in reply for Metlife, there was no reference to any order being expressed in the terms set out in the last sentence of the written reply. Rather, the oral submissions in reply emphasised that it was inappropriate to approach the issue on the basis that there was some event. For example it was submitted:

… AFCA is not properly understood as being a successful or unsuccessful party for the purposes of considering applying any 'rule' like costs following the event, and so in the face of that the correct analysis is not to say that there's some starting or presumptive or default position that Mr Wise's clients should receive a costs order in his client's favour unless my client can fall within some recognised exception or special rule. Rather, we're fighting the debate at an earlier stage of analysis.

What is the correct approach to costs in circumstances where the costs follow the event rule doesn't bind or, indeed, doesn't even guide …

11    The tenor of the submissions for Metlife was that rather than it being required to pay costs, there should be no order as to costs.

12    I determined that there should be no order as to the costs of the proceedings and published reasons for that decision: MetLife Insurance Limited v Australian Financial Complaints Authority (No 3) [2022] FCA 849.

13    Metlife now brings what it describes as a 'conditional application' by which it seeks an order that AFCA pay the costs of and incidental to the costs hearing. It relies upon r 39.05(c) of the Federal Court Rules 2011 (Cth) which allows for the Court to vary or set aside a judgment or order after it has been entered if it is interlocutory. The order sought was a variation of the costs order that has been made so that it would read:

The First Respondent to pay the Applicant's costs of and incidental to the question of costs. Otherwise, there be no order as to the costs of the proceedings.

14    Metlife says it only brings the application if the Court has overlooked the submission in the last sentence of its written submissions in reply. Framed in that way, the application is premised upon an interrogatory directed to the Court as to what was considered when the reasons were published. There are important limits upon such inquiries: see, for example, Herijanto v Refugee Review Tribunal [2000] HCA 16 at [15]-[16] (Gaudron J); and Herijanto v Refugee Review Tribunal (No 2) [2000] HCA 21 at [10] (Gaudron J). If those limits are not respected then the finality with which courts speak in quelling disputes will be compromised. There are all sorts of circumstances in which a party may be uncertain as to what is meant by the reasons that have been given or the reasoning pathway that has been taken. However, the fundamental nature of judicial power is such that brings an end to the dispute. Adequate reasons must be provided. These days, rights of appeal exist and they may be exercised to redress deficiencies in the exercise of judicial power but there remains the possibility for this Court to be amenable to prerogative relief if the judicial task has not been undertaken. In either case, it is for others to make the determination as to the adequacy of what has been done by the primary judge.

15    Therefore, I have considerable doubt as to whether the approach by Metlife whereby, in effect, it inquires as to what was considered in the formulation of published reasons for decision, should be countenanced. All the more so in circumstances where appeals in respect of both the substantive decision and the costs decision are pending. The record is available. I have published my reasons. The judicial task has been undertaken. If it be thought that the reasons given are inadequate or bespeak error having regard to the way in which the proceedings unfolded then that is a matter for determination on appeal.

16    Even accepting that orders as to costs are always interlocutory (as to which, see my consideration of the position in Caratti v Commissioner of the Australian Federal Police [2021] FCA 1067 at [9]-[13]), that does not mean that it is appropriate to vary the order in the present circumstances. There is no suggestion that the orders made did not deal with part or all of what was in issue such that part of the matter for determination was not addressed. It is not suggested that the reasons given could not explain why the order sought in the written reply submissions was not made. There is no claim that there has been a change in circumstances which would justify a variation. There was no liberty reserved to apply. It was not suggested that the amount at issue was sufficiently significant to the parties to justify entertaining an application to vary the orders in the interests of justice or that a grant of leave to revisit the question would avoid an appeal on the costs question.

17    In all the circumstances, I decline the application on the basis that no sufficient reason has been advanced to exercise the limited power to vary the cost order.

18    Lest it be relevant for the appeal court to know, and noting the doubt already expressed, I approached the question for costs on the basis that the order sought by Metlife was that there be no order as to costs. Had an application for costs of and incidental to the determination of the question of costs been pressed by Metlife, I would have made the same order, namely that there be no order as to the costs of the proceedings. No matter was advanced to support the making of an order that AFCA pay the costs of and incidental to the question of costs. I infer that any application for such an order could only have been advanced on the basis that costs should be awarded to the party whose contentions on costs were accepted. In substance, that was the nature of submission put for Metlife on the application to vary.

19    However, to put the matter in that way is to fail to recognise that Metlife was unsuccessful in the substantive proceedings. Had it not brought them then there would have been no issue as to costs. Further, the cost issues raised were novel. The submissions of both parties assisted in their resolution. It was quite proper for AFCA to have advanced the submissions as to costs that it did in the rather peculiar circumstances of the case. They exposed how the appropriate order for costs depended upon a proper understanding of the nature of the substantive proceedings and, in that respect, I declined to approach the matter on the basis that there was some failure by AFCA to adhere to the Hardiman principle. Therefore, even if Metlife had succeeded, in all likelihood the appropriate order as against AFCA would have been no order as to costs. The same would have been the case for Mr Edgecombe who filed a submitting appearance. Therefore, had I been of the view that Metlife had sought the costs of and incidental to the determination of the question of costs I would have made no order as to such costs.

Associate:

Dated:    1 September 2022