Federal Court of Australia

Electoral Commissioner v McQuestin [2024] FCA 685

ORDERS

THE COURT ORDERS THAT:

1.    The application by the Respondent dated 9 April 2024 seeking a variation to the costs order made on 26 March 2024 be dismissed.

2.    The Respondent pay the Applicant’s costs of the application.

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

REASONS FOR JUDGMENT

O’BRYAN J:

Introduction

1    These reasons concern the appropriate order to be made with respect to the costs of the proceeding following the Court’s determination of liability and relief in Electoral Commissioner v McQuestin [2024] FCA 287 (primary judgment).

2    On 26 March 2024, the Court made orders declaring that the respondent, Mr McQuestin, contravened s 321D(5) of the Commonwealth Electoral Act 1918 (Cth) (Electoral Act) on three occasions in connection with the publication of electoral advertisements in the Geelong Advertiser newspaper on 14, 19, 20 and 21 May 2022 and imposing pecuniary penalties on Mr McQuestin in respect of those contraventions. The Court also made the following orders as to costs:

5.     Subject to paragraph 6, the respondent pay the applicant’s costs of the proceeding.

6.     Within 14 days of the date of this order, either party may apply to vary the order in paragraph 5 by filing and serving a submission of no more than 2 pages and, if required, any evidence in support.

7.    If a party files and serves a submission pursuant to paragraph 6, within a further 14 days the other party may file and serve a submission in response of no more than 2 pages and, if required, any evidence in support.

8.     Any application to vary the order in paragraph 5 will be determined on the papers.

3    On 9 April 2024, Mr McQuestin filed a submission seeking a variation to the costs order in paragraph 5 of the orders made on 26 March 2024. Mr McQuestin seeks an order that the Electoral Commissioner pay his costs. The submission was supported by an affidavit of his solicitor, Michelle Phillips, sworn 9 April 2024. The affidavit annexed offers of settlement made by Mr McQuestin prior to the hearing of the proceeding on 30 January 2024.

4    On 16 April 2024, the Electoral Commissioner filed a submission opposing any variation to the costs order in paragraph 5 of the orders made on 26 March 2024.

5    For the following reasons, I refuse Mr McQuestin’s application to vary the costs order.

Mr McQuestin’s submissions

6    Mr McQuestin submitted that he is properly to be regarded as the successful party in the proceeding. He submitted that there were two matters on which the parties joined issue, namely the number of contraventions that had occurred and the appropriate penalty in respect of each contravention.

7    As to the number of contraventions, Mr McQuestin argued that the parties’ positions were clear from an early stage of the proceeding, in that Mr McQuestion informed the Electoral Commissioner that he would consent to three declarations in respect of the three electoral advertisements by correspondence on 26 September 2023. Mr McQuestin submitted that much of the work in the proceeding was then devoted to that issue, including argument at the hearing. Mr McQuestin was ultimately successful on that issue.

8    As to quantum of penalty, Mr McQuestin argued that the Electoral Commissioner maintained a submission that the Court would be justified in imposing the maximum penalty, and sought a penalty in the range of $100,000 to $150,000. That submission was not accepted by the Court.

9    Mr McQuestin further submitted that he made offers to resolve the matter, including offers to agree to a joint submission on penalty that were very close to the penalty ultimately imposed by the Court. On 9 November 2023, Mr McQuestin offered to agree a total penalty of $30,000 on the basis of three contraventions. That offer was not accepted. On 29 January 2024, Mr McQuestin again attempted to settle the matter by offering to agree to a penalty of $54,301.14. The Electoral Commissioner made a counter-offer on the basis of an agreed penalty of $70,000.

10    Mr McQuestin submitted that the Electoral Commissioner’s submissions to the Court concerning the number of contraventions and the appropriate penalty were unreasonable, particularly in light of the offers of settlement that had been made by Mr McQuestin. Mr McQuestin argued that, in these circumstances, and given that he was successful in the two matters upon which the parties had joined issue, the appropriate costs order is that the Electoral Commissioner pay his costs of the proceeding.

The Electoral Commissioner’s submissions

11    The Electoral Commissioner submitted that the starting point is that a successful litigant is generally entitled to an award of costs. The Court may depart from the usual rule if the applicant has not obtained all the relief sought, if a party has not succeeded on all bases (factual or legal), or if there has been some disentitling conduct on the part of the successful party.

12    The Electoral Commissioner submitted that he succeeded in the proceeding, in that he obtained declaratory relief and a pecuniary penalty order, and it follows that the starting point is that he is entitled to the usual costs order in his favour. The Electoral Commissioner submitted that there is no reason to depart from the usual costs order.

13    The Electoral Commissioner argued that the primary matter at issue in the proceeding was the appropriate penalty. Although the $40,000 penalty was lower than the Electoral Commissioner sought, it was higher than that proposed by Mr McQuestin at the hearing, being either no penalty or a penalty of no more than $20,000. Further, although the Court did not accept the Electoral Commissioner’s submissions about the number of contraventions, this did not ultimately affect the quantum of the penalty imposed (primary judgment at [31]). As to the offers made by Mr McQuestin before the hearing, the Electoral Commissioner submitted that the only offer made by Mr McQuestin that would have reflected a ‘better’ outcome for the Commissioner was the offer made on 29 January 2024, the day before hearing. At that point, had the offer been accepted, it would still have been necessary to have a final hearing for the Court to consider and determine the appropriate declarations and penalties and to address the number of contraventions. It was not unreasonable for the Electoral Commissioner to reject the offer, particularly having regard to the fact that there would have been no substantial cost or time saved (for the parties or the Court) had it been accepted.

14    The Electoral Commissioner further submitted that Mr McQuestin’s conduct in the proceeding (in particular, his delay in making appropriate admissions) caused the Commissioner to incur additional and unnecessary costs. Although the proceeding was filed on 15 February 2023, Mr McQuestin continued to dispute liability with respect to the three forms of advertisement until 26 September 2023 and only made full admissions as to liability during the course of the hearing (including as to non-compliance with s 11(3)(a) and (d) of the Authorisation Determination).

Consideration

15    The relevant principles with respect to the award of costs by the Court are well known. The Court’s discretion to award costs under s 43 of the Federal Court of Australia Act 1976 (Cth) is broad. The discretion must be exercised judicially, consistently with the purpose of the power and taking account of the relevant facts and circumstances of the litigation: Kazar v Kargarian (2011) 197 FCR 113 at [4] per Greenwood and Rares JJ. The purpose of an order is to compensate the successful party, not to punish the unsuccessful: Latoudis v Casey (1990) 170 CLR 534 at 543 per Mason CJ, 563 per Toohey J and 567 per McHugh J. Usually, the discretion to award costs is exercised in favour of a successful party: Oshlack v Richmond River Council (1998) 193 CLR 72 at [35] per Gaudron and Gummow JJ, [66]-[67] per McHugh J and [134] per Kirby J; Foots v Southern Cross Mine Management Pty Ltd (2007) 234 CLR 52 at [25] per Gleeson CJ, Gummow, Hayne and Crennan JJ. A successful party may be deprived of a proportion of its costs, or even required to pay costs to the other party, if the successful party succeeded only upon a portion of its claim, or failed on issues that were not reasonably pursued, or where the result of the litigation might be described as mixed: Ruddock v Vadarlis (No 2) (2001) 115 FCR 229 at [11]ff per Black CJ and French J; Queensland North Australia Pty Ltd v Takeovers Panel (No 2) (2015) 236 FCR 370 at [11] per Dowsett, Middleton and Gilmour JJ. However, the mere fact that a court does not accept all of a successful party’s arguments does not make it appropriate to apportion costs on an issue by issue basis: Australian Trade Commission v Disktravel [2000] FCA 62 at [3]-[4] per French, Kiefel and Mansfield JJ; The State of Victoria v Sportsbet Pty Ltd (No 2) [2012] FCAFC 174 at [8] per Emmett, Kenny and Middleton JJ; Firebird Global Master Fund II Ltd v Republic of Nauru (No 2) [2015] HCA 53; 327 ALR 192 at [6] per French CJ, Kiefel, Nettle and Gordon JJ.

16    I do not accept Mr McQuestin’s submission that he should be regarded as the successful party in the proceeding. The Electoral Commissioner succeeded in his application, establishing that Mr McQuestin had contravened s 321D(5) of the Electoral Act in the manner alleged. The Electoral Commissioner obtained the relief he sought, comprising declarations of contravention and the imposition of pecuniary penalties. The Electoral Commissioner fulfils an important public role in enforcing the Electoral Act and is entitled to receive his costs of the proceeding.

17    As the parties acknowledged, the Electoral Commissioner was unsuccessful in its contention concerning the number of contraventions of the Electoral Act that had occurred in this case. Nevertheless, the contention advanced by the Electoral Commissioner had a reasonable basis and was fairly arguable. The argument had been previously rejected by the Court in Electoral Commissioner of the Australian Electoral Commission v Laming (No 2) [2023] FCA 917, but the Electoral Commissioner has appealed that decision. There was nothing inappropriate in the Electoral Commissioner maintaining the argument in the present proceeding. I would not vary the usual costs order in this case merely because the Electoral Commissioner was unsuccessful on that argument.

18    The quantum of penalty to be imposed by the Court was in dispute at the hearing. The Electoral Commissioner sought a penalty within the range of $100,000 to $150,000 while Mr McQuestin argued that, in the circumstances of this case, a pecuniary penalty should not be imposed. The Court imposed an aggregate penalty of $40,000. Mr McQuestin contends that the Electoral Commissioner should not receive the costs of the hearing because Mr McQuestin had offered to agree to a penalty in an amount similar to that ultimately imposed by the Court. On 9 November 2023, Mr McQuestin offered to agree to a penalty of $30,000 and, on 29 January 2024, Mr McQuestin offered to agree to a penalty of $54,301.14. The offer made by Mr McQuestion on 29 January 2024 referred to the principles in Calderbank v Calderbank [1975] All ER 333.

19    While the Calderbank principles are generally applicable to proceedings brought by statutory bodies enforcing statutory obligations (see for example Australian Competition & Consumer Commission v Universal Music Australia Pty Limited (No 2) [2002] FCA 192), the principles are necessarily affected by the nature of such proceedings. Proceedings for the imposition of a pecuniary penalty are not “ordinary civil litigation” (Australian Competition and Consumer Commission v Baxter Healthcare Pty Ltd [2005] FCA 860 at [8] per Allsop J) and are not as “amenable to commercial settlement as ordinary civil litigation” (Australian Competition and Consumer Commission v Colgate-Palmolive Pty Ltd (No 5) [2021] FCA 246 at [16] per Wigney J) , not least because the parties’ agreement to the quantum of penalty cannot bind the Court. Even if the parties agree to a quantum to be proposed to the Court, it remains necessary for the parties to adduce evidence and advance submissions in order to satisfy the Court that a penalty in the quantum proposed is appropriate.

20    In the present case, the Court imposed a penalty in a quantum that exceeded the offer made by Mr McQuestin on 9 November 2023. While the penalty ultimately imposed was less than that proposed by Mr McQuestin on 29 January 2024, I do not consider that any variation should be made to the costs order on that account. The offer was made the day before the hearing and, even if the Electoral Commissioner had accepted the offer, it would have been necessary for the hearing to proceed to enable the Court to make relevant findings of fact and determine the appropriate penalty to be imposed. There would have been no material saving in time or cost.

21    For the foregoing reasons, I consider that the appropriate costs order in the present case is that Mr McQuestin pay the costs of the Electoral Commissioner. I therefore refuse Mr McQuestin’s application to vary the costs order made on 26 March 2024. The Electoral Commissioner should also receive his costs of this application.

Associate:

Dated:    26 June 2024