Federal Court of Australia

Bedi v Edwards [2024] FCA 966

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 37AI of the Federal Court of Australia Act 1976 (Cth) (FCA Act), an interim non-publication order is made limiting disclosure of the reasons for judgment given on 30 August 2024 to the parties, the interested person, the legal representatives of the parties and the interested person, and Court staff until 5pm on 3 September 2024.

2.    By midday on Tuesday 3 September 2024, the parties and the interested person are to advise as to whether there are any passages in the reasons for judgment given on 30 August 2024 which they propose be redacted pursuant to s 37AH of the FCA Act and explaining the reasons why by reference to the grounds in s 37AG prior to publication of the reasons.

3.    By 4pm on Monday 2 September 2024, the Interested Person is to file and serve the following documents:

(a)    the affidavit of Katie Elizabeth Miriam Binstock made on 7 March 2024;

(b)    the Interested Person’s submissions in support of the costs application dated 13 March 2024 (costs submissions); and

(c)    the Interested Person’s submissions dated 13 November 2023 which are referred to in the costs submissions

4.    Pursuant to s 37AI of the FCA Act, an interim non-publication order is made limiting disclosure of the documents referred to in order 3 above to the parties, the interested person, the legal representatives of the parties and the interested person, and Court staff.

5.    Pursuant to s 37AI of the FCA Act, an interim non-publication order is made limiting the disclosure of the following documents to the parties, the interested person, the legal representatives of the parties and the interested person, and Court staff:

(a)    the affidavit of Ian Alexander Meagher, sworn 27 March 2024, including its annexure IAM1;

(b)    the respondents’ tender bundle dated 12 July 2024; and

(c)    the respondents’ submissions, filed 27 March 2024.

6.    The interlocutory application for non-publication orders under s 37H of the FCA Act is to be listed urgently in accordance with s 37Al(2) of the FCA Act on a date to be fixed before the Duty Judge.

7.    The respondents are to pay the costs of the Interested Party up to and including the hearing on 13 June 2023.

8.    There otherwise be no order as to the costs of the Interested Party and the respondents including on the application by the Interested Party for its costs.

THE COURT NOTES THAT:

9.    The parties and the interested person are to liaise with a view to reaching agreement on a timetable for the filing of any amended interlocutory application for non-publication orders under s 37H of the FCA Act and for the filing and service of evidence and submissions with respect to the interlocutory application for non-publication orders.

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

REASONS FOR JUDGMENT

PERRY J:

1.    INTRODUCTION

1    By an interlocutory application filed on 7 March 2024, the interested person, the Council of the Law Society of the ACT, seeks an order pursuant to s 43(1) of the Federal Court of Australia Act 1976 (Cth) (FCA Act) that the respondents pay the interested person’s costs of the respondents’ interlocutory application for suppression orders filed on 2 May 2023 in this proceeding (the suppression order application).

2    The first three respondents are partners of a law firm in Canberra, Maliganis Edwards Johnson (MEJ). The fourth respondent is the estate of a former partner and employee of MEJ who has passed away. The fifth respondent is the first, second and third respondents trading as MEJ. The substantive proceeding is an application under the Australian Human Rights Commission Act 1986 (Cth) by a former employee of MEJ seeking compensation for alleged unlawful discrimination.

3    For the reasons set out below, I consider that exceptional reasons have been established by the Law Society warranting an order that the respondents pay its costs up to and including the interlocutory hearing on 13 June 2023. However, I do not consider that it would be in the interests of justice to award costs against the respondents in favour of the Law Society thereafter. Given that the Law Society has been partially successful only on its application for costs, and the respondents have otherwise been successful on that application, I consider that there should be no order as to the costs of this application

2.    EVIDENCE

4    The Law Society read the affidavit of Ms Binstock, solicitor, affirmed on 7 March 2024.

5    The respondents read the affidavit of Ian Alexander Meagher, solicitor, affirmed on 27 March 2024. The respondents also tendered a bundle of five documents relating to the ACAT disciplinary proceedings:

•    ACAT Suppression Order dated 20 February 2024;

•    ACAT Suppression Order dated 11 April 2024;

•    ACAT Order dated 28 June 2024;

•    ACAT reasons dated 27 June 2024;

•    ACAT reasons dated 28 June 2024

6    Both the Law Society and the respondents handed up chronologies, which were received as aide memoires.

3.    INTERIM NON-PUBLICATION ORDERS

7    By the interlocutory application filed on 7 March 2024, the Law Society also seeks orders that:

•    the affidavit of Katie Elizabeth Miriam Binstock, affirmed 7 March 2024;

•    the costs submissions of the interested person, dated 13 March 2024; and

•    the submissions of the interested person dated 13 November 2023, which are referred to in the costs submissions;

be marked and treated as confidential, including for the purpose of r 2.32(3) of the Federal Court Rules of 2011 (Cth). These documents were provided by the Law Society by email on 13 March 2024 to the Chambers of Justice Kennett, who was the then docket judge, together with the submissions of the Interested Person dated 13 November 2023. In the email, the Law Society stated that, out of an abundance of caution, the affidavit and submissions would not be filed in the on-line registry in view of the application that these documents be treated as confidential.

8    In email correspondence dated 29 August 2024, the respondents also sought an interim non­ publication order, pursuant to s 37AI of the FCA Act with respect to:

•    the affidavit of Ian Alexander Meagher, sworn 27 March 2024, including its annexure IAMl;

•    the respondents’ tender bundle dated 12 July 2024; and

•    the respondents’ submissions, filed 27 March 2024

on the basis that these documents may give rise to the same concern as that intended to be addressed by the interim non-publication order sought by the Law Society for their court documents.

9    I am satisfied that it is appropriate to make interim orders under s 37AI of the FCA Act for the non-publication of the documents referred to at [7]–[8] above. The hearing of the applications for non-publication orders by the respondents and the interested party is to be listed on a date to be fixed, bearing in mind that such an application should be heard as a matter of urgency in accordance with s 37AI(2). As I will be taking long-service leave for a period after making these orders, it will be necessary for those applications to be heard by the Duty Judge.

4.    FACTUAL FINDINGS

10    On 17 February 2021, [CD-1] provided information to the Law Society concerning [EF-1]. On 15 March 2021, the Law Society resolved to make a complaint against [EF-1]. The Law Society commenced a disciplinary proceeding on 4 August 2022 against [EF-1] in the ACT Civil and Administrative Tribunal (ACAT) pursuant to s 419 of the Legal Profession Act 2006 (ACT) (the ACAT proceeding).

11    The substantive proceeding in this Court was instituted on 30 September 2022.

12    On 3 February 2023, the ACAT made orders, inter alia, for [EF-1] to provide a response and for the filing and service of evidence in the disciplinary proceeding. On 2 March 2023, the Law Society provided [CD-1] with their amended application in the ACAT proceeding. On 26 April 2023, the ACAT varied the timetable for the provision of [EF-1’s] response and the filing and service of evidence in the proceeding.

13    Prior to the variation by the ACAT, the Law Society’s solicitor wrote to [CD-1] on 1 March 2023 about the Law Society’s efforts to compile evidence in the disciplinary application, including to advise:

We will take instructions to provide you with a copy of the amended application to assist you with preparing your evidence after we provide you with a draft affidavit.

14    As I shortly explain, the Law Society placed particular weight on this letter in support of its application for costs.

15    On 2 May 2023, the respondents filed an application seeking, inter alia, ex parte suppression orders in this proceeding (Suppression Application). The Suppression Application was made without notice to the Law Society. The respondents submitted that the application was made after a letter was produced during a court-ordered mediation “under the cover of confidentiality... [that] was so scandalous if went beyond the bounds of what was proper into an abuse of process”. However, the letter itself was not in evidence before the Court.

16    Following the hearing of the ex parte application, on 29 May 2023, Kennett J made the following interim order on the respondents' application (Interim Suppression Order):

2.    Pursuant to s 37AI of the Federal Court of Australia Act 1976 (Cth) (FC Act), and subject to revocation by the Court, the following are not to be disclosed or published other than to the Court (subject to order 4 below), the applicant, the respondent and their legal representatives:

a.    the content or substance of the statements in paragraphs (a) to (r) contained in Annexure MEJl 1 to the affidavit of Deborah Rolfe AM dated 28 April 2023 (Rolfe Affidavit);

b.    paragraphs 23(3) and 31-53 inclusive of the Rolfe Affidavit; and

c.    all Annexures referred to in paragraphs 31-53 inclusive of the Rolfe Affidavit, including MEJ13 and MEJ14.

17    On 5 May 2023, [EF-1’s] solicitors notified the Law Society's solicitors that, as a consequence of the Interim Suppression Order, [EF-1] was unable to provide his response in the disciplinary proceeding. It was at this point that the Law Society first became aware of the Interim Suppression Order. The respondents, to whom this letter was not copied, submit that they did not become aware until June 2023 at the earliest, that the Interim Suppression Order would effectively operate as a stay on the ACAT proceeding.

18    On 9 May 2023, Kennett J made an order granting leave to the Law Society to appear as an interested person on the Suppression Application. His Honour also granted the Law Society access to the material subject to the suppression orders.

19    On 7 June 2023 at 1:17pm, the Law Society wrote to [EF-1] and respondents to propose that the parties agree to a variation of the Interim Suppression Order to allow disclosure of the suppressed material to the ACAT and to any person giving evidence, or who is contemplated to give evidence, in the ACAT proceeding. The Law Society further proposed that suppression orders be made in the ACAT proceeding. On the same day, at 6:14pm, the respondents advised that they consented to the Law Society’s proposed orders.

20    On 9 June 2023, [EF-1] notified the Law Society and respondents that he would seek a more limited variation of the Interim Suppression Order, the effect of which would be to enable [EF-1] to serve, but not file, his response to the disciplinary application in the ACAT.

21    At 8.57am on 13 June 2023, the respondents’ solicitor emailed the solicitors for [EF-1] and the Law Society attaching the orders which the respondents proposed to seek at the case management hearing listed for that morning. At 9.32am, the solicitors for the Law Society emailed the respondents’ solicitors and [EF-1] attaching the Law Society’s proposed amendments to [EF-1’s] proposed orders.

22    Later that morning, at the case management hearing before Kennett J, Mr D Moujalli for the Law Society submitted in support of the orders sought by the Law Society that:

The Law Society’s concern is that the order sought by Mr Notley's client [EF-1] is that it may allow some steps to be taken in the ACAT proceedings; however, it doesn’t contemplate the service of material in the ACAT proceedings. And the Law Society’s concern is we will eventually reach a point where that material - no further steps will be able to be taken in the ACAT proceedings in the sense that no further directions will be able to be made.

23    The respondents proposed that orders be made which were consistent with those proposed by the Law Society on 7 June 2023. Further, counsel for the respondents, Mr Brennan SC, submitted that this would have had “the benefit of not halting the ACAT proceeding”. He also submitted that “Order 1 is what the Law Society had indicated they sought, and our only interest is not getting in the way of the ACAT proceedings”.

24    [EF-1], on the other hand, specifically opposed variations in the terms proposed by the Law Society.

25    At the end of the case management hearing, Kennett J made orders in the terms proposed by [EF-1]. As a consequence, the Interim Suppression Order was varied so as to allow [EF-1] to serve on the Law Society (but not file in the ACAT or provide to witnesses) any documents that disclosed the matters the subject of the Interim Suppression Order.

26    On 22 June 2023, the parties to the ACAT proceeding attended a directions hearing and informed the ACAT that they could not comply with any directions in the ACAT proceeding due to the Interim Suppression Order. As a consequence, the ACAT vacated orders which had previously been made for the filing of a response by [EF-1] and evidence by the parties. The 22 June 2023 orders note that, until the Interim Suppression Order is revoked or varied, the parties cannot comply with directions for the filing of a response and evidence.

27    At a further case management hearing before Kennett J on 28 July 2023, the Law Society proposed that they participate in the final suppression order hearing and that, by agreement or submissions to the Court, they would attempt to seek a carveout. The Law Society contended, and I accept, that it adopted this approach because it assumed that the suppression order hearing would be heard shortly after 28 July 2023, given that evidence and submissions with respect to the Suppression Application were to be filed by 14 July 2023.

28    On 8 December 2023, following a case management hearing, Kennett J varied the Interim Suppression Order in the manner proposed by the Law Society so as to allow disclosure of the material subject to the Interim Suppression Order to the ACAT and to any witnesses for the purpose of the disciplinary proceeding. The Law Society submitted that this hearing was the turning point at which they effectively submitted to Kennett J, “Your Honour, enough is enough. We’ve waited. This issue hasn't been resolved. We need a carve-out”.

29    After the variation of the Interim Suppression Order, the Law Society sought orders in the ACAT proceeding for the filing of a response by [EF-1] and the preparation and filing of evidence by the Law Society and [EF-1]. On 5 February 2024, the ACAT made orders to that effect.

30    On 12 February 2024, [CD-1] applied to the ACAT for suppression orders in the disciplinary proceeding.

31    The final hearing of the Suppression Application in the Federal Court was listed on 20 February 2024 before Kennett J. However, on 19 February 2024, the following orders were made by consent:

1.    The interlocutory hearing listed on 20 February 2024 for hearing of [CD-1’s] Interlocutory Application filed 2 May 2023 (Primary Interlocutory Application) be vacated.

2.    The Primary Interlocutory Application filed 2 May 2023 be dismissed.

3.    The following orders be discharged:

a.    Orders 2 and 3 of the orders made on 2 May 2023; and

b.    Order 7 of the orders made on 8 December 2023.

32    On 20 February 2024, the ACAT granted [CD-1’s] application for suppression orders. On 8 April 2024, [EF-1] sought a variation to the ACAT suppression orders. The ACAT heard the application on 9 April 2024 and on 11 April 2024, varied the suppression orders. On 27 June 2024, the ACAT gave reasons for making the suppression orders.

33    On 24 May 2024, [EF-1] revived his variation application in the disciplinary proceedings before the ACAT. The ACAT heard the revived application on 12 June 2024. On 28 June 2024, the ACAT dismissed the revived application.

5.    RELEVANT PRINCIPLES

34    The relevant legal principles were not in issue and can be shortly stated.

35    Section 43 of the FCA Act confers a wide discretion on the Court to award costs. This discretion extends to awarding costs in favour of and against non-parties: Kelly v Willmott Forests Ltd (in liquidation) (No 6) [2019] FCA 745 at [8] (Murphy J); Knight v FP Special Assets Ltd (1992) 174 CLR 178 at 192; and O’Keefe v Hayes Knight GTO Pty Ltd [2005] FCA 1559 at [19]–[24].

36    In O’Keefe at [24], Nicholson J summarised the following principles relating to the awarding of costs to a non-party:

1.    Section 43 of the Federal Court of Australia Act is cast in sufficiently wide terms to enable the Court to make an order for costs in a proceeding for the benefit of a non-party.

2.    For such an order to be made there must be “costs” and they must be incurred in “proceedings before the Court”.

3.    Even if those requirements are met, the section requires an exercise of discretion in the particular circumstances in which the issue arises and the requirements of reason and justice.

4.    The making of an order for payment of costs in favour of a non-party will be exceptional and therefore must be treated “with considerable caution”.

5.    The nature of the relationship between the non-party and the litigation will be relevant.

37    The need to approach the exercise of discretion in favour of a non-party with particular caution was also emphasised, for example, by Emmett J in Fletcher and Barnet in the matter of Octaviar Ltd [2012] FCA 344 at [12], who stated that:

There is no doubt that the Court has power to order costs in favour of a non-party. Section 43 of the Federal Court of Australia Act 1976 (Cth) is cast in sufficiently wide terms to enable the Court to make an order for costs in the proceeding for the benefit of a non-party. Nevertheless, the making of an order must be treated with considerable caution. Regard must be had in each case to the particular circumstances and the requirements of reason and justice, and the nature of the relationship between the non­ party and the litigation will be relevant in that regard. In general, a special factor outside the ordinary and expected course of events, engendering a justifiable expectation, in the mind of a non-party, of compensation for costs, must exist before an order will be made for costs in favour of a non-party against a party....

(Citations omitted.)

6.    DISPOSITION OF THE COSTS APPLICATION

38    Applying the principles explained above, it is clear that the Court has power to award costs to the Law Society for its costs incurred in this proceeding. In her affidavit, Ms Binstock deposed to the retainer of solicitors and counsel to provide legal services to the Law Society in relation to the Suppression Application: Binstock affidavit at [34]–[40].

39    The question then arises as to whether this is an exceptional case in which costs ought to be awarded in the Law Society’s favour against the respondents.

40    The Law Society contends that there were exceptional circumstances warranting the award of costs in its favour against the respondents. In support of this submission, the Law Society relied, in particular, upon the following considerations:

(1)    The Interim Suppression Order had the effect of:

(a)    preventing a response from being filed in the ACAT proceeding;

(b)    limiting the evidence that the parties to the ACAT proceeding could prepare because of the inability to disclose matters to witnesses for the preparation of written evidence; and

(c)    preventing the parties to the ACAT proceeding from filing and serving their evidence.

(2)    The necessity for the Law Society to appear on the Suppression Application in order to progress the disciplinary proceedings without undue delay in the public interest created an exception to the prima facie position as to the costs of a non-party.

(3)    Absent intervention by the Law Society seeking variations to the Interim Suppression Order, the disciplinary proceeding in the ACAT could not progress, thereby adversely affecting the Law Society’s interests and the public interest.

(4)    The respondents sought the Interim Suppression Order without notice to the Law Society, despite their knowledge since 2 March 2023 of the existence of the disciplinary application as a consequence of which the respondents were on notice that the Suppression Orders would impact on the ACAT disciplinary proceeding.

(5)    The effect of the 19 February 2024 consent orders was that the respondents wholly abandoned the Suppression Application.

41    The respondents do not dispute that the Law Society has incurred costs in these proceedings. However, the respondents submit that the Law Society has failed to show “exceptional” circumstances justifying the award of costs in favour of a non-party. The respondents submitted that any significant costs incurred by the Law Society came about “through its own forensic choices”:

(1)    Thus, while at the case management hearing on 13 June 2023, the respondents specifically pressed for orders in the terms for which the Law Society contended, the Law Society's submissions “were limited, and expressed no more than a ‘concern’ with the orders proposed by [EF-1]. In truth, the Society was agnostic.”

(2)    Despite the fact that the Law Society, but not the respondents, was party to the ACAT proceedings, the Law Society did not submit to the Court that there was a risk that the ACAT might entirely vacate its timetabling orders as occurred in fact on 22 June 2023.

42    In my view, the Law Society should be awarded its costs up to and including the case management hearing on 13 June 2023, but not otherwise. I accept that there was a strong public interest in the ACAT proceedings being prosecuted and progressed as expeditiously as possible and that the Interim Suppression Order impeded that public interest. As a consequence, it was incumbent upon the Law Society to seek to be heard on the Interim Suppression Order, as it submitted. As counsel for the Law Society submitted, “[i]t simply was not an option for the [Law Society] to effectively stand by on the sidelines once the suppression orders had been made.” I also accept that the respondents, by reason of their knowledge of the ACAT proceedings, were sufficiently on notice of the possibility that the Interim Suppression Order, which they sought without notice to the Law Society on 2 May 2023, could have an impact on the expeditious progress of the ACAT proceedings. Cumulatively, those circumstances do, in my opinion, amount to exceptional circumstances warranting the award of costs in favour of the Law Society against the respondents to this extent.

43    In reaching this view, I have considered the submission by Mr Brennan SC for the respondents that “it would be unjust to order the respondents to pay any of the costs that were incurred after [their] unambiguous and immediate consent to the carve-out proposed, which was on 7 June…. Because, from that date, the [Law Society] can have been in no doubt that they would have no opposition from us to the very carve-out that they ultimately sought” (emphasis added). However, the fact that the respondents very properly accepted the force of the Law Society’s proposed variations to the Interim Suppression Order and actively contended for those variations to be made, did not obviate the need for the Law Society to appear at the case management hearing on 9 June 2023.

44    Furthermore, in deciding that the costs awarded to the Law Society should include the costs of the hearing on 13 June 2023, I should make it clear that I do not accept the submission that the Law Society made a forensic decision not to actively press for the Interim Suppression Order to be varied, in line with its proposed amendments, at the case management hearing on 13 June 2023. I consider, with respect, that that would not be a fair reading of the transcript. Rather, I accept that the Law Society was, as it submitted, actively advocating for the Interim Suppression Orders to be varied in the terms which it proposed and that the submissions made by the Law Society accorded with what it believed to be the true impact at the time of the Interim Suppression Order on the ACAT proceedings, in line with the duty of candour owed by lawyers to the Court.

45    However, in my view, it would be unjust to order the respondents to pay the Law Society’s costs after the case management hearing on 13 June 2023. This is because the respondents agreed with, and made submissions in support of, varying the Interim Suppression Order at the case management hearing in accordance with the position adopted by the Law Society. These variations were not made because of the position taken by the applicant.

46    Finally, I do not accept that any adverse inference can be drawn from the fact that the respondents consented to orders dismissing their final application for suppression orders on 19 February 2024 being the day before the final hearing of the Suppression Application. In particular, I accept the respondents’ submission that it is not open for the Court to infer from their “abandonment” (as described by the Law Society) of the application that the application should never have been made. As the respondents also submitted, “...in circumstances where this issue of the impact of this court’s orders on the progress of ACAT had become centre stage, one of the things to be inferred from that chronology is we made the judgement that the more efficient way of protecting our own interests was to have them directly protected in ACAT rather than here in the Federal Court].”

Associate:

Dated: 30 August 2024    

SCHEDULE OF PARTIES