Federal Court of Australia

Shafran v Secretary of the Department of Veterans' Affairs (Costs) [2025] FCA 512

ORDERS

THE COURT ORDERS THAT:

1.    The applicant pay the first and second respondents' costs of and incidental to the amended application dated 12 February 2021, the interlocutory application dated 4 January 2021 and the interlocutory application dated 25 May 2022, such costs to be assessed by a registrar of this Court on a lump sum basis.

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

REASONS FOR JUDGMENT

BANKS-SMITH J:

1    These reasons address the costs orders that should be made following the summary dismissal of Mr Shafran's claim as determined in Shafran v Secretary of the Department of Veterans' Affairs [2024] FCA 621.

2    Where a veteran applies for an increase in their pension under the Veterans Entitlements Act 1986 (Cth), the Secretary of the Department of Veterans' Affairs investigates and provides materials to the Repatriation Commission, which has broad powers to receive evidence. The Commission makes a decision on the application. There is a right of review of the Commission's decision to the Veterans' Review board.

3    Where a veteran seeks a review by the Board, s 137(1)(a) of the Act requires the Secretary to prepare a report referring to the evidence under the control of the Department that is relevant to the review. The report is provided to the applicant for comment, and then all relevant documents are provided by the Secretary to the Board for it to carry out the review.

4    In Shafran, Mr Shafran claimed that 'evidence' where used in s 137(1)(a) of the Act was to be construed as meaning, in effect, only evidence that would otherwise be admissible in a court proceeding, and in accordance with the terms of the Evidence Act 1995 (Cth) or by application of the rules of evidence at common law. Amongst other relief, Mr Shafran sought a declaration to this effect.

5    At its heart, Mr Shafran's complaint was that opinions from 'contracted medical advisers' should not have been included in the materials provided by the Secretary as they were not 'evidence' within the meaning of s 137(1)(a) of the Act.

6    Mr Shafran's argument failed. I found that 'evidence' where used in that provision was to be understood broadly, having regard to a number of matters, including that: the legislation operates in the realm of administrative decision-making; the word 'evidence' in the relevant context was not to be understood as meaning 'admissible evidence'; and that veterans might seek to provide a range of documents in support of their claims that should not be limited by an artificially narrow view of the material to which the Board might have regard: Shafran at [103]-[131].

7    I concluded that Mr Shafran's arguments were untenable and granted the application brought by the first and second respondents for summary dismissal.

8    The orders included the following costs orders:

3.    Subject to order 4, the applicant pay the first and second respondents' costs of and incidental to the amended application dated 12 February 2021, the interlocutory application dated 4 January 2021 and the interlocutory application dated 25 May 2022, such costs to be assessed by a registrar of this Court on a lump sum basis if not agreed.

4.    If the parties seek any other costs order with respect to the proceedings, a minute of any proposed orders should be provided to Chambers within 14 days.

9    There then followed a protracted process whereby Mr Shafran requested a number of extensions of time in which to address costs orders that might be made pursuant to order 4, extensions which were consented to by the respondents. In the end Mr Shafran procured pro bono assistance on the question of costs, and his solicitor filed an affidavit, which also included submissions, on 14 February 2025. Responsive submissions were filed by the second respondent on 14 March 2025.

10    The parties have communicated about costs, including by open offers, but no agreement has been reached. The second respondent relied on an affidavit of their solicitor, Mr Burgess, which provided a Costs Summary pursuant to the Costs Practice Note (GPN - Costs), and which included a 35% reduction of the total solicitors' fees incurred.

11    Mr Shafran made certain complaints about the Costs Summary. To the extent there are issues about the form and content of the Costs Summary, subject to what is said below, they may be addressed generally with and by a registrar allocated to determine the costs on a lump sum basis in accordance with my orders.

12    It is appropriate that I address one of the submissions made on behalf of Mr Shafran, and that is the extent to which the costs orders should have regard to the 'public interest'.

13    Mr Shafran noted by his solicitor's affidavit that I referred in my reasons to his concern to seek 'judicial clarity on the statutory interpretation of s 137' (at [30] of Shafran). He relied on this in support of his submission that any costs should be reduced to take into account the public interest involved in the application.

14    He also submitted that the respondents' counsel at one point during the hearing observed that a decision giving a reasoned interpretation of s 137 might be in the public interest. To be fair, the submission should be viewed in context:

And the consequence of that [a summary dismissal rather than proceeding to trial] would be that if there is some issue about whether the report is still – is compliant or not, then that is something that could be perhaps even resolved by consent after the parties had an opportunity to see your Honour’s decision whichever way it might fall on the interpretation issue, and there’s also a countering public interest which is that it is, ultimately, inappropriate for the parties and the court and also, indirectly, the public to be put through the cost of protracted proceedings if those are not necessary. So if your Honour is – were to hand down a decision that would give a reasoned interpretation of section 137, that is something that would, we would say, be in the public interest.

15    In other words, the public interest emphasised by counsel for the respondent was the avoidance of a protracted hearing in circumstances where my reasons on a summary dismissal application should in any event provide guidance as to the meaning of s 137(1)(a).

16    Regardless, Mr Shafran submitted that Mr Burgess, and so the Court, was obliged in the Costs Summary to take into account the public interest nature of the application in accordance with the guidelines published by way of the Costs Practice Note.

17    Part B of Annexure A to the Costs Practice Note provides that the deponent of the costs affidavit should succinctly set out certain information 'to the extent relevant' in the Costs Summary. One of those matters (para 1 (l)) is 'any special features of the case which may impact the assessment of costs or any other relevant and important matters not mentioned above'.

18    The Court has a broad discretion under s 43(2) of the Federal Court of Australia Act 1976 (Cth) when determining appropriate costs orders. This discretion must be exercised judicially: Summers v Repatriation Commission (No 2) [2015] FCAFC 64 at [14] (Kenny, Murphy and Beach JJ).

19    In the ordinary course the discretion to award costs is exercised in favour of a successful party: Oshlack v Richmond River Council (1998) 193 CLR 72 at [35] (Gaudron and Gummow JJ), [66]-[67] (McHugh J), [134] (Kirby J); Foots v Southern Cross Mine Management Pty Ltd [2007] HCA 56; (2007) 234 CLR 52 at [25] (Gleeson CJ, Gummow, Hayne and Crennan JJ); and Northern Territory v Sangare [2019] HCA 25; (2019) 265 CLR 164 at [25].

20    The authorities that address the 'usual rule' in the context of public interest litigation are usefully considered by Bennett J in Corcoran v Virgin Blue Airlines Pty Ltd [2008] FCA 864 at [8]-[10] and [45]-[46]. As Bennett J observed at [10]:

There is no error in taking into account in a decision whether to award costs matters such as the absence of personal gain on the part of the applicants, the fact that a significant number of members of the public may be affected and that the basis of the challenge is arguable and raises 'significant issues' as to the interpretation and application of statutory provisions (Oshlack v Richmond River Council (1998) 193 CLR 72 at [20] per Gaudron and Gummow JJ, at [49] per McHugh J).

21    However, the characterisation of proceedings as being in the public interest is also not by itself a sufficient condition to warrant a departure from the ordinary rule as to costs: Racing New South Wales v Fletcher (No 2) [2020] NSWCA 67 at [12] (Bell P, Meagher and Payne JJA). The second respondent submits that the applicant’s case does not demonstrate a special feature of 'something more' that is required to justify departure from the rule: Local Democracy Matters Inc v Infrastructure NSW (No 2) [2019] NSWCA 118 at [8]-[9] (Leeming JA, Sackville AJA and Emmett AJA).

22    As observed in Racing New South Wales v Fletcher at [12]:

… It has been said that the process of characterising proceedings as in the 'public interest' is one which proceeds in a principled manner and looks to substance rather than form: People for the Plains Incorporated v Santos NSW (Eastern) Pty Ltd (No 2) [2017] NSWCA 157 at [35] (Meagher, Ward and Payne JJA). A number of factors are relevant to that question of characterisation including the nature of the proceedings, the relief sought and the motivations of the party bringing the proceedings. Furthermore the characterisation of proceedings as being in the 'public interest' is not by itself a sufficient condition to warrant a departure from the ordinary rule as to costs: People for the Plains Incorporated v Santos NSW (Eastern) Pty Ltd (No 2) at [40] (Meagher, Ward and Payne JJA); Corcoran v Virgin Blue Airlines Pty Ltd [2008] FCA 864 at [45] (Bennett J). To proceed otherwise would bring about absurdity because to the extent that there is a general public interest in the rule of law, every exercise of judicial power involves to some degree a question of public importance. As was said in Botany Bay City Council v Minister for Local Government (No 2) [2016] NSWCA 127 at [17] (Bathurst CJ, Beazley P and Ward JA):

[B]y the very nature of the adversarial common law tradition, the success of one party in proceedings will often, if not inevitably, entail a clarification of the law to some extent or in some respect. In that light, it is hard to see how clarification of the law could amount to a factor tending strongly in favour of a departure from the usual rule as to costs.

23    In People for the Plains Incorporated v Santos NSW (Eastern) Pty Ltd (No 2) [2017] NSWCA 157 at [40] (Meagher, Ward and Payne JJA), the Court said:

Even assuming the proceedings were properly to be characterised as amounting to 'public interest litigation' (and there is scope for debate about this), as already noted that does not of itself warrant a departure from the general rule. As Bennett J observed (at [45]) in Corcoran v Virgin Blue Airlines Pty Ltd [2008] FCA 864, 'public interest and an arguable case are not necessarily decisive and not, of themselves, sufficient to prevent the usual costs order being made'. The appellant has not demonstrated that this appeal involved 'something more' than the mere fact of the litigation having the character of 'public interest litigation'.

24    As counsel for the respondent submitted during the summary dismissal hearing, even if it could be said that there was some general public benefit in determining the meaning of s 137(1)(a) of the Act, so much could be said of any number of matters before the courts which raise the construction of Commonwealth legislation, and which frequently affect a large number of people.

25    In this case, Mr Shafran pursued declaratory relief related to his application for review, but he also asked the Court to restrain the Board from reviewing the decision of the Commission on his application until it had received a compliant s 137 report from the Secretary. In short, Mr Shafran sought to have the Board provide a report that did not refer to the material from a medical adviser that Mr Shafran did not consider constituted evidence. He sought to have the review relating to the increase in his pension conducted absent information he apparently considered was prejudicial to the balance of the claim he sought to pursue. In other words, whilst the proceeding raised a question of statutory interpretation which was plainly of broader application, the application was brought in order to serve Mr Shafran's private interests. Furthermore, the basis of the challenge was not reasonably arguable. In the circumstances, I am not satisfied that the claim can properly be characterised as one brought in the public interest or that involves a question of general public interest.

26    Applying the principles, even if it were assumed in his favour that his application to this Court had the character of public interest, Mr Shafran would need to establish 'something more' in order for me to be satisfied in the exercise of my discretion that some departure from the ordinary costs rule is required. I am not satisfied that he has done so.

27    I accept that as a pensioner Mr Shafran may have some difficulty in meeting a costs order. However, he brought and pursued these proceedings cognisant of that risk. He has previous experience in litigation. In this regard I refer to Shafran v Repatriation Commission [2019] FCA 1833 (Logan J), a matter in which Mr Shafran had some success (in distinguishable circumstances where a broader question of the conduct of the Board was in issue), and to the costs reasons that followed in Shafran v Repatriation Commission (No 2) [2020] FCA 1072. I also note that in the summary dismissal application before me Mr Shafran was represented by solicitors and counsel.

28    Mr Shafran claimed that a costs order would place him under considerable financial pressure and I accept that is regrettably likely to be the case. However, the impecuniosity of an unsuccessful party is not, without more, a reason to deprive a successful party of its costs. There is nothing in the conduct of the respondents in this case, their position having been vindicated, that would direct a different result.

29    Having said that, it may be open to the registrar on structuring a costs order to provide for payment over time 'in order to avoid inflicting unnecessary hardship while at the same time improving the likelihood of compliance with the order': Northern Territory v Sangare at [32].

30    Finally, some generalised submissions were made as to rejection by the second respondent of an open offer of compromise on costs made by Mr Shafran. The offer was for significantly less than the amount set out in the Costs Summary and appeared to be contingent on successful crowd funding by Mr Shafran. It is unsurprising that the respondents rejected the offer.

31    Having taken into account the matters relevant to determining what costs orders should be made, including the matters raised on behalf of Mr Shafran, I remain of the view that the appropriate order is that Mr Shafran pay the first and second respondents' costs of and incidental to the amended application dated 12 February 2021, the interlocutory application dated 4 January 2021 and the interlocutory application dated 25 May 2022, such costs to be assessed by a registrar of this Court on a lump sum basis. I have not been persuaded to make any different order.

32    As is apparent from the above reasons, I do not consider that any public interest is a special feature of this application, and I do not consider it requires special consideration under the costs assessment regime. Having said that, the registrar tasked with carrying out the assessment may otherwise exercise their discretion as they consider appropriate, including by structuring the payment of the lump sum costs award over time, if that is a course Mr Shafran seeks to pursue.

33    I will now formally make orders. I will also request that the proceeding be allocated to a registrar to make all necessary directions and to carry out the costs assessment.

Associate:

Dated:    19 May 2025