Federal Court of Australia

Commissioner of the Australian Federal Police v Talwar [2026] FCA 489

ORDERS

THE COURT ORDERS THAT:

1.    The respondents pay the applicant’s costs on an indemnity basis.

2.    The matter be referred to a Registrar to determine an appropriate lump sum figure, in accordance with the reasons in this judgment.

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

REASONS FOR JUDGMENT

ABRAHAM J:

1    The Commissioner of the Australian Federal Police brought proceedings seeking a declaration that client legal privilege does not attach to material seized by the Australian Federal Police (AFP) at the offices of Snedden Hall & Gallop at 43-49 Geils Court, Deakin, Australian Capital Territory on 23 September 2022 (the material). At the time the material was seized, the respondents made a blanket claim of legal professional privilege. For reasons unnecessary to traverse in detail, by 20 December 2023 the AFP advised the respondents that they accepted the privilege claim in respect to the conveyancing files and did not propose to inspect the remaining files, but reserved their right to revisit that position. Suffice to say from the time of claiming legal professional privilege up until 20 December 2023, the evidence reflects the respondents’ repeated failure to respond to communications from the AFP. The AFP’s position changed on 11 April 2025 when it informed the respondents it intended to revisit its position in relation to the claim of legal professional privilege. These proceedings were commenced on 15 August 2025 in circumstances where the respondents had persisted in their failure to respond to communications by the applicant. There was a time imperative to reach a conclusion on the privilege claim, given the AFP wished to consider whether any of the material was relevant to an upcoming criminal proceeding against one of the respondents.

2    Case management hearings were held on 27 August 2025, 3 September 2025, 20 October 2025 and 20 November 2025 and various orders were made. Generally, these orders were not complied with by the respondents. Ultimately, the respondents informed the applicant they were not maintaining any claims of legal professional privilege and on 20 November 2025 the proceedings were dismissed with a cost order in favour of the applicant. The applicant seeks indemnity costs in a lump sum order. Although the respondents challenge costs on an indemnity basis, they accept a lump sum is appropriate.

3    It was agreed that the parties provide submissions and the matter be determined on the papers. The applicant also relies on an affidavit of Luke Anthony Crocker affirmed 12 December 2025 in support of an order for $62,952.20 in costs.

4    For the reasons below, I find an award for indemnity costs should be made. I refer this matter to a Registrar to determine the appropriate lump sum figure for these costs.

Consideration

5    The Court has a broad power to award costs in proceedings, including indemnity costs, under s 43 of the Federal Court of Australia Act 1976 (Cth) (FCA Act). In exercising the discretion to award costs, s 37N(4) of the FCA Act requires the Court to take account of any failure by a party to comply with the overarching purpose of the civil procedure provisions, to facilitate the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible: see s 37M(1) FCA Act; Melbourne City Investments Pty Ltd v Treasury Wine Estates Limited (No 2) [2017] FCAFC 116 (Melbourne City Investments (No 2)) at [3].

6    The principles relevant to an award of indemnity costs are well-established. There can be no exhaustive list of the circumstances that may warrant the exercise of the discretion. An award of indemnity costs is not a punitive measure, but is designed for “compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the Court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs”: Hamod v New South Wales [2002] FCAFC 97; (2002) 188 ALR 659 at [20]; Melbourne City Investments (No 2) at [5].

7    In broad terms an order for indemnity costs requires that some special or unusual feature arises: Cirillo v Consolidated Press Property Ltd (formerly known as Citicorp Australia Ltd) (No 2) [2007] FCA 179 at [3]; Melbourne City Investments (No 2) at [5]; Seven Network Ltd v News Ltd [2009] FCAFC 166; (2009) 182 FCR 160; [2009] FCAFC 166 at [1102]; Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 801; (1993) 46 FCR 225 at 233.

8    The applicant submitted she commenced these proceedings after exhausting all available alternatives to resolve the ambit of the respondents’ legal professional privilege claims. The respondents consistently failed to respond to correspondence from the applicant seeking to resolve the claims, including when they were informed that the applicant intended to commence proceedings if they did not engage. They failed to engage with the applicant’s suggestion of Alternative Dispute Resolution. The applicant submitted once proceedings commenced, the respondents’ conduct continued to frustrate the process of resolving their claims and resulted in the applicant incurring costs beyond what should have been required. This included the respondents’ failure to comply with orders made throughout the proceedings, incurring delay and the need for additional case management hearings. Further, the applicant relied on the circumstances and context in which the respondents insisted on viewing original copies of the material. The applicant submitted she is entitled to recover 80% of general party-party costs prior to 21 November 2025 (beside costs for matters calculated by reference to Schedule 3 of the Federal Court Rules 2011 (Federal Court scale)), because the respondents’ conduct contributed significantly to the costs she incurred.

9    The respondents opposed an indemnity award, although in relation to their conduct, only directly addressed the applicant’s submission surrounding viewing the material. The respondents also submitted they asked for further information about the costs claimed, including an itemised invoice, but were not provided this. In particular, the respondents contend the bulk of the costs is an amount for $48,721.51 which they are unable to assess due to the lack of information, aside from observing this amount was not calculated by reference to the Federal Court scale.

10    I am persuaded an award for indemnity costs should be made.

11    First, it should not have been necessary to institute these proceedings. Once the applicant notified the respondents of her intention to revisit her position, the failure of the respondents to respond or otherwise engage in resolving the dispute led to these proceedings. The process was one the parties should have been able to undertake without the involvement of the Court.

12    Second, the respondents’ conduct during the proceedings was characterised by repeated non-compliance with court orders. This was without any proper explanation. This conduct led to the matter being relisted on occasions, delayed the resolution of the proceedings, and incurred additional cost. That the attendance of counsel for the respondents at the case management hearing on 20 October 2025 resulted in action thereafter in accordance with their undertaking to do so does not alter that.

13    I note there is a dispute as to the circumstances in which the material was viewed by the respondents. To put it neutrally there appears to have been some confusion resulting from the communications facilitating the respondents’ lawyers’ access to view the material. I do not attribute that to either party and, as such, do not rely upon the respondents’ conduct in that respect in assessing whether to award indemnity costs. That said, it is apparent on the evidence that the respondents have had at least some of the material on a USB stick in their possession since 2023. Given the long history of the matter, it is unclear why, if the respondents wished to view hard copies of the original material, that had not been attended to at a much earlier time. Delay in pursuing this request frustrated the resolution of the matter.

14    Given the above circumstances, I am persuaded an order for indemnity costs is justified.

15    As noted above, the applicant seeks and the respondents accept that a lump sum order ought to be imposed.

16    An issue arises in determining the amount. In particular, I am concerned as to the basis on which the applicant has calculated the largest of the amounts sought, and the period of time over which it is sought.

17    The costs are sought from 16 August 2024. According to the affidavit initiating this proceeding, this is when the AFP advised the Australian Government Solicitors (AGS) of its intention to revisit its acceptance of the legal professional privilege claims. From then until December 2024, the AGS advised the applicant. As explained above, in April 2025 the respondents were notified of the intention to revisit. Once instituted, the court proceedings were confined to case management hearings.

18    The respondents are correct that the largest amount sought, $48,721.52, is simply described as being for: various attendances on the applicant; preparation for and attending to instruct counsel appearing at case management hearings; preparing and reading correspondence to and from the respondents; and providing further advice to the applicant. The applicant’s indemnity claim is for 80% of that figure, being $38,977.22. There is scant information in relation to the figure. It is not on the Federal Court scale. I note only one component of the costs order sought, being the preparation of various documents for the proceedings, is assessed by the applicant on that scale. Further, a significant period of time covered by the order sought (16 August 2024 to April 2025) relates to advice being sought by and provided to the AFP on the topic of revisiting the privilege claim, in circumstances where the AFP had previously informed the respondents that the claim was accepted. The respondents did not interact with the applicant during that process. That is, the respondents were not put on notice that the applicant intended to revisit the claim until they were advised of this by the AFP on 11 April 2025. At that time, the AFP requested the respondents to identify whether the claims were maintained and the basis for them. It was the respondents’ failure to do so that led to the court proceedings. In those circumstances, in my view, the indemnity costs order should commence from 11 April 2025, the time when the respondents were notified of the AFP’s intention to revisit.

19    On the evidence before me, I cannot assess the appropriateness of the amount sought.

20    In those circumstances I refer this matter to a Registrar to determine the appropriate lump sum figure. It is to be determined in accordance with these reasons, but otherwise it is for the Registrar to decide how that process is conducted.

Associate:

Dated:    23 April 2026