Re Garry Francis Bullock; John Skilbeck and Graham James Harkness v the Federated Furnishing Trades Society of Australiasia; L Kyriacou; A Findlay; R Shugg; Alvonne Nominees Pty Ltd (Trading As AF Carpet Distributors); Colony Carpets Pty Ltd [1985] FCA 48 (26 February 1985)

FEDERAL COURT OF AUSTRALIA

Re: GARRY FRANCIS BULLOCK; JOHN SKILBECK and GRAHAM JAMES HARKNESS
And: THE FEDERATED FURNISHING TRADES SOCIETY OF AUSTRALIASIA; L. KYRIACOU; A.
FINDLAY; R. SHUGG; ALVONNE NOMINEES PTY. LTD. (Trading as A.F. CARPET
DISTRIBUTORS); COLONY CARPETS PTY. LTD.; R.G. CARPET AGENCIES PTY. LTD.;
CARPET WHOLESALERS (VIC.) PTY. LTD.; OTTO FLOORS PTY. LTD.; V.E. MACKEY & CO.
PTY. LTD.; JASON CARPETS COMMERCIAL PTY. LTD. and GURIAN PTY. LTD. (Trading as
MYER TEALE)
No. VG309 of 1984
Federal Court - Costs
58 ALR 373 / 5 FCR 476
11 IR 44

COURT

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Smithers(1), Sweeney(1) and Woodward(1) JJ.

CATCHWORDS

Federal Court - practice and procedure - costs certificate - costs of unsuccessful respondent - discretion to grant - relevant considerations.

Federal Proceedings (Costs) Act 1981 s.6

Costs - Costs of respondents on appeal - Application for costs certificate by unsuccessful respondents - Whether the court should exercise its discretion to grant such certificate - Principles to be applied in the exercise of such discretion - Relevant factors to be taken into account - Federal Proceedings (Costs) Act 1981, s 6. In an application for the grant of a costs certificate pursuant to s 6 of the Federal Proceedings (Costs) Act 1981 (the Act) by the respondents, being the unsuccessful respondents in an appeal relating to the grant of interlocutory injunctions based on claims made pursuant to the trade practices legislation,

Held (per curiam): (1) The discretion vested in the court to grant to an unsuccessful respondent a costs certificate pursuant to s 6 of the Act is an unfettered discretionary power to be exercised in accordance with proper principles. Without fettering this discretion in any way, the court would look to the Act for guidance in ascertaining the relevant factors. Here, the Act appeared to aim at giving relief where the decision turned on a question of law and where that question of law might at least have reasonably been resolved in different ways so that the unsuccessful respondent had suffered owing to the doubt about which was the correct rule of law to be applied.

Richards v. Faulls Pty Ltd (1971) WAR 129, referred to with approval.

There is no presumption that where a question of law is involved an unsuccessful respondent who has not been responsible for the error or whose request is in no way unmeritorious should be granted such a certificate.

(2) Although in this case a question of law was involved, the court would not exercise its discretion to grant the certificate because of two significant and relevant factors, which were:

(i) the doubt relating to the correct rule of law to be applied relating to interlocutory injunctions had given to the respondents a positive advantage, namely a period of three weeks between the trial and the appeal in which to freely pursue their campaign against the applicants;

(ii) the respondents had elected to take a risk in not placing any evidence before the trial judge, choosing instead to rely upon legal argument relating to the adequacy of the applicant's cause of action, such legal argument in this case being very debatable and likely to be challenged on appeal if successful.

Di Battista v. Motton (1971) VR 565; Gurnett v. Macquarie Stevedoring Co Pty Ltd [1955] HCA 63; (1956) 95 CLR 99, referred to.

HEARING

Melbourne, 1984, December 12-17; 1985, February 26. 26:2:1985
APPLICATION

Application by unsuccessful respondents to an appeal for a costs certificate pursuant to s 6 of the Federal Proceedings (Costs) Act 1981.

A. M. North, for the respondents.
Cur adv vult

Solicitors for the respondents: Ryan Carlisle Needham Thomas.
GFV

ORDER

A costs certificate be refused.

Application refused

DECISION

In this matter the unsuccessful respondents to an appeal have sought a costs certificate from the Court pursuant to s.6 of the Federal Proceedings (Costs) Act 1981 (the Act). That section, so far as is relevant for present purposes, reads:

"(1) Subject to this Act, where a Federal appeal
succeeds on a question of law, the court that
heard the appeal may, on the application of a
respondent to the appeal, grant to the respondent
a costs certificate in respect of the appeal.

(2) ...

(3) The certificate that may be granted under
sub-section (1) or (2) by a court to a respondent
to a Federal appeal is a certificate stating that,
in the opinion of the court it would be
appropriate for the Attorney-General to authorize
a payment under this Act to the respondent in
respect of -

(a) the costs incurred by the respondent in
relation to the appeal; ..."

2. There is no doubt that the appeal in the present case was a Federal appeal, within the meaning of the Act, and it did succeed on a question of law. It is equally clear that the grant of a certificate is a matter for the discretion of the Court and s.13 of the Act provides that no appeal lies from a refusal to grant a certificate.

3. In our view the discretion of the Court is unfettered, once the respondent shows that the grant of a certificate is within the power of the Court, though it must of course be exercised judicially and on proper grounds.

4. The respondents have argued that there is a presumption in favour of the grant of a certificate once the pre-requisites are satisfied. It was said that a certificate should only be refused if the respondents have been in some way responsible for the error of the Court below - by failing, perhaps, to draw attention to a relevant statute or the over-ruling of an apparently binding precedent - or the request is for some other reason unmeritorious.

5. In our view there is no such presumption. The unsuccessful respondent must satisfy the Court (or a member of it sitting in Chambers - see s.12) that it is appropriate in all the circumstances for a certificate to be granted, and the circumstances which could properly influence that decision are many and various. One matter to be borne in mind in all cases is that it is the taxpayer who is being asked to bear the cost, up to a maximum of $3,000 in this Court, of the error of law which has occurred. This fact may produce a different emphasis in decisions under this Act from those reached in jurisdictions where the payments are made from a special fund which is automatically contributed to by all litigants through their payment of court fees.

6. However the basic principles to be applied in the exercise of discretion will not vary on this account and we are confirmed in the view we take by the judgment of the Full Court of the Supreme Court of Western Australia in Richards v Faulls Pty Ltd (1971) WAR 129 at 137-8. In construing similar legislation the Court said,

"The question is whether the power which is
conferred upon the Court should be
exercised. It is a discretionary power and
the grant of the certificate follows upon
and requires the exercise of the discretion.
Hence it is a discretion to grant; it is
not a discretion to refuse. Hence it is not
the position, adapting to this case the
words of the joint judgment of Latham CJ
Rich and Dixon JJ in Main v Main [1949] HCA 39; (1949), 78
CLR 636, at p.643, that once facts are
proved bringing the case within s.10(1) a
certificate should be granted unless the
court thinks on discretionary grounds that
the certificate should be withheld; on the
contrary, the unsuccessful respondent to an
appeal must show some ground calling for the
exercise of the discretion in his favour and
he does not do this merely by showing that
the appeal has succeeded on a question of
law: Reeve v Fowler, (1965) NSWR 110, per
Walsh J at p. 111. Of course the nature of
the case may in itself show that a
certificate should be granted and not
infrequently the court is able to act
without further evidence or argument.

It is axiomatic that when a discretion is
given to a court or a judge the discretion
must be exercised judicially, that is to say
according to proper principles: indeed one
of the comparatively few grounds upon which
a discretionary decision can be successfully
challenged on appeal is that there was in it
some error of principle. When a new
discretion is created by statute one looks
primarily to the statute itself for
guidance, either express or implied, as to
the principles upon which the discretion is
to be exercised, that is to say what factors
should be taken into account, or, on the
other hand, put aside as irrelevant when
reaching a decision. Some of the
difficulties arising under this Act are
illustrated in the judgment of Moffitt J in
Acquilina v Dairy Farmers Co-Operative Milk
Co. Ltd. (No. 2), (1965) NSWR 772, where his
Honour considered in detail the
corresponding legislation of New South
Wales. The intention of the Act is clearly
enough to relieve a litigant from the burden
of the costs of an appeal in a case where he
has obtained a favourable decision but has
lost it on appeal because the court below
erred on a question of law; the purpose of
the Act is not, however, to promote
litigation, nor to provide legal aid in a
broad sense out of the Fund: see per
Maguire J in Pataky v Utah Construction Pty.
Ltd., (1966) 1 NSWR 698; 84 WN (Pt. 1) (NSW)
201, at p. 208. It would be wrong for this
Court to say anything which could be taken
as fettering the unfettered discretion given
by the Act, but nevertheless it appears to
us that in broad terms the Act is aimed at
giving relief in cases where the decision
turns on a question of law, as contrasted
with the facts of the particular case, where
that question of law might at least
reasonably be resolved in different ways, so
that in a sense the unsuccessful party may
be thought to have suffered some
'misfortune' owing to a doubt about the
correct rule of law to be applied."

7. In the present case the unsuccessful respondents are a trade union and its officers who persuaded the Court to discharge an interim injunction and not grant an interlocutory injunction which would have had the effect of preventing them from trying to force carpet suppliers to cease contracting with the self-employed carpet-layers they had normally used, and to use only their own employees - who would for the most part have had to be engaged for the purpose.

8. In the course of argument before the learned Judge hearing the application, counsel for the respondents persuaded his Honour not to follow a recent Full Court decision which had overturned a previous decision of his Honour's concerning the appropriate test to apply to applications for interlocutory injunctions. They urged his Honour to persist in his adherence to an earlier and apparently divergent line of authority. This was a bold submission but it was certainly not "a submission by a party which should not have been made", to use the words of Winneke CJ in Di Battista v Motton (1971) VR 565 at 572.

9. There is, however, a significant factor in the present case which points towards the exercise of the Court's discretion against the respondents. This is that the respondents obtained a positive advantage, and the applicants suffered a corresponding disadvantage, by reason of the erroneous decision of the Court hearing the application. Between the date of that judgment and the time when this Court was able to restore the position which had previously obtained, the respondents had a period of three weeks in which they were permitted to pursue their campaign against the applicants without fear of any legal sanction.

10. Another factor which, in our view, is relevant to the exercise of discretion is that the respondents elected to place no evidence before the Court hearing the application. They relied entirely upon arguments, first, that to obtain interlocutory relief the applicants had to establish a probability that they would succeed in an ultimate hearing and, secondly, that their application disclosed no cause of action which, as a matter of law, would probably succeed. This course "involved an obvious risk", to adopt the words of Dixon CJ in Gurnett v The Macquarie Stevedoring Co. Pty. Ltd. [1956] HCA 29; (1956) 95 CLR 106 at 113, not unlike the risk to which the Chief Justice was referring in that case, namely persuading a trial judge to take a plaintiff's case from the jury. In that case, which involved broadly similar NSW provisions for costs certificates, his Honour said,

"I cannot see why, because in the result it turned
out badly, the defendant should have a claim upon
the discretion of the Court to certify for the
recoupment of costs out of a public fund."

11. So, in the present case, we can see no good reason why the taxpayer should be asked to subsidise the legal costs of litigants who, rather than put all their cards on the table, deliberately elected to rely upon legal arguments which were clearly very debateable and, if successful, would be highly likely to be challenged on appeal.

12. For those reasons a costs certificate will be refused.