Minister for Immigration & Multicultural Affairs v Shen [2002] FCA 899 (19 July 2002)

Last Updated: 23 July 2002

FEDERAL COURT OF AUSTRALIA

Minister for Immigration & Multicultural Affairs v Shen [2002] FCA 899

COSTS - application for costs against migration agent - applicant in primary proceedings unsuccessful - application for review in this Court filed by migration agent - application of no merit - power of Court to award costs against a non-party - discretionary issues - indemnity costs.

Federal Court of Australia Act 1976 (Cth), s 43

Migration Act 1958 (Cth), ss 276, 280(1), 314

Migration Agents Regulations 1988 (Cth), Schedule 2

Legal Profession Act 1987 (NSW), ss 43E, 48E, 48B

Judiciary Act 1903 (Cth), s 79

He v Minister for Immigration & Multicultural Affairs [2001] FCA 1167, referred to

H v Minister for Immigration & Multicultural Affairs [2002] FCAFC 18, referred to

Knight v F P Special Assets Ltd [1992] HCA 28; (1992) 174 CLR 178, applied

Re Sanchez; Ex parte Smits (1994) 49 FCR 326, cited

Yates v Boland & Ors [2000] FCA 1895, referred to

General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125, referred to

White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169, applied

Orchard v South Eastern Electricity Board [1987] QB 565, referred to

Re Wilcox; Ex parte Venture Industries Pty Ltd (No. 2) (1996) 72 FCR 151, applied

Yates Property Corp Pty Ltd v Boland [1997] FCA 760, referred to

Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225, cited

Myers v Elman [1940] AC 282, referred to

MINISTER FOR IMMIGRATION & MULTICULTURAL AFFAIRS v HAO RAN SHEN & ANOR

N389 of 2001

MADGWICK J

19 JULY 2002

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N389 of 2001

BETWEEN:	MINISTER FOR IMMIGRATION & MULTICULTURAL AFFAIRS APPLICANT
AND:	HAO RAN SHEN FIRST RESPONDENT GLOBAL TIME GROUP PTY LTD SECOND RESPONDENT
JUDGE:	MADGWICK J
DATE OF ORDER:	19 JULY 2002
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The notice of motion dated 21 August 2001 be allowed.

2. The first respondent pay 40% of the applicant's costs of proceedings N389 of 2001 and the applicant's costs of the notice of motion dated 21 August 2001 on a party and party basis.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N389 of 2001

BETWEEN:	MINISTER FOR IMMIGRATION & MULTICULTURAL AFFAIRS APPLICANT
AND:	HAO RAN SHEN FIRST RESPONDENT GLOBAL TIME GROUP PTY LTD SECOND RESPONDENT

JUDGE:	MADGWICK J
DATE:	19 JULY 2002
PLACE:	SYDNEY

REASONS FOR JUDGMENT

HIS HONOUR:

1 In this matter the applicant Minister seeks an order that the first respondent, Mr Shen, a registered migration agent, pay the Minister's costs of proceeding N389 of 2001 and the Minister's costs of this application, and/or that the second respondent, Global Time Group Pty Ltd ("Global"), a company which provided migration agent services and of which Mr Shen is a director, pay those costs. Mr Shen appeared personally. He was also granted leave to appear as an agent of Global.

Background

2 The notice of motion arose from the respondents' involvement in an unsuccessful application for judicial review of a decision by the Refugee Review Tribunal ("the Tribunal"). In the principal proceedings (N389 of 2001), Mr He, the applicant in that matter, unsuccessfully sought review of a decision of the Tribunal which affirmed the decision not to grant him a protection visa: see He v Minister for Immigration & Multicultural Affairs [2001] FCA 1167. The application for review was hopeless. Judgment was given against him on 9 August 2001. On that date, leave was granted to the Minister to make an application for costs against the present respondents. The Minister's application was filed on 21 August 2001.

3 Although Mr He had represented himself in the proceedings before me, his application for review was filed by Global. On the application form, Mr Shen's name appeared as the individual who filed the document with the NSW District Registry of the Federal Court.

4 The evidence of Mr Shen was that he attended upon Mr He, on 11 April 2001, at the Villawood Immigration Detention Centre after being approached by members of Mr He's family in Melbourne to provide assistance for reward. At the detention centre, Mr Shen discussed the decision of the Tribunal with Mr He and informed him that he did not believe that there was any reviewable error in the Tribunal's decision. Despite this, Mr He entered into a service agreement with Global for it to act as his migration agent and he signed a "Clause 2.17(b) Notice" which stated that he had been informed by Global that his application had no prospects of success and, knowing this, he still wished to proceed.

5 Mr Shen filled in the application to the Court for review of the Tribunal's decision, explained what was written in the application and had Mr He sign it. Mr Shen then filed the application for review in the Registry on 12 April 2001. No legal advice was sought prior to the filing of the application. As at the date the application was filed, 12 days had passed from the date of the Tribunal's decision; Mr He had 28 days to file an application for review from the deemed time he was notified of the Tribunal's decision, namely 9 April 2001: the legislative scheme that indicates this result was discussed in H v Minister for Immigration & Multicultural Affairs [2002] FCAFC 18.

6 Upon the filing of the application in the Court, Mr He was given access to the NSW pilot legal advice scheme funded by the applicant Minister's Department. Pursuant to that scheme, Mr He was put in touch with counsel who, following discussions with Mr He and upon consideration of the court book of relevant documents prepared by the Minister's solicitors and filed in the Court, provided him with legal advice but did not offer to represent Mr He at the hearing. Mr Shen's evidence was that Mr He contacted him and informed him that counsel would not represent him. At that point, Mr Shen became aware that the advice provided to Mr He by counsel was that there was no basis for establishing legal error on the part of the Tribunal. Mr Shen suggested to Mr He that an adjournment of the hearing be sought. Mr He instructed Mr Shen to seek an adjournment and the latter accordingly wrote to the Court on 26 June 2001 requesting an adjournment of the hearing date of 28 June 2001. The application for adjournment was heard on 28 June 2001, when Mr He represented himself. I granted the adjournment because Mr He claimed to have only become aware, not long before the hearing, that counsel would not appear and he said that he wished to obtain financial assistance from his parents in China in order obtain other legal representation. At the later substantive hearing, on 9 August 2001, Mr He was again unrepresented, and as noted earlier, Mr He's application was dismissed.

Relevant legislation

7 Section 43 of the Federal Court of Australia Act 1976 (Cth) ("the FC Act") relevantly provides:

"(1) Subject to subsection (1A), the Court or a Judge has jurisdiction to award costs in all proceedings before the Court...other than proceedings in respect of which any other Act provides that costs shall not be awarded.

...

(2) Except as provided by any other Act, the award of costs is in the discretion of the Court or Judge."

8 The relevant provisions of the Migration Act 1958 (Cth) ("the Migration Act") concerning the provision of immigration assistance were:

"276(1) For the purposes of this Part, a person gives immigration assistance if the person uses, or purports to use, knowledge of, or experience in, migration procedure to assist a visa applicant or cancellation review applicant by:

(a) preparing or helping to prepare, the visa application or cancellation review application; or

(b) advising the visa applicant or cancellation review applicant about the visa application or cancellation review application; or

(c) preparing for proceedings before a court or review authority in relation to the visa application or cancellation review application; or

(d) representing the visa applicant or cancellation review applicant in proceedings before a court or review authority in relation to the visa application or cancellation review application.

(2) For the purposes of this Part, a person also gives immigration assistance if the person uses, or purports to use, knowledge of, or experience in, migration procedure to assist another person by:

(a) preparing, or helping to prepare, a document indicating that the other person nominates or sponsors a visa applicant for the purposes of the regulations; or

(b) advising the other person about nominating or sponsoring a visa applicant for the purposes of the regulations; or

(c) representing the other person in proceedings before a court or review authority that relate to the visa for which the other person was nominating or sponsoring a visa applicant (or seeking to nominate or sponsor a visa applicant) for the purposes of the regulations.

(3) Despite subsections (1) and (2), a person does not give immigration assistance if he or she merely:

(a) does clerical work to prepare (or help prepare) an application or other document; or

(b) provides translation or interpretation services to help prepare and application or other document; or

(c) advises another person that the other person must apply for a visa; or

(d) passes on to another person information produced by a third person, without giving substantial comment on or explanation of the information."

Section 280(1) prohibits the giving of immigration assistance by a person who is not a registered migration agent.

9 Section 314 of the Migration Act provides for the making of a Code of Conduct ("the Code") for migration agents and subs (2) requires that a registered agent must conduct himself or herself in accordance with the Code. The Migration Agents Registration Authority established under the Act, has the power to caution, cancel or suspend the registration of an agent for failing to comply with the Code: s 303(h). The Code, which is in Schedule 2 to the Migration Agents Regulations 1988 (Cth), relevantly provides:

"1.9 The Code is not intended to displace any duty or liability that a migration agent may have under the common law, or the statute law of the Commonwealth, a State or a Territory, in relation to a matter covered by the Code. The provisions of the Code should be read in light of this principle.

...

2.1 A migration agent must always:

(a) act in accordance with the law and the legitimate interests of his or her client...

2.17 If an application under the Migration Act or the Migration Regulations is vexatious or grossly unfounded (for example, an application that has no hope of success) the agent:

(a) must not encourage the client to lodge the application; and

(b) must advise the client that, in the agent's opinion, the application is vexatious or grossly unfounded; and

(c) if the client wishes to lodge the application - must obtain written acknowledgment from the client of the advice given under paragraph (b)." (emphasis added)

10 Section 48E of the Legal Profession Act 1987 (NSW) ("the LP Act") relevantly provides:

"(1) In this section:

Fee includes any form of, and any expectation of, a fee, gain or reward.

general legal work means the work involved in drawing, filling up or preparing an instrument or other document that:

...

(d) relates to a legal proceeding.

...

(2) A person must not directly or indirectly do any general legal work...for a fee unless the person is a barrister or solicitor or unless the person is an incorporated legal practice and the work is done on its behalf by a barrister or solicitor.

(3) Any general legal work ... is taken to have been done for a fee if it relates to, or is done in conjunction with, other work done by the same person for a fee, unless it is proved that the general legal work ...:

(a) was done without the person who did it receiving any advantage or benefit; and

(b) was not offered as an inducement to do other work." (emphasis added)

Consideration

(i) limits on migration agents' legal rights to perform legal work

11 Although ss 276(1)(c), (d) and 280 of the Migration Act prohibit persons other than migration agents from assisting a visa applicant by preparing for proceedings before a Court or representing an applicant before a Court, they do not confer a right to perform legal work. State law governs the provision of legal work and s 79 of the Judiciary Act 1903 (Cth) provides that the laws of the State are, except as otherwise provided by the Constitution or the laws of the Commonwealth, binding on this Court. Section 48E(2) of the LP Act clearly restricts the provision of paid legal work to qualified legal practitioners with a current practising certificate (s 48B of the LP Act). Such work includes drawing up and preparing documents that relate to legal proceedings. Consequently, the conduct of Mr Shen, as a registered migration agent, was contrary to his duty under the statute law of New South Wales. It was in no sense authorised by the Migration Act. The federal "Code", indeed, provides in paras 1.9 and 2.1 that migration agents are to act in accordance with State law. The Code does not displace any duty a migration agent may have under the statute law of a state. It is essential that migration agents, like legal practitioners, should be aware of their responsibilities and the limits of their powers.

(ii) Knight's Case - jurisdiction and the active participant

12 The Court's jurisdiction to award costs is wide and, subject to any particular Act, is not qualified, except that the discretion is one that must be exercised judicially: Knight v F P Special Assets Ltd [1992] HCA 28; (1992) 174 CLR 178 per Mason CJ and Deane J at 192, Gaudron J at 205; Re Sanchez; Ex parte Smits (1994) 49 FCR 326 per Einfeld J at 326. In Knight, the High Court examined the power of the Supreme Court of Queensland to order costs against a non-party to the litigation pursuant to s 58 of the Supreme Court Act 1867 (Qld) and O 91 r 1 of the Rules of the Supreme Court of Queensland which, like s 43 of the FC Act, is broadly expressed. Mason CJ and Deane J, Gaudron J agreeing, said (at 192-3):

"The conclusion that the wide words of O. 91, r. 1 should not be read down so as to preclude jurisdiction to make an order for costs against a non-party does not, of course, mean that a judge has an unfettered discretion to make any order that he or she choses. The wide jurisdiction conferred by the rule `must be exercised judicially and in accordance with general legal principles pertaining to the law of costs...'

Obviously, the prima facie general principle is that an order for costs is only made against a party to the litigation. As our discussion of the earlier authorities indicates, there are, however, a variety of circumstances in which considerations of justice may, in accordance with the general principles relating to awards of costs, support an order for costs against a non-party....

For our part, we consider it appropriate to recognize a general category of case in which an order for costs should be made against a non-party ... That category of case consists of circumstances where the party to the litigation is an insolvent person or man of straw, where the non-party has played an active part in the conduct of the litigation and where the non-party, or some person on whose behalf he or she is acting or by whom he or she has been appointed, has an interest in the subject of the litigation. Where the circumstances of a case fall within that category, an order for costs should be made against the non-party if the interests of justice require that it be made" (emphasis added)

This passage was relied on by the applicant Minister.

13 In Yates v Boland & Ors [2000] FCA 1895, it was claimed that there was a requirement to warn a non-party of the risk of a costs order. In applying what was said in Knight, a Full Court of this Court said (at para 34):

"The necessity to warn a non-party of an intention to claim costs is not a principle applicable in every case in which costs are sought against a non-party. Rather it may be a material consideration depending on the situation disclosed in the case under consideration."

14 Mr He's application for review by this Court was filed by Mr Shen as an employee of Global, contrary to s 48E(2) of the LP Act. Mr He told the Court at the first hearing date that he did not have the funds to pay for any legal assistance and was not able to earn any money as he was in immigration detention: he was relying on his parents sending him money from China. This, he later said, did not occur. The respondents were to be paid by Mr He's relatives. Mr He, it thus appears, was a man of straw. The filing of the application for review by Mr Shen, thereby initiating proceedings known or believed to be meritless, and actively advising an effort to obtain an adjournment of such proceedings is, in my opinion, to be considered to be playing an active part in the proceedings. Global was paid for the services provided to Mr He by Mr Shen in connection with the meritless proceedings.

15 However, neither respondent can be said to have had an active interest in the proceedings. It is true that, if proceedings, though meritless, were instituted and continued, the probable benefit for Mr He would be to stave off further his return to China, and, to assist in achieving this, would presumably enlarge the respondents' prospects of getting or keeping larger rewards for their services. Nevertheless, neither of the respondents would be affected by the actual result in the principal proceedings. Thus, the case does not fall within the actual principle applied in Knight.

(iii) abuse of process by strangers

16 The case may, however, be viewed more broadly. It is an abuse of the Court's process for a party to institute proceedings which are quite hopeless: General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 per Barwick CJ. The Court has power to award costs against a party's agent, whether a lawyer or otherwise, who abuses the Court's process: Knight.

17 The jurisdiction to order costs against strangers, in a case such as this, has as its main purpose to compensate the successful party for such inability. The jurisdiction to order costs against a non-party has been described as compensatory, rather than punitive or disciplinary: Myers v Elman [1940] AC 282 at 289 and 319.

18 In the case of a lawyer, Goldberg J exhaustively considered in White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169 dicta in a number of cases suggesting that "commencing or maintaining proceedings with no or no substantial prospects of success enlivens the jurisdiction to order a solicitor to pay the costs of a party". His Honour pointed out, at 231, that such a proposition:

"must be treated with caution as it exposes a tension with the important right of a person to have a case conducted in the courts irrespective of the view which his or her legal adviser has formed about the case and its prospects of success"

His Honour remarked upon the necessity that an honourable practitioner acting for a client who will not accept his or her advice should not be "looking over his or her shoulder" in fear of a costs order. Ultimately his Honour concluded that mere absence or paucity of prospects of success was not enough:

"Something more must be added to the equation such as, for example, an ulterior purpose, abuse of process or a serious dereliction of duty."

19 I adopt, with gratitude, Goldberg J's analysis. It is undoubted that the jurisdiction is one, in the words of Sir John Donaldson MR in Orchard v South Eastern Electricity Board [1987] QB 565 at 572 "which falls to be exercised with care and discretion and only in clear cases". The public interest in access to justice underlies the importance of a litigant, even with a hopeless case, being able to ask a lawyer to bring his or her grievance to court and to be well-represented there.

20 A migration agent performing, for reward, a legal practitioner's work in defiance of a legal proscription cannot be in any better position, as to liability for a costs order, than a lawyer. Further, in my opinion, the public interest in access to justice, to which I have referred, has nothing to say as to any need for paid agents, wrongfully performing legal work, to be free of a need to look over their shoulders to see whether a costs order might pursue them. On the contrary, it serves rather than undermines the cause of orderly and effective access to justice that persons other than qualified lawyers who wrongfully accept money for performing legal work should be at personal risk of a costs order if they aid quite hopeless litigation: the money is better directed to fully legally trained people who have the ethical obligations of "officers of the Court".

21 While it is the active conduct of Mr Shen rather than Global which bears examination, it is clear that the former was also the agent of the latter. The application for review prepared and filed by Mr Shen was without any merit. Mr Shen believed this to be so from the outset and it was confirmed for him, before seeking the adjournment, by a conversation with counsel who provided assistance to Mr He under the pilot scheme. In proposing to Mr He that he seek to gain an adjournment, and in assisting him to do so, thereby encouraging the maintenance of the proceedings, Mr Shen further assisted the waste of the Court's time, as well as adding to the Minister's costs. There had initially been adequate time for Mr Shen to suggest that Mr He obtain legal advice about his application. This was not the case of an agent acting in circumstances of urgency to protect a person's rights of review. The respondents were acting unlawfully and, armed as they saw it, with the "Clause 2.17(b) Notice", simply considered that they were free to do anything in connection with the proceedings in the Court, that might assist Mr He's (and his relatives') wish that Mr He remain longer in this country. The respondents chose to see that Notice as a licence to help waste the Court's time, and the public resources which sustain it, as well as the public funds of paying for the Minister's legal costs, on a quite hopeless case. It would be evident to any intelligent person, and Mr Shen is such a person, that the point of the notice is, as it were, to emove would-be immigrants from the queue of hopeless cases; the respondents, however, treated it as a warrant to enlarge that queue and to usurp a function legally reserved, for good reason, to lawyers.

22 In these circumstances, in my opinion the interests of justice require that Mr Shen be ordered to pay the applicant Minister's costs to the extent that the respondents caused them to be incurred or to be enlarged. To use Goldberg J's phrase, there was "something more" than a lawyer lawfully assisting a client with a hopeless case. The respondents were not lawfully assisting Mr He. They were deliberately misunderstanding the point of a notice designed to bring the true legal hopelessness of his position home to him and either cynically exploiting him and his family or cynically exploiting the Court's processes in a cause they well knew to be hopeless.

(iv) the extent to which costs should be ordered

23 The extent to which the costs should be paid needs further consideration. It is very possible that Mr He would not have been deterred from instituting the review proceedings in the Court merely by the advice given by the respondents that he could not succeed. The chance that he would have wished and managed, without the respondents' aid, to institute such proceedings must, indeed, be assessed as fairly high. Likewise, the chance that, without the respondents' intervention, he would have secured the adjournment should also be regarded as substantial. The extent of the contribution by the respondents to the institution and maintenance of the proceedings must therefore be regarded as considerably limited. I think effect can be given to these considerations by limiting the costs order, which is otherwise well warranted, to an order that they pay 40% of the Minister's costs of the principal proceedings. In addition they should pay the costs of the Minister's application for costs.

(v) indemnity costs

24 The applicant Minister also sought indemnity costs. In Re Wilcox; Ex parte Venture Industries Pty Ltd (No. 2) (1996) 72 FCR 151, Cooper and Merkel JJ (Black CJ agreeing) said (at 158):

"... unless the justice of the particular case requires or some special or unusual feature arises, the rules should not be departed from by the making of some other order for costs in exercise of the jurisdiction conferred under s 43. The generality of the criteria for departing from the usual rule ensures that the discretion to depart from the rule can be exercised whenever the Court is of the view that after applying the criteria to the facts of the particular case, it is just do so."

In Yates Property Corp Pty Ltd v Boland [1997] FCA 760 at p 3, Branson J summarised the circumstances set out by Sheppard J in Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 in which the Court would depart from the usual rule as to costs:

"(a) the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud;

(b) particular misconduct that causes loss of time to the Court and to other parties;

(c) the commencement or continuation of proceedings for some ulterior motive, or in wilful disregard of known facts or clearly established law;

(d) the making of allegations that ought never to have been made or the undue prolongation of a case by groundless contentions;

(e) an imprudent refusal of an offer to compromise; and

(f) proceedings involving a contemnor."

25 The respondents would fall within classes (b), (c) and (d). However, no order for indemnity costs was sought against Mr He. It is the likely inability of the applicant Minister to extract the costs from him which it seems to me, is the first condition for the making of any costs order against the respondents. There is no warrant for over-compensation. Further, as far as I am aware, this is the first case of this kind. The respondents did not appreciate the liability for costs to which they were exposing themselves. As it happens, the ordinary order for costs on a party and party basis will have some actual, though unintended, punitive effect. If a case for ordering indemnity costs is otherwise made out, I would nevertheless decline so to order.

Disposition

26 For the reasons given, the notice of motion will be allowed. The respondents and each of them will be ordered to pay 40% of the applicant's costs in proceedings N389 of 2001 and the full costs of this application.

I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Madgwick.

Associate:

Dated: 19 July 2002

Solicitors for the Applicant:	Ms S Hanstein of Blake Dawson Waldron
The First Respondent appeared in person and appeared, with leave of the Court, as agent for the Second Respondent.
Date of Hearing:	23 August 2001 and 5 September 2001
Date of Further Written Submissions	14 September 2001 (respondents) 26 October 2001 (applicant)
Date of Judgment:	19 July 2002