Capricornia Credit Union Ltd v Australian Securities and Investments Commission [2007] FCAFC 112 (27 July 2007)

Last Updated: 31 July 2007

FEDERAL COURT OF AUSTRALIA

Capricornia Credit Union Ltd v Australian Securities and Investments Commission [2007] FCAFC 112

COSTS – costs on appeal – first hearing day argued on the basis of amended notice of appeal – appeal failed on amended notice of appeal – second hearing day argued on the basis of further amended notice of appeal – applicant succeeded on one ground of the further amended notice of appeal – application for a costs certificate pursuant to the Federal Proceedings (Costs) Act 1981 (Cth) – apportionment of responsibility between the parties – involvement of original decision-maker in the adversarial process – application of the principles in Hardiman





Federal Proceedings (Costs) Act 1981 (Cth) ss 6, 14
Administrative Appeals Tribunal Act 1975 (Cth) s 43


The Queen v The Australian Broadcasting Tribunal; Ex parte Hardiman [1980] HCA 13; (1980) 144 CLR 13 applied












CAPRICORNIA CREDIT UNION LTD v AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION AND MACKAY PERMANENT BUILDING SOCIETY LTD

QUD 580 OF 2005




DOWSETT, EDMONDS AND BESANKO JJ
27 JULY 2007
BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QUD 580 OF 2005

ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL CONSTITUTED BY DEPUTY PRESIDENT MULLER

BETWEEN:	CAPRICORNIA CREDIT UNION LTD Applicant
AND:	AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION First Respondent MACKAY PERMANENT BUILDING SOCIETY LTD Second Respondent

JUDGES:	DOWSETT, EDMONDS AND BESANKO JJ
DATE OF ORDER:	27 JULY 2007
WHERE MADE:	BRISBANE

THE COURT ORDERS THAT:

1. The applicant have leave to amend its notice of appeal in accordance with Annexure C to the affidavit of Stephen Edward Quartermain filed on 8 May 2007;
2. The appeal be allowed in part;
3. The decision of the Administrative Appeals Tribunal dated 4 March 2005 to approve the purpose identified in the Schedule to this order pursuant to s 173(3)(bb) of the Corporations Act 2001 (Cth) be set aside and in lieu thereof there be a decision that the said purpose be not approved;
4. The appeal otherwise be dismissed;
5. The applicant pay the first respondent’s costs of the appeal, limited to the costs which it would have incurred had it, on 14 August 2006 made a submitting appearance;
6. The applicant pay the second respondent’s costs of and incidental to the appeal, up to and including 25 March 2007; and
7. The parties be at liberty to apply for a certificate pursuant to s 6 of the Federal Proceedings (Costs) Act 1981 (Cth). Such application must be made within seven days of the publication of these reasons.

SCHEDULE

To communicate material and other information to the members of Capricornia to assist or facilitate convening a meeting of members to consider and, if thought proper pass, resolutions changing the composition of Capricornia’s Board so that a majority of its directors (at least) are prepared to give effect to the directions of the members (as set out in any resolution passed by members) with regard to the proposal, and the appointment of proxies to vote at such a meeting on behalf of members.




















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

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QUD 580 OF 2005

ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL CONSTITUTED BY DEPUTY PRESIDENT MULLER

BETWEEN:	CAPRICORNIA CREDIT UNION LTD Applicant
AND:	AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION First Respondent MACKAY PERMANENT BUILDING SOCIETY LTD Second Respondent

JUDGES:	DOWSETT, EDMONDS AND BESANKO JJ
DATE:	27 JULY 2007
PLACE:	BRISBANE

REASONS FOR JUDGMENT (COSTS)

THE COURT:

1 We pronounced judgment in this matter on 5 June 2007. At that time we invited the parties to propose orders for the final disposition of the appeal and to make submissions as to costs. There is no substantial dispute as to the effect of the proposed substantive orders. The Court will order that:

‘• the applicant have leave to amend its notice of appeal in accordance with Annexure C to the affidavit of Stephen Edward Quartermain filed on 8 May 2007;

• the appeal be allowed in part;

• the decision of the Administrative Appeals Tribunal dated 4 March 2005 to approve the purpose identified in the Schedule to this order pursuant to s 173(3)(bb) of the Corporations Act 2001 (Cth) be set aside and in lieu thereof there be a decision that the said purpose be not approved; and

• the appeal otherwise be dismissed.

SCHEDULE
To communicate material and other information to the members of Capricornia to assist or facilitate convening a meeting of members to consider and, if thought proper pass, resolutions changing the composition of Capricornia’s Board so that a majority of its directors (at least) are prepared to give effect to the directions of the members (as set out in any resolution passed by members) with regard to the proposal, and the appointment of proxies to vote at such a meeting on behalf of members.’

2 We turn to the question of costs. The rather unusual history of the matter is of significance in this regard. The appeal was originally argued in August 2006. In the course of argument the Court suggested that purposes 4 and 5 might be invalid for reasons other than those advanced by the applicant and invited the parties to make written submissions. They did so. The applicant purported to adopt some or all approaches raised by the Court, but did not seek to amend its notice of appeal to raise those matters. The Court informed the parties that it would not consider those additional grounds unless the notice of appeal was amended. The applicant then indicated that it would apply to amend. The matter was listed for further argument on 26 March 2007. At that hearing the application for leave to amend the notice of appeal was heard but not determined. The parties made submissions concerning the proposed new grounds. The Court subsequently allowed the amendment and gave judgment in the matter. The applicant failed on the grounds upon which it initially relied but succeeded as to purpose 4 on a ground raised at the invitation of the Court. However it failed on purpose 5.

3 The applicant concedes that the second respondent has a prima facie entitlement to its costs up to, and including, the first hearing day. It submits, however, that some of those costs are attributable to the appeal in connection with purpose 4. The applicant submits that having succeeded in relation to purpose 4, it should have its costs of the appeal after the first hearing day, although some of those costs relate to purpose 5 on which it failed. It submits that such costs should be offset against that part of the second respondent’s award which is attributable to purpose 4. The applicant proposes that it pay the second respondent’s costs of the appeal up to and including the first hearing day, and that the first and second respondents pay the applicant’s costs of the appeal on and from 15 August 2006. Alternatively it submits that there should be no order as to costs. The applicant submits that in any event the first respondent should receive no order as to its own costs. The submission is based on the assertion that the appeal arose out of its decision, and that it ought not to have taken a partisan stance in the proceedings.

4 It is appropriate to consider the second respondent’s submissions before considering the first respondent’s. It points out that there was an earlier amendment to the notice of appeal by order made on 14 August 2006. The Court has already ordered that the applicant pay the respondents’ costs thrown away by that amendment. The second respondent submits that as the first amended notice of appeal raised matters upon which the applicant was ultimately wholly unsuccessful, the second respondent should have its costs of and incidental to that amended notice of appeal. It further submits that it should have the costs of and incidental to the application for further leave to amend. That would include the costs of the hearing on 26 March 2007. It submits that the applicant should pay two-thirds of the respondents’ costs of the submissions filed by the parties on 19 March and 21 March 2007 and two-thirds of the costs of the further hearing on 26 March 2007, and that one-third of the applicant’s costs of and incidental to the submissions and the hearing on 26 March 2007 should be paid by the respondents. As an alternative it submits that the respondents should be granted a costs certificate pursuant to the Federal Proceedings (Costs) Act 1981 (Cth).

5 The first respondent submits that it should have the whole of its costs of the proceedings, and that in light of the applicant’s conduct of the matter, those costs should not be reduced to reflect such success as it has enjoyed.

6 The respondents have successfully defended the approval of purposes 1, 2 and 5. The applicant has successfully appealed against the approval of purpose 4. The purposes were discrete and largely independent. For that reason it would be unfair to assess the extent of the applicant’s success as insubstantial. On the other hand the respondents have clearly been substantially successful. The applicant’s conduct of the matter led to additional expense in its prosecution, largely attributable to the need to amend the notice of appeal and list the matter for further argument.

7 We consider that, prima facie, the applicant should pay the second respondent’s costs of and incidental to the appeal, up to and including 14 August 2006. Prima facie, the applicant should also pay the second respondent’s costs of and incidental to the application to amend the notice of appeal made on 26 March 2007. Some costs were incurred between the two hearing dates in the preparation of written submissions. In the end those submissions did not dispose of the matter because of the applicant’s failure to amend its notice of appeal. However the costs were not all thrown away as many of the submissions were relevant to the issues raised by the subsequent amendment. As to the costs of 26 March 2007, the applicant was successful on purpose 4, and the second respondent was successful on purpose 5.

8 Whilst it would be possible to make orders reflecting the various apportionments of responsibility to which we have referred, it will be better to make a global order which broadly reflects those considerations. We will order that the applicant pay the second respondent’s costs of and incidental to the appeal, up to and including 25 March 2007, and that there be no order as to the costs incurred thereafter.

9 We note that the second respondent has applied for a certificate pursuant to s 6 of the Federal Proceedings (Costs) Act 1981 (Cth) and appears to suggest that the first respondent should also have a certificate. Section 14 of that Act provides:

‘1. A Court is not empowered by this Act to grant a costs certificate to

(a) the Commonwealth;
(b) a State;
(c) the Northern Territory;
(d) a person suing, or being sued, on behalf of the Commonwealth, of any State, or of the Northern Territory;
(e) an authority of the Commonwealth, of any State or of any Territory (including the Northern Territory and Norfolk Island);
(f) a body corporate that has a paid-up capital of $200,000 or more; or
(g) a body corporate that is not a body corporate referred to in paragraph (f) but is related to such a body corporate.

2. For the purposes of subsection (1), the question whether bodies corporate are related to each other shall be determined in the same manner as the question whether corporations, within the meaning of the Corporations Act 2001, are related to each other would be determined under that Act.’

10 We suspect that the paid-up capital of the second respondent is more than $200,000. We also suspect that the first respondent is an authority of the Commonwealth or of a State. We therefore do not propose to issue a certificate at this stage. We grant the parties liberty to apply in that regard should they be so advised. Any such application must be made within seven days of the publication of these reasons.

11 As to the first respondent, the problem is a little more complex. As is well known, in The Queen v The Australian Broadcasting Tribunal; Ex parte Hardiman [1980] HCA 13; (1980) 144 CLR 13 at 35-36, the High Court said:

‘There is one final matter. Mr Hughes was instructed by the Tribunal to take the unusual course of contesting the prosecutors’ case for relief and this he did by presenting a substantive argument. In cases of this kind the usual course is for a tribunal to submit to such order as the Court may make. The course which was adopted by the Tribunal in this Court is not one which we would wish to encourage. If a tribunal becomes a protagonist in this Court there is the risk that by so doing it endangers the impartiality which it is expected to maintain in subsequent proceedings which take place if and when relief is granted. The presentation of a case in this Court by a tribunal should be regarded as exceptional and, where it occurs should, in general, be limited to submissions going to the powers and procedures of the Tribunal.’

12 Those remarks were made in the context of an application for mandamus and prohibition directed to the Australian Broadcasting Tribunal. That body was obliged to investigate certain transactions involving the transfer of interests in companies which held broadcasting licences. It also had power to approve such transactions. As the order nisi for the issue of mandamus was made absolute, no question of the Tribunal’s costs appears to have arisen.

13 Pursuant to subs 43(1) of the Administrative Appeals Tribunal Act 1975 (Cth), it is open to the Tribunal, in reviewing a decision, to remit the matter to the original decision-maker for further consideration. Thus it was at least theoretically possible that the Tribunal would remit this matter to the first respondent for further consideration. Whether this Court could, on appeal from the Tribunal, remit the matter to the original decision-maker (as opposed to remitting it to the Tribunal) is unclear. However, if it remitted the matter to the Tribunal, the Tribunal might, in reconsidering the matter, determine that it should be remitted to the first respondent. We consider that the views of the High Court as expressed in Hardiman should have informed the first respondent in deciding upon the role which it would play in these proceedings, both in the Administrative Appeals Tribunal and on appeal to this Court.

14 We do not understand the first respondent to have considered its role to be so limited. Where, as here, there is an appropriate respondent other than the original decision-maker, the involvement of that decision-maker in the adversarial process will have the undesirable effect identified by the High Court in Hardiman. It may also increase costs incurred by the parties in the course of the appeal. Little will generally be gained as a result of the decision-maker appearing, save in those limited areas identified by the High Court in Hardiman. Had the applicant raised the question of the first respondent’s participation in the appeal at the outset, we would have indicated the inappropriateness of its continued participation. However that was not done. The point was raised by the Court in the course of the first respondent’s submissions. It seems that the first respondent also participated on an active basis in proceedings before the Tribunal, again apparently without objection. The question is of some public importance. For that reason the applicant’s failure to raise the matter should not be seen as an absolute bar to the submission which it now makes concerning the costs of the appeal. However such a failure does tend to weaken its position. On the other hand, the first respondent, as a statutory decision-maker, should have been aware of the decision in Hardiman and of the potential for embarrassment attendant upon its participation in proceedings on a partisan basis.

15 In the circumstances the applicant should be ordered to pay the first respondent’s costs of the appeal, limited to the costs which it would have incurred had it, on 14 August 2006, made a submitting appearance. We make no order as to the applicant’s costs.

I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Dowsett, Edmonds and Besanko.

Associate:

Dated: 27 July 2007

Counsel for the Applicant:	Mr G Martin SC
Solicitor for the Applicant	Gilshenan & Luton
Counsel for the First Respondent:	Mr R Derrington SC
Solicitor for the First Respondent:	Australian Securities and Investments Commission
Counsel for the Second Respondent:	Mr D Jackson QC Mr P Bickford
Solicitor for the Second Respondent:	McCullough Robertson
Dates of Hearing:	14 August 2006 and 26 March 2007
	Applicant’s submissions on orders and costs filed 18 June 2007
	First Respondent’s submissions on orders and costs filed 15 June 2007
	Second Respondent’s submissions on orders and costs filed 15 June 2007
Date of Judgment:	27 July 2007