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Supreme Court of Victoria - Court of Appeal |
Last Updated: 16 November 2018
COURT OF APPEAL
S APCI 2018 0039
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Applicant
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First Respondent
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THILINI MAHESHIKA KUMARI EKANAYAKE
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Second Respondent
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ACN 128 564 312 PTY LTD
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Third Respondent
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JUDGES:
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WHERE HELD:
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DATE OF HEARING:
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DATE OF JUDGMENT:
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MEDIUM NEUTRAL CITATION:
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AFP v Opal Storm Pty Ltd and Ors
(Costs Ruling) [2018] VCC 1823 (Judge Cohen)
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PRACTICE AND PROCEDURE – Costs – Appeal – Commissioner successfully defended action arising out of Proceeds of Crime Act 2002 (Cth) (‘the Act’) proceedings in County Court – Judge did not award costs to Commissioner for substantive action but awarded costs for 30 per cent of application for costs – Civil character of proceedings under the Act – Judge erred in exercise of discretion - Application does not have a real prospect of success – Leave refused.
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APPEARANCES:
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Counsel
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Solicitors
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For the Applicant:
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Mr C Horan QC
with Mr A Yuile |
Australian Federal Police
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For the Respondents
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Mr C Juebner
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Paul Horvath Solicitors
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PRIEST JA
ASHLEY JA
WEINBERG JA:
1 The application for leave before this Court concerns the principles to be applied when the Commissioner of the Australian Federal Police (‘the Commissioner’) successfully defends an application arising out of proceedings under the Proceeds of Crime Act 2002 (Cth) (‘the POC Act’). The Commissioner contends that he was wrongly denied the costs of defending such an application. The respondents contend that leave to appeal should be refused, or if granted, that the Commissioner should nonetheless be refused the particular relief that he seeks.
Procedural background
2 On 3 June 2016, the Commissioner brought an application for a restraining order pursuant to s 18 of the POC Act. As is typical in such cases, that application was initially heard ex parte.
3 Section 18 relevantly provides that where a ‘proceeds of crime authority’[1] applies for such an order, and there are reasonable grounds to suspect that a person has committed a ‘serious offence’,[2] a court with ‘proceeds jurisdiction’ must order that certain property not be disposed of or otherwise dealt with by any person except in the manner specified in the order.
4 On the same day that the application was made, a judge of the County Court granted the orders sought, thereby preventing the disposal of, or any dealing with, the property that was the subject of the Court’s orders. The orders were made against Opal Storm Pty Ltd, Thilini Maheshika Kumari Ekanayake and ACN 128 564 312 Pty Ltd.
5 The judge also made an ‘examination order’, pursuant to s 180, in relation to Nayanaka Arjuna Samarakoon, the husband of the second respondent, Thilini Maheshika Kumari Ekanayake.
6 On 29 June 2016, the respondents each filed applications, pursuant to s 31 of the POC Act, for exclusion of property from the restraining orders previously made. In addition, the first respondent, Opal Storm Pty Ltd, sought revocation of those orders pursuant to s 42. However, these applications were all subsequently withdrawn.
7 In their place, the respondents sought relief under Part 2.3 of the POC Act, specifically ss 94 and 94A. These provisions deal with forfeiture on conviction of a serious offence. They provide an alternative mechanism whereby forfeiture of assets can be avoided, or at least ameliorated, by way of compensation.
8 On the following day, 30 June 2016, the Commissioner applied for forfeiture orders, and a pecuniary penalty order. Those applications were adjourned.
9 On 23 December 2016, the respondents filed a joint application seeking declarations that:
(a) Section 26(4) of the POC Act, which provides that the Court must consider the application for a restraining order without notice having been given to the respondents, if the responsible authority requests the Court to do so, was constitutionally invalid. It was said that this section was in breach of Chapter III of the Constitution;(b) Section 182(2) of the POC Act, which provides for the making of examination orders, was constitutionally invalid, as also being in breach of Chapter III;
(c) Each of the respondents was entitled to a rehearing of the Commissioner’s initial application for a restraining order. This was said to be pursuant to the County Court’s ‘inherent jurisdiction’; and
(d) Mr Samarakoon was entitled to a rehearing of the Commissioner’s initial application for an examination order. This was also said to be pursuant to the County Court’s ‘inherent jurisdiction’.
10 On the same day, the respondents gave notice, as required by s 78B of the Judiciary Act 1903 (Cth), of a constitutional matter.
11 Subsequently, lengthy submissions were filed on behalf of both the respondents and the Commissioner. In the course of those submissions, the Commissioner conceded that it was open to the County Court to rehear the application for an examination order made in respect of Mr Samarakoon. However, the Commissioner opposed the making of any of the declarations sought by the respondents.
12 On 23 and 24 February 2017, there was full oral argument regarding the constitutional and other issues raised by the respondents. On 14 March 2017, the judge delivered judgment.
13 In substance, her Honour held that:
14 After her Honour delivered judgment, the Commissioner sought an order for costs. The respondents opposed that application. They submitted that the Court had no power to order costs in the Commissioner’s favour.
15 The judge adjourned the hearing of the costs application, and gave directions for the filing of submissions regarding that matter. She also fixed a date for a full oral hearing on that question.
16 On 28 November 2017, the respondents filed lengthy written submissions on the question of costs. They argued that s 78A of the County Court Act 1958, which confers upon that Court its general power to award costs, was not ‘picked up and applied’ by s 79 of the Judiciary Act 1903 (Cth), to proceedings under the POC Act. They further submitted that s 323 of the POC Act, which allows for a person whose property has been restrained but has succeeded in resisting an order for forfeiture, to be awarded costs against the Commissioner, covered the field regarding costs under the POC Act. It was submitted that the section ‘otherwise provide[d]’, for the purpose of s 79, and that it followed that there was no power to award costs to the Commissioner in this proceeding.
17 On 21 February 2018, the judge delivered judgment on the costs application. Her Honour held that the County Court had power to award costs in favour of the Commissioner, pursuant to s 78A, which was ‘picked up and applied’ by s 79 of the Judiciary Act 1903 (Cth). She further held that s 323 of the POC Act did not ‘otherwise provide’.
18 Despite her findings in relation to the applications for declaratory relief, her Honour declined to order costs generally in favour of the Commissioner, in the exercise of her discretion. She did, however, order that the Commissioner should receive 30 per cent of the costs of the application for costs on the basis that the Commissioner had successfully argued in that application that there was power to award costs in his favour.
19 The Commissioner now seeks leave to appeal against the judge’s refusal, on 21 December 2016, to award him the costs of the proceeding for declaratory relief.
20 The judge’s reasons for refusing to order costs in favour of the Commissioner are to be found at [28]–[32] of her judgment:[4]
The Commissioner sought costs on the basis that he was the successful litigant in the applications which I decided last year. Although not included in the statutory power as it was in the New South Wales Supreme Court provision under scrutiny in Diaz, there is in civil proceedings in this State a general principle that costs will ordinarily follow the event. However, in my view that is not an appropriate approach to take as the starting point in proceedings under [the POC Act].Although I consider that policy considerations militate against the total absence or exclusion of an ability for the court to order costs in favour of the Commonwealth agency which administers [the POC Act], I regard that role as placing the Commissioner in a quite different position when it comes to costs than an ordinary civil litigant, even an institutional one. Section 64 of the Judiciary Act refers to the Commonwealth or a State as being as nearly as possible in the same position as a party in a suit. In litigation under [the POC Act], the Commissioner is not merely a party in a suit. There is a statutory role to bring and litigate proceedings as provided under the Act. Those proceedings often involve first the restraint and ultimately the forfeiture of property of persons in connection with the commission of certain types of criminal offences. While the Commissioner can, and often does, reach a resolution of various claims in proceedings under the Act, it is not in my view in the role of an ordinary civil litigant, taking merely commercial decisions in relation to the applications it brings or defends, and that role inevitably involves cost. Further, there are policy reasons why persons whose property is affected should not feel constrained to forego the full airing of their claims under the Act out of fear of the sanction of a costs order being made against them if unsuccessful. In my view these considerations should lead to costs orders in favour of the Commissioner being only made sparingly.
In the present case the applications brought by the respondents were in my view somewhat ambitious, especially having regard to there being a decision in another State’s Court of Appeal directly on point and against several of their contentions. I also take into account that as the respondents signalled that the applications were likely to become a test case and important enough from their point of view to require senior counsel, written submissions and a two-day hearing, the Commissioner probably incurred higher legal costs in defending those applications than would be anticipated on a more conventional interlocutory application in this Court.
I also take into account that when originally brought, the substantive application sought to invalidate or achieve a rehearing on an order for examination of Mr Samarakoon, obtained ex parte on the same hearing as the restraining orders. A rehearing was conceded by the Commissioner to be available, so the issue of invalidity was not pursued. To this extent there was partial success in the application although by no means on the main thrust of what was sought.
Weighing up all of these considerations, although it is a situation where I find that the Commissioner was put to further legal expense in an application that was ambitious and ultimately unsuccessful, I have decided that those costs are nevertheless of a nature that ought to be borne by the Commonwealth agency administering [the POC Act] as part of that function. I have decided that no costs order should be made.[5]
Principles governing leave to appeal
21 This being an application for leave to appeal from what is plainly a discretionary judgment, the Commissioner must overcome several significant hurdles. The first is the need to establish, as one step towards the grant of leave to appeal, what is generally described as House v The King[6] error.
22 The constraints upon granting leave in such a case are well established. In some respects, they are similar to those that apply to the grant of leave from an interlocutory decision. In such cases, before the enactment of ss 14A and 14C of the Supreme Court Act 1986, a party seeking leave would have to demonstrate that the decision below was attended by sufficient doubt as to warrant the grant of leave, but also that the party seeking leave would suffer substantial injustice if that decision were permitted to stand. We refer to the implications of ss 14A and 14C a little later in this judgment.
23 The authorities suggest that, as though these hurdles were not themselves sufficient, still more is required before leave to appeal will be granted against a costs order.
24 Section 14A(1) of the Supreme Court Act 1986 now provides, subject to presently irrelevant exceptions, that leave to appeal is required in all civil cases brought before this Court. In addition, s 14C provides:
The Court of Appeal may grant an application for leave to appeal under section 14A only if it is satisfied that the appeal has a real prospect of success.[7]
25 It was observed in Kennedy that s 14C replaced the two limbed test stated in Niemann v Electronic Industries Ltd[8] with a single-limbed test. Nonetheless, the permissive language of the section enables consideration of discretionary circumstances. In Cargill Australia Ltd v Viterra Malt Pty Ltd,[9] Kyrou and McLeish JJA, said this of s 14C:
There is no separate requirement under s 14C that ‘substantial injustice’ be established if the decision sought to be appealed were to stand. The distinction is between those appeals whose prospects are real and those whose prospects are fanciful. At the same time, the concept of substantial injustice may be useful in determining whether the residual discretion should be exercised. Observations regarding substantial injustice made by this Court in Swan Hill Chemicals Pty Ltd v MA & J Tripodi Pty Ltd must be understood in the light of the requirements of s 14C as explained above.This Court held in Molonglo Group (Australia) Pty Ltd v Cahill as follows:
Even if this Court is satisfied that an appeal has a real prospect of success, it may nevertheless refuse to grant leave in the exercise of its residual discretion, such as when no substantial injustice will be done if the decision at first instance stands, or the order sought to be appealed against is one of practice and procedure. The question of leave may sometimes be approached by considering, first, whether discretionary considerations exist which justify a refusal of leave, regardless of an applicant’s prospects of success. Where discretionary considerations exist but by themselves are insufficient to justify a refusal of leave, refusal may nevertheless be warranted where those discretionary considerations arise in the context of an appeal that has low, albeit real, prospects of success.
The fact that an order in respect of which leave to appeal is sought is an interlocutory order regarding a matter of practice and procedure is a significant consideration bearing upon the exercise of the residual discretion. In Bodycorp Repairers Pty Ltd v GDG Legal Pty Ltd, this Court set out the governing principles as follows:
While the old distinction between interlocutory and final orders no longer exists, the principles which underlay the former requirement for leave whenever a party sought to appeal an interlocutory order continue to be potentially relevant. In particular, it is most important for the proper administration of justice that this Court keep a ‘tight rein’ upon interference with interlocutory orders at first instance, given the potential consequences of a failure to do so in terms of delay and increased cost, and given the potential for applications in relation to interlocutory orders to become a means whereby discretionary judgments in the trial division are in effect transferred to the Court of Appeal. That is especially so where, as here, there has already been a rehearing de novo of a decision made by a judicial registrar of this Court.[10]
26 While their Honours’ observations were specifically directed towards leave to appeal against interlocutory decisions, they were not confined to such matters. Notwithstanding that a costs order is a final order, and notwithstanding that prospects of a successful appeal against such an order may be adjudged real and not merely ‘fanciful’, the Court is not disentitled to exercise its discretion to refuse leave.
27 There has long been reluctance to entertain appeals against costs orders. Before the enactment of sections 14A and 14C of the Supreme Court Act 1986, there was already a specific leave requirement in the case of costs orders,[11] this emphasising the disinclination to entertain appeals in such matters. In the context of the present provisions, we consider that the Court is entitled to employ its discretion to refuse leave to appeal if satisfied, inter alia, that no substantial injustice will result if there is such refusal.
Written contentions of the Commissioner
28 The application for leave puts forward ten separate reasons why leave to appeal should be granted. They are as follows:
29 There are two proposed grounds of appeal. The first asserts that the judge erred in the exercise of her discretion by determining and applying ‘wrong legal principles’. Ground 1 is as follows:
Having correctly found that the County Court had power to award costs pursuant to s 78A of the County Court Act (as applied by ss 64 and/or s 79 of the Judiciary Act 1903 (Cth)), the primary Judge erred in the exercise of the discretion to award costs by determining and applying wrong legal principles. Her Honour erred by:
30 The second ground asserts error in the exercise of discretion by failing to have regard to the ‘character’ of the substantive application brought by the respondents. Specifically, ground 2 is as follows:
In addition, the Judge below erred in the exercise of her Honour’s discretion by failing to have regard to the character of the substantive application brought by the respondents, including that the application was for relief outside the framework of proceedings under the POC Act which could have been obtained in separate proceedings.
31 In support of ground 1, the applicant first contends that the judge was wrong to hold that the Commissioner was not to be placed in the same position as an ordinary party in a civil suit. That particular finding is said to have failed to give effect to s 64 of the Judiciary Act 1903 (Cth), which required her Honour to accord to the Commissioner the same rights, as nearly as possible, as to a party in an ordinary suit between subject and subject.
32 In ordinary civil proceedings, a successful party would, in the usual course, obtain an order for costs. The discretion of the Court to award or not to award costs is obviously a very broad one. Of course, like any other discretion, it must be exercised judicially. [12]
33 It is said that the judge should have held that proceedings under the POC Act were, at least, analogous to civil proceedings. It is further said that it would be odd that the legislature should allow one party to civil proceedings to recover costs, but not the other.
34 Secondly, the applicant contends that the judge erred in stating, as a principle, that the usual rule regarding costs in civil proceedings did not apply to the Commissioner’s role in POC Act proceedings. The fact that the Commissioner was administering and seeking to enforce a statute, should not, of itself, qualify or detract from the principle that a successful party is ordinarily awarded their costs. Moreover, the judge’s approach was at odds with that generally adopted in cases involving other Commonwealth agencies with regulatory functions.[13] It was also noted that proceedings under the Confiscation Act 1997 (Vic) are routinely the subject of costs orders by this and other Courts,[14] and that s 133(2) of that Act specifically provides that the ordinary rules governing costs apply to proceedings brought in connection with applications for forfeiture and related matters.
35 Thirdly, it is said that the judge erred in stating that the policy imperative underlying the principles regarding costs in POC Act cases was the discouragement of frivolous applications.[15] In fact, the relevant principle is that of compensating or indemnifying successful parties to civil litigation,[16] and has nothing to do with punishing the making of unmeritorious claims. Moreover, this was not a criminal case, where ordinarily the State neither seeks, nor pays, costs.
36 Fourthly, it was said that the judge erred in setting down principles that constrain the exercise of a discretion that must be exercised judicially, but is otherwise ‘absolute and unfettered’.[17] The effect of her Honour’s statement of principle was that the Commissioner was in a different position to that of other litigants, and costs orders in his favour should only be ‘sparingly’ made. It was contended that there was no warrant for such a principle, or any rule to the effect that costs will only be awarded to the Commissioner in ‘exceptional cases’.
37 Fifthly, the Commissioner submits that the error of principle in the judge’s approach to the question of costs is demonstrated by the apparent incongruity in her Honour having declined to award the Commissioner his costs of resisting the application for declaratory relief, but granting him 30 per cent of his costs with respect to the costs application.
38 In support of ground 2, the Commissioner submits that the judge erred by failing to take into account the fact that this was not a typical case arising out of the POC Act. Respondents often seek revocation, exclusion, and sometimes compensation, within the parameters of that Act. However, the respondents’ application for declaratory relief before this judge was of a very different character. This was a matter which her Honour should have taken into account, but had clearly failed to do so.
Written contentions of the respondents
39 It is first submitted on behalf of the respondents that in seeking leave to appeal against a costs order, the Commissioner faces a high bar. In AJH Lawyers v Mathieson Nominees Pty Ltd & Anor,[18] Hansen and McLeish JJA (with whom Robson AJA agreed) said:
Appeals from orders as to costs are rightly treated as exceptional. The Court exercises particular restraint before interfering with the exercise of a costs discretion at first instance.[19]
40 This Court has on a number of occasions restated the ‘exceptional’ nature of an appeal against a costs order.[20]
41 In Daulizio v Trust Company of Australia & Ors,[21] Nettle JA (as his Honour then was), stated:
I accept that from the appellant's perspective the order may seem harsh. It may also be that some other judges would have taken a more lenient approach. ... But it is one thing to conclude that other judges may have taken a different approach and it is another to be persuaded that the judge below committed an appealable error in the exercise of discretion. I am not persuaded that his Honour did.[22]
42 The relevant test which an appellant must meet in order to obtain leave to appeal against a costs order was expressed in the following terms by Maxwell P in Velissaris v Fitzgerald:[23]
Where leave is required to appeal against an order, the applicant for leave must show first that the order is wrong or at least attended with sufficient doubt to warrant its being reconsidered on appeal and, secondly, that the applicant would suffer substantial injustice if the order were allowed to stand. As the decision to order a party to pay costs in a particular way is a discretionary decision, the task of showing that the decision is wrong or attended with doubt involves showing that the exercise of the discretion has miscarried in one of the ways described in House v R. When reviewing the exercise of a judge's discretion, it is not enough that this Court considers that it might have made a different decision if it had been in the judge's position. It must be shown that the judge below made an error in the sense of acting on a wrong principle, taking irrelevant matters into account, making a mistake as to the facts or failing to take a material consideration into account.[24]
43 In State of Queensland & Anor v Bell,[25] it was observed that:
A major hurdle confronting the applicants is the strong presumption in favour of the legal correctness of a first instance costs order. The appeal tribunal will presume that the ‘generous margin of discretion’ was exercised properly, unless confidence in it can somehow be shaken to the point that allowing the order to stand might be substantially unjust in all the circumstances.[26]
44 The respondents submit that the judge’s refusal to order costs in favour of the Commissioner in the exercise of her discretion was neither wrong, nor attended by sufficient doubt to warrant being reconsidered on appeal. Further, or in the alternative, it was submitted that the Commissioner would not suffer any substantial injustice if the order below were allowed to stand.
45 It is next submitted that the Commissioner’s argument is misconceived because it is not the usual rule to award costs in favour of a party such as him in circumstances such as the present. It is said that this case should be viewed as analogous to that of a party who is able to maintain, after an inter partes contest, an interlocutory injunction. There, costs would ordinarily be costs in the cause, or at least reserved, pending the final determination of the proceeding.
46 More specifically, in relation to ground 1, it is submitted that the judge was correct to hold that the Commissioner was not to be equated to an ordinary party in a civil suit. Litigation in connection with the POC Act is said to be quite different from ordinary civil litigation. The Commissioner does not act under the POC Act by reference to purely commercial considerations, but rather performs a statutory function. Moreover, proceedings under the POC Act are not purely civil, but have a quasi-criminal aspect.[27]
47 It is further noted that the Civil Procedure Act 2010, which applies generally to civil proceedings in Victoria, defines such proceedings in s 3 to mean ‘any proceeding in a court other than a criminal proceeding or quasi-criminal proceeding’. Moreover, s 4(2)(d) of the Civil Procedure Act 2010 specifically excludes proceedings under the POC Act from its operation.
48 In addition, it is noted that the appeal provisions in s 322 of the POC Act make it clear that the principles which govern sentence appeals are relevant to the resolution of confiscation order disputes.
49 Next, it is submitted that a proceeding brought by the Commissioner under the POC Act places a person whose property is restrained in a most vulnerable position. It has the capacity to operate in a particularly harsh manner. For example, under the POC Act ‘legal costs’ cannot be covered out of restrained assets, which can be an extraordinarily Draconian consequence.
50 It is submitted that these unique features associated with the POC Act regime, justify a more restrictive approach to the question of costs than might otherwise be taken when considering whether the Commissioner should be awarded costs.
51 As regards ground 2, the respondents submit that the distinction drawn on behalf of the Commissioner between applications directly made under the POC Act, and declaratory relief sought in respect of a state of affairs arising under that Act, is overly technical and largely artificial.
52 Finally, the respondents submit that if, contrary to their earlier contentions, this Court were to find error of principle in the judge’s exercise of the costs discretion, it should still not award costs to the Commissioner. Rather, it should order that the costs of the challenge to the validity of the restraining order be costs in the proceeding, an order that would be analogous to one which would be made arising out of interlocutory processes.
Oral submissions before this Court
53 The oral submissions before this Court largely replicated those set out in the parties’ respective written cases.
54 There were, however, several additional points raised. Senior counsel on behalf of the Commissioner drew attention to Stanley Rural Community Inc v Stanley Pastoral Pty Ltd,[28] a recent decision of this Court concerning an application for leave to appeal against a trial judge’s refusal to award costs to a successful respondent in an appeal on a point of law under s 148 of the Victorian Civil and Administrative Tribunal Act 1998.
55 In a joint judgment, the Court (Osborn, Santamaria and Ashley JJA) held that the judge had erred in denying the respondent costs. Their Honours said:
Ordinarily, costs follow the event on an appeal. However, it is not necessarily an error to hold that a successful respondent should be denied its costs. The award of costs is in the discretion of the Court. Accordingly, such an award will be reviewed only when it can be shown that the Court acted on a wrong principle, mistook the facts, took into account an irrelevant consideration, failed to take into account a relevant consideration or made a decision in which, although no specific error can be identified, was so unreasonable as to suggest implicit error. While it is not uncommon for a successful appellant to be refused its costs on appeal, especially where success has resulted from a point not taken below, it is relatively uncommon for a successful respondent to be refused its costs: the respondent succeeded below and has been brought into an appeal which has proved unsuccessful. Moreover, a successful respondent is entitled to defend the decision below on any ground which is open to it.[29]
56 Stanley Pastoral was a somewhat unusual example of a refusal by a judge at first instance to order costs being the subject of a successful application for leave to appeal. The Commissioner’s reliance upon this case prompted a question from the Bench as to whether he accepted that, in order to be granted leave to appeal, not only did he have to demonstrate House v The King error, but also something akin to ‘exceptional circumstances’. After some consideration, senior counsel indicated that he accepted that as a correct statement of the law.
57 There was also some debate as to whether the judge’s decision below could, in any sense, be described as having ‘precedential’ value. The Commissioner had submitted that her Honour’s approach might, unless specifically overturned by this Court, be given weight by other judges.
58 That particular argument was soon given short shrift. It was accepted that the particular exercise of judicial discretion which her Honour had carried out could not sensibly be regarded as having precedential value, and would certainly not be regarded as binding on any other court.
59 It is important to note that senior counsel for the Commissioner specifically conceded, in oral argument, that the various matters raised by the respondents in their written submissions as to why costs in favour of the Commissioner should be ordered sparingly, were all potentially relevant to the exercise of the costs discretion.
60 Senior counsel encapsulated his oral submission on this point as follows:
So in a particular case, the judge can look at the vulnerability of the respondent, the harshness of the order, the amount of property and so on in the particular circumstances of the case. But one can’t just simply adopt a universal rule that the Commissioner is qualitatively different from other litigants in terms of the ability to award costs in favour of the Commissioner where that is otherwise just and fair in the circumstances of the case.
61 In other words, senior counsel conceded the relevance of these factors to the exercise of the costs discretion, but confined his argument to challenging the proposition that they did not affect the ‘starting point’. He noted that none of these matters had been put to the primary judge, and that none of them had been relied upon by her Honour in making her ruling refusing costs in the exercise of discretion.
62 Next, in support of ground 2, senior counsel emphasised that although the respondents’ application had been made ‘in connection with’ proceedings under the POC Act, it was not an application directly under that Act, and not one in which the Commissioner had been the moving party.
63 Finally, senior counsel accepted, when pressed on the point, that this application for leave to appeal was being brought by the Commissioner as something of a test case. He accepted that the Commissioner had no real concern about the relatively paltry amount of costs he had been denied below, but only the basis upon which that decision had been reached.
64 On behalf of the respondents, it was submitted that the Commissioner had to overcome a number of hurdles if he were to be granted leave to appeal. He would have to persuade this Court that the decision below was ‘attended with sufficient doubt’ to warrant the grant of leave. Moreover, he would have to do so in the face of the constraints laid down in House v The King. Quite separately, he would also have to demonstrate that the case now being brought involved exceptional circumstances, and that the Commissioner would suffer ‘substantial injustice’ if the decision below were not set aside.
65 Counsel for the respondents then emphasised the Draconian nature of this legislation which, he submitted, set it apart from other quasi-criminal proceedings, such as those involving the Australian Securities and Investments Commission, and the Australian Competition and Consumer Commission.
66 Next, counsel submitted that the Commissioner had failed entirely to show any substantial injustice arising out of the judge’s refusal to order costs in his favour. He noted that the final merits of the litigation had not yet been determined, and that there was no basis upon which this Court could, at this stage, decide whether he had been justified in obtaining the restraining order at the outset.
67 Finally, counsel submitted that the decision below had no precedential value of any kind. He did, however, acknowledge that the particular judge against whose decision this application was brought often sat in confiscation proceedings.
68 Put simply, counsel invited this Court to correct her Honour if we concluded that she had fallen into some serious error of principle, but to refuse leave, at least on the basis that the Commissioner had failed to show any substantial injustice.
Analysis
69 With respect, more than enough money has already been spent on dealing with the question of costs in this matter. What should have been a relatively straightforward exercise of judicial discretion was transformed into an ill-considered constitutional challenge, which was almost certainly foredoomed to fail.
70 That said, we consider that the judge below approached the exercise of her discretion on the costs issue in an erroneous manner. The Commissioner correctly argued that a number of the matters upon which the respondents now rely in support of the decision below do not justify putting him at a disadvantage from the start in terms of any application for costs. Nonetheless, he properly conceded that a number of these matters might be relevant in any given case as regards the particular exercise of the costs discretion.
71 We agree with the Commissioner that the decision below involved a serious error of principle, in accordance with the House v The King test. That error should be corrected. There is no presumption whatever against awarding costs to the Commissioner if he is successful in meeting a challenge of whatever kind to the exercise of his statutory functions under the POC Act.
72 In that sense, proceedings under that Act should, at least for costs purposes, be regarded as civil in nature. The fact that they may also have a quasi-criminal aspect may be relevant to the exercise of the discretion in any particular case. So too, may the fact that these provisions can operate harshly. These matters do not affect the ‘starting point’ in the exercise of the judicial discretion.
73 At the same time, this Court should state unequivocally that applications for leave to appeal against costs orders will face significant resistance, unless there really is something special or exceptional about the particular case. The Court, in its civil jurisdiction, is already beset with too many applications for leave to appeal against interlocutory decisions, particularly those involving matters of practice and procedure. The same constraints that apply to applications for leave to appeal involving those issues should apply with equal force to applications for leave to appeal against costs orders.
74 It follows from what we have said that although the Commissioner has succeeded in demonstrating significant error on the part of the judge in refusing his application for costs, he has entirely failed to demonstrate either that this case is of an exceptional character, or that he would suffer substantial injustice if he did not receive the costs of the proceeding below.
75 Accordingly, we would refuse leave to appeal.
[1] The Commissioner is a ‘proceeds of crime authority’ pursuant to the definition of that term in s 338 of the POC Act.
[2] In this case, it was not in dispute that the Commissioner had reasonable grounds for suspecting that a person had committed a serious offence, that being fraud upon the Commonwealth.
[3] [2011] WASCA 55; (2011) 248 FLR 64.
[4] AFP v Opal Storm Pty Ltd and Ors (Costs Ruling) [2018] VCC 1823 (Judge Cohen) .
[5] Emphasis added.
[6] (1936) 55 CLR 499 (‘House v The King’).
[7] Emphasis added. See Kennedy v Shire of Campaspe [2011] VSCA 47 [11],[19] (‘Kennedy’) and Note Printing Australia Ltd v Leckenby [2015] VSCA 105; (2015) 50 VR 44, 70-72 [78]-[82] (Tate JA, Whelan and Ferguson JJA agreeing).
[8] [1978] VicRp 44; [1978] VR 431, 441–2.
[10] Ibid [111]–[113] (citations omitted).
[11] The now-repealed s 17A(1)(b) of the Supreme Court Act 1986.
[12] See, however, Taylor v Pace Developments Ltd [1991] BCC 406, 408 where Lloyd LJ observed that ‘there is only one immutable rule in relation to costs and that is that there are no immutable rules’.
[13] Such as the Australian Competition and Consumer Commission, the Australian Securities and Investments Commission, and the Australian Taxation Office.
[14] See, eg, Bow Ye Investments (in liq) v Director of Public Prosecutions (No 2) [2009] VSCA 278. See also, very recently, in all the circumstances of a proceeding in which a collateral attack was made upon a confiscation order: Coleman v Director of Public Prosecutions (No 2) [2018] VSCA 282.
[15] While her Honour characterised the respondent’s substantive application as ‘somewhat ambitious’, it apparently fell short of being frivolous.
[16] Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534. As Mason CJ said at 543, ‘if one thing is clear in the realm of costs, it is that, in criminal as well as civil proceedings, costs are not awarded by way of punishment of the unsuccessful party. They are compensatory...’. See also Chen & Ors v Chan & Ors [2009] VSCA 233 [10] and Hoskin v Greater Bendigo City Council [2015] VSCA 370 [9].
[17] Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534, 557.
[19] Ibid [89].
[20] See, eg, Velissaris v Fitzgerald [2008] VSCA 152 [8] (Maxwell P, Mandie AJA agreeing); 24 Hour Fitness Pty Ltd v W&B Investment Group Pty Ltd [2015] VSCA 216 [53] (Hansen, Ferguson and McLeish JJA); Bodycorp Repairers Pty Ltd v GDG Legal Pty Ltd [2018] VSCA 32 [18] (Ferguson CJ, Whelan and McLeish JJA). See also Mitchison v Bullock [1886] VicLawRp 111; (1886) 12 VLR 512, 520; McCauley v McCauley [1910] HCA 16; (1910) 10 CLR 434, 455; Gladstone Park Shopping Centre Pty Ltd v Wills [1984] FCA 166; (1984) 6 FCR 496; Wightman v Johnston [1995] VicRp 81; [1995] 2 VR 637, 639–40.
[22] Ibid [23].
[23] [2008] VSCA 152. This was in the setting before the commencement of ss 14A and 14C of the Supreme Court Act 1986. But leave was required under the now-repealed s 17A(1)(b) of that Act. In the present statutory context see [25] above.
[24] Ibid [9] (citations omitted).
[26] Ibid [11] (citations omitted).
[27] It was noted that under s 315 of the POC Act, proceedings under it are ‘not criminal proceedings’.
[28] [2018] VSCA 104 (‘Stanley Pastoral’).
[29] Ibid [18] (citations omitted).
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