GWE v AFP; Costs or Indemnity Costs

On 21 December 2020, the NSW Court of Appeal (Bathurst CJ; Bell P; Emmett AJA) published reasons in Gwe v Commissioner of the Australian Federal Police (No 2) [2020] NSWCA 350.

The appeal had been allowed so as to grant exclusion orders in respect of restrained property. The issue was whether section 323 of the Proceeds of Crime Act 2002 proceeded from a presumption that the Commissioner should pay the costs of the successful exclusion applicant on an indemnity basis, rather than the standard basis. That question arose because section 323 states that upon a successful exclusion application “the court may order the Commonwealth to pay all costs incurred by the person in connection with the proceedings“.

It was submitted for the exclusion applicants that the reference to “all costs incurred” evinced a predisposition for an indemnity costs order. On behalf of the Commissioner it was argued that no such predisposition arose from the section and that the costs discretion was at large.

After referring to the decision of the Victorian Court of Appeal in Fowkes v Deputy Director of Public Prosecutions [1997] 2 VR 506, where a “liberal” interpretation was given to a similarly worded section of the Proceeds of Crime Act 1987, the New South Wales Court of Appeal disapproved of the reasoning in Fowkes and stated:

[14] With due respect, we do not see why s 101 (and s 323 by extension) should be given a “liberal” interpretation. There is nothing ambiguous on the face of the provision if the conditions in sub-section (1) are satisfied: satisfaction of those provisions opens up a broad discretion to the Court, as was explained by Santow JA in Diez. It is antithetical to the existence of a broad discretion that there should be a predisposition, because of the character of the legislation, as to how that discretion ought be exercised. That the legislation might be “beneficial” does not mean that a presumption can or should be read into it. If no presumption is to be read into the legislation, the fact that the legislation may be beneficial is not to the point.

[15] It follows that we favour the submissions of the Commissioner in relation to the interpretation of s 323 of the Act. The awarding of costs under s 323 of the Act is a question of discretion. The appellants’ submission that “there is nothing the appellants have done that should disentitle them from receiving ‘all costs’” proceeds on the incorrect basis that s 323 erects a presumption in favour of “all costs” or indemnity costs for a party that satisfies the preconditions of s 323(1) of the Act. For the reasons already given, we do not accept that submission.

Hence, on the authority of Gwe, no presumption for the award of indemnity costs against the Commissioner arises; section 323 does nothing more than make clear that the Court has an unfettered discretion in respect of the question of costs.

After expressing those views, the Court went on to consider offers of compromise which had been made by the exclusion applicants. After considering the various offers, which had been rejected by the Commissioner, and noting that the exclusion applicants had achieved a result more favourable than previously offered, the Court of Appeal determined that the Commissioner should, on the basis of the rejected offers of compromise, pay costs on an indemnity basis.

The decision highlights the importance of making offers of compromise prior to trial.