Minister for Immigration and Citizenship v GKX18 - Costs Judgment

Original Word Document (131.9 KB) Federal Court of Australia

Minister for Immigration and Citizenship v GKX18 (Costs) [2026] FCAFC 28

| Appeal from: | GKX18 v Minister for Immigration and Multicultural Affairs (No 2) (2025) 395 FLR 206; FedCFamC2G 718 |
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| File number: | NSD 917 of 2025 |
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| Judgment of: | MARKOVIC, HORAN AND MCDONALD JJ |
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| Date of judgment: | 24 March 2026 |
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| Catchwords: | COSTS – whether the appellants acted unreasonably in defending an application for habeas corpus – whether indemnity costs appropriate – costs ordered on an ordinary basis

PRACTICE AND PROCEDURE – whether appellants be permitted to set-off their liability for costs in proceeding before the primary judge against liability owed to one of them in other proceedings involving the respondent – where respondent’s legal representatives acted on a conditional costs basis – public interest considerations – set-off permitted |
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| Legislation: | Federal Circuit and Family Court of Australia Act 2021 (Cth) s 214

Migration Act 1958 (Cth) ss 197C, 198

Federal Circuit and Family Court (Division 2) (General Federal Law) Rules 2021 (Cth) r 22.02 |
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| Cases cited: | Aristocrat Technologies Pty Ltd v Allam [2017] FCA 812

ASF17 v Commonwealth (2024) 98 ALJR 782

Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397

Donald Campbell & Co v Pollak [1927] AC 732

Edwards v Nine Network Australia Pty Limited (No 6) [2024] FCA 758

Griffiths v Boral Resources (Qld) Pty Ltd (No 2) (2006) 157 FCR 112

House v The King (1936) 55 CLR 499

Hypec Electronics Pty Limited (in liquidation) v Mead; BL & GY International v Hypec Electronics Pty Ltd (in liq) (2004) 61 NSWLR 169

Molnar v Good Mood Food Pty Ltd [2020] FCA 1242

Northern Territory v Sangare (2019) 265 CLR 164

NZYQ v Minister for Immigration, Citizenship and Multicultural Affairs (2023) 280 CLR 137

QJKY v Minister for Immigration, Citizenship and Multicultural Affairs [2024] FCA 879

Re a Debtor (No 21 of 1950) (No 2); Ex parte the Petitioning Creditors v the Debtor [1951] 1 Ch 612

Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622

Ruddock v Vardalis (No 2) (2001) 115 FCR 229 |
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| Division: | General Division |
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| Registry: | New South Wales |
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| National Practice Area: | Administrative and Constitutional Law and Human Rights |
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| Number of paragraphs: | 89 |
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| Date of hearing: | 17 November 2025 |
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| Counsel for the Appellants: | Mr P Knowles SC and Mr J Barrington |
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| Solicitor for the Appellants: | Australian Government Solicitor |
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| Counsel for the Respondent: | Mr Q Rares and Ms M Bridgett |
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| Solicitor for the Respondent: | Heretic Law |
ORDERS

| | | NSD 917 of 2025 |
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| BETWEEN: | MINISTER FOR IMMIGRATION AND CITIZENSHIP

First Appellant

SECRETARY OF DEPARTMENT OF HOME AFFAIRS

Second Appellant | |
| AND: | GKX18

Respondent | |

| order made by: | MARKOVIC, HORAN AND MCDONALD JJ |
| DATE OF ORDER: | 24 March 2026 |
THE COURT ORDERS THAT:

1. Leave be granted to the first appellant and the second appellant (together, Appellants) to appeal from the orders of the Federal Circuit and Family Court of Australia (Div 2) made on 21 May 2025 in GKX18 v Minister for Immigration and Multicultural Affairs (No 2) (2025) 395 FLR 206; FedCFamC2G 718.

2. Leave be granted to the Appellants to file and serve a notice of appeal in the form annexed to the affidavit of Adrian Patrick Downie affirmed on 4 June 2025.

3. The appeal be allowed.

4. The orders made by the primary judge on 21 May 2025 be set aside and in lieu thereof order that:

(a) the Appellants pay the respondent’s costs of the proceeding in the Federal Circuit and Family Court of Australia (Div 2) up to and including 20 January 2025 on an ordinary basis, to be taxed in default of agreement;

(b) the respondent pay the Appellants’ costs of the costs submissions on an ordinary basis, to be taxed in default of agreement; and

(c) any costs payable under Order 4(a) above be set-off against the costs payable under Order 4(b) above as well as the costs ordered to be paid in GKX18 v Minister for Home Affairs & Anor [2019] FCCA 2018; GKX18 v Minister for Home Affairs & Anor [2020] FCA 263; and BQU22 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs & Anor (Federal Circuit and Family Court of Australia File No. SYG676/2022).

1. The respondent pay the Appellants’ costs of the application for leave to appeal filed on 4 June 2025 and the appeal, to be taxed in default of agreement.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

1 This application for leave to appeal, and if leave is granted, appeal brought by the Minister for Immigration and Citizenship and the Secretary of the Department of Home Affairs (together, Appellants) was heard at the same time as an application for leave to appeal brought by the Appellants in connection with orders made by the Federal Circuit and Family Court of Australia (Div 2) (FCFCoA) on the question of jurisdiction of that Court to hear the proceeding brought by GKX18 as then constituted before it. Accordingly, these reasons should be read with the reasons also published today in Minister for Immigration and Citizenship v GKX18 (Jurisdiction) [2026] FCAFC 27. The respondent to both applications is GKX18.

2 The present application and appeal concern the orders made by the FCFCoA on 21 May 2025 in relation to costs of the proceeding before it up to 20 January 2025 (Costs Orders) that:

(1) the Appellants pay GKX18’s costs of the proceeding, reasonably incurred, up to and including 20 January 2025, on an indemnity basis, to be assessed by the primary judge if not agreed;

(2) the Appellants pay GKX18’s costs of the costs submissions on an ordinary basis, to be assessed by the primary judge if not agreed; and

(3) the costs ordered to be paid in (1) and (2) above not be set-off against the costs ordered to be paid in GKX18 v Minister for Home Affairs & Anor [2019] FCCA 2018, GKX18 v Minister for Home Affairs & Anor [2020] FCA 263 and BQU22 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs & Anor (Federal Circuit and Family Court of Australia File No. SYG676/2022),

see GKX18 v Minister for Immigration and Multicultural Affairs (No 2) (2025) 395 FLR 206; FedCFamC2G 718 (PJ).

3 The events leading up to the making of the Costs Orders are set out in part in GKX18 (J urisdiction) at [4]-[17] with additional relevant background set out below.

4 On 20 January 2025 the proceeding below was listed before the primary judge for case management hearing at which time a number of matters were canvassed. By 20 January 2025 GKX18 had been granted a bridging visa.

5 In the Appellants’ submissions relied on for the purpose of the case management hearing, the Minister agreed to pay GKX18’s costs of, and incidental to, the proceeding insofar as GKX18 sought relief by way of habeas corpus up until the date of the case management hearing upon that aspect of the case being finalised. However, GKX18 sought an order that his costs be paid on an indemnity basis.

6 On 20 January 2025 the primary judge made a series of case management orders including orders for the parties to file their evidence and submissions in relation to GKX18’s application that his costs up to that date be paid on an indemnity basis and for the question of costs up to and including 20 January 2025 to be determined on the papers.

The primary judge’s reasons

7 Relevantly the primary judge considered: first, whether GKX18’s costs up to and including 20 January 2025 should be paid on an indemnity basis; and secondly, whether the Appellants are entitled to set off costs orders made in favour of the Minister in previous proceedings involving the Minister and GKX18 in the FCFCoA and this Court.

8 In considering whether GKX18 was entitled to indemnity costs, the primary judge considered each of the reasons on which GKX18 relied in support of his claim.

9 The first reason relied upon by GKX18 and considered by the primary judge was alleged unreasonable conduct on the part of the Appellants prior to commencement of the litigation. The primary judge set out the parties’ respective submissions and referred to the decision in Hypec Electronics Pty Limited (in liquidation) v Mead; BL & GY International v Hypec Electronics Pty Ltd (in liq) (2004) 61 NSWLR 169 at [46].

10 Her Honour observed that the Appellants had a duty not to detain GKX18 unlawfully and accepted that breach of that duty was the subject of the proceeding, namely an application by GKX18 for the Appellants to stop detaining him. The primary judge found that it followed that the Appellants’ prior conduct was relevantly connected to the litigation: at PJ 214 [39]. After referring to the Appellants’ submission that, based on the statutory regime which applied to GKX18’s detention, there was nothing unreasonable about their conduct prior to commencement of the litigation, the primary judge found that whilst “[i]t was within the Minister’s power to give [GKX18] a visa, which he did on 16 October 2024, without any explanation”, it was unclear why that had not occurred earlier and that, if the Minister had granted a visa at an earlier time, GKX18 would not have needed to be detained from the date of grant of such a visa: at PJ 214 [41]. The primary judge continued at PJ 214-5 [42] saying:

The [Appellants’] claim that the Tribunal’s non-refoulement findings in 2022 were “seriously questionable” is surprising. Are the [Appellants] asking the court to look at the merits of that finding? That would be inconsistent with the Minister’s granting [GKX18] a Bridging Visa E on 16 October 2024. The reasons for granting that visa were not explained to the court or [GKX18]. However, the conclusion seems unavoidable that the Minister granted the applicant the Bridging Visa E because the Tribunal’s non-refoulement findings were valid and sound.

11 Her Honour concluded that, absent any explanation as to why the Minister granted GKX18 a Bridging Visa E (BVE) on 16 October 2024 and not earlier, “it is difficult to avoid the conclusion that the delay in granting [GKX18] a visa, and releasing him from detention, was unreasonable”: at PJ 215 [43].

12 The second reason relied upon by GKX18 was that the Appellants’ defence was doomed to fail. The primary judge found that, although GKX18’s application for habeas corpus and an injunction had not, at the time of her consideration of the application for indemnity costs, been finalised, the Appellants had “largely capitulated on the habeas corpus application when the Minister granted [GKX18] a bridging visa and released him from detention”. Her Honour observed that while the injunction application remained “a live issue”, it was given very little attention by the parties up to and including 20 January 2025 and thus the fact that it remained to be determined had “negligible bearing on the costs issue”: at PJ 215 [48]-[49].

13 The primary judge concluded, on the material before her, that the Appellants’ habeas corpus case “was always weak and speculative and should not have been pursued”: at PJ 215 [50].

14 The third reason relied upon by GKX18 was the alleged unreasonable conduct on the part of the Appellants in relation to “non-refoulement policy”. GKX18 argued, in effect, that if the Appellants had given “due weight” to their own non-refoulement policy they could not possibly have defended the habeas corpus application: at PJ 216 [53]. The primary judge noted that, on the costs application, the Appellants argued that they ran the substantive case on the basis that GKX18 was not owed non-refoulement obligations, making the non-refoulement policy irrelevant. Her Honour found at PJ 216 [56] that:

In the absence of an explanation by the Minister, the only reasonable basis on which it appears that the Minister could have given [GKX18] a bridging visa was that he was owed non-refoulement obligations.

15 The primary judge concluded that “it was unreasonable for the [Appellants] to consider that a pre-removal clearance assessment, and especially one that was ‘not sufficient’ and not ‘thorough’, could override the Tribunal’s non-refoulement finding” and that “[t]his unreasonable stance infected the [Appellants’] entire case”: at PJ 216 [57].

16 The fourth reason relied upon by GKX18 was alleged unreasonable conduct on the part of the Minister after 16 October 2024. That unreasonable conduct was said to be constituted by the length of time taken by the Appellants to produce documents called for by GKX18. There were four categories of documents called for by GKX18. The primary judge considered each category but, in each case, found that the circumstances in which production was made or, in one case, withheld did not support an award of indemnity costs: at PJ 216-7 [58]-[65].

17 GKX18 also raised as unreasonable conduct the uncertainty surrounding his immigration status after his bridging visa expired on 17 February 2025 and the length of time it took for the Appellants to provide an update to him. Once again, the primary judge rejected this as a basis for an award of indemnity costs in GKX18’s favour: at PJ 217-8 [66]-[68].

18 Another reason based on which GKX18 said he was entitled to indemnity costs, which the primary judge referred to as “[r]eason 4A”, was his success on the habeas corpus application to date. The primary judge rejected this as a basis for an award of indemnity costs, noting that it was no doubt the reason why the Appellants conceded that they should pay costs on the ordinary basis up to 20 January 2025: at PJ 218 [69].

19 The fifth reason relied upon by GKX18 was that the Appellants failed to comply with the overarching purpose of rules of court, being to facilitate the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible. In support of this reason, GKX18 relied upon a letter dated 13 October 2024 addressed to the Appellants which set out an offer to resolve the habeas corpus application. As GKX18 had not achieved a better outcome than the terms set out in that letter, the primary judge found that it did “not meet the requirements of a Calderbank offer” and thus the “Calderbank principles” did not apply: at PJ 218 [70]-[73]. However, the primary judge found, based on the material before her, that the Appellants’ conduct “involved non-Calderbank unreasonableness”. At PJ 218-9 [74]-[76] her Honour relevantly said:

74    … As noted above, the Minister, without explanation, gave [GKX18] a Bridging Visa E on 16 October 2024. The facts known on 16 October 2024 were the same as the facts known prior to the commencement of the litigation, namely, that the High Court had handed down its judgment in NZYQ and the Tribunal had made non-refoulement findings in respect of [GKX18].

75    The one additional fact, that only became apparent during the cross-examination of the [Appellants’] witnesses on 11 October 2024, was that the pre-removal clearance assessment, conducted by the [Secretary’s] own department, was not sound. Prior to 11 October 2024, the [Appellants] appear to have been of the view that the departmental assessment could displace the Tribunal’s non-refoulement findings. The [Appellants] have not sought to justify that view. At this stage of the proceedings, I can only conclude that the [Appellants’] view was wrong, and was always wrong.

76    In all the circumstances, and on the material presently before me, it was unreasonable for the [Appellants] to not release [GKX18] from detention following the High Court’s decision in NZYQ on 28 November 2023 and [GKX18’s] request for his release from detention by letter dated 7 August 2024. That letter was about one month prior to the commencement of the habeas corpus proceedings.

20 The primary judge also found that it was unreasonable for the Minister to place condition 8510 on GKX18’s BVE, which she noted the Appellants had conceded: at PJ 219 [77].

21 The primary judge then drew her conclusion. Based on the material before her she found that the Minister “ought to have released [GKX18] from detention following the High Court’s decision in NZYQ and [GKX18’s] letter dated 7 August 2024” and thus that he should have been released prior to the commencement of the proceeding because of the reasoning in NZYQ v Minister for Immigration, Citizenship and Multicultural Affairs (2023) 280 CLR 137 and the Tribunal’s non-refoulement finding. Her Honour found that “it was grossly unreasonable for the [Appellants] to oppose the application for habeas corpus based on nothing more than the departmental pre-removal clearance assessment, especially as their own witnesses admitted that assessment was ‘not sufficient’ and not ‘thorough’”: at PJ 219 [80]. The primary judge concluded that the Appellants ran their case “in wilful disregard of known facts or clearly established law” or “made ‘allegations which ought never to have been made’ or unduly prolonged the case by ‘groundless contentions’” and thus ought to pay GKX18’s costs reasonably incurred up to and including 20 January 2025 on an indemnity basis: at PJ 219 [81].

22 The primary judge then considered the question of the set-off of costs of approximately $18,000 owed to the Minister alone by GKX18 as a result of costs orders made in the Minister’s favour in 2019, 2020 and 2022. Her Honour acknowledged the issue raised in the authorities about the necessity of an identity of parties but did not consider that to be an issue given that the Appellants in the case were essentially the Commonwealth. Rather, her Honour was persuaded to accept GKX18’s submission that set-off should not be permitted in circumstances where his lawyers were acting on a conditional costs basis. GKX18 submitted that “eating into any costs order with a set-off would discourage lawyers from acting on such a basis for other people in the future” which was contrary to the public interest: at PJ 220 [87].

23 The primary judge accepted that that there is a public interest in “people challenging governmental decisions being adequately legally represented” and allowing a set-off in the circumstances may discourage appropriate lawyers from acting. Her Honour found that this factor weighed particularly heavily where, based on the material before her, the Appellants had acted unreasonably: at PJ 220 [88].

Leave to appeal should be granted

24 As set out above, the Appellants require leave to appeal from the primary judge’s orders. The relevant principles which guide a grant of leave to appeal are settled. Leave to appeal will be granted if the decision the subject of the application is attended by sufficient doubt to warrant its reconsideration on appeal and if substantial injustice would result if leave to appeal was refused, supposing the decision to be wrong: see Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398-399.

25 In our view leave to appeal should be granted. For the reasons we set out below in considering the grounds of appeal, we are satisfied that the primary judge’s decision is attended by sufficient doubt to warrant its reconsideration. We are also satisfied that substantial injustice would result if leave to appeal was refused. In that regard we accept the Appellants’ submission that the primary judge’s decision, if not corrected, is potentially of relevance to a large number of cases. It suggests both that the Appellants’ conduct might give rise to an order for indemnity costs if the Appellants detain a person unlawfully before a proceeding for habeas corpus is commenced and that the Appellants (or any other party) may not be able to set off costs orders made in their favour where lawyers act on the other side of the record pursuant to a conditional costs agreement.

The grounds of appeal

26 In the draft notice of appeal, the Appellants raise the following five grounds of appeal (omitting particulars):

1.    The learned primary judge erred by finding the appellants had engaged in unreasonable conduct prior to the commencement of litigation that was “relevantly connected with the litigation” (Reason 1).

2.    The learned primary judge erred by finding that the appellants had engaged in unreasonable conduct by advancing a case in relation to the habeas corpus proceedings that was “always weak and speculative” (Reason 2).

3.    The learned primary judge erred by finding that the appellants had engaged in unreasonable conduct with respect to the “non-refoulement policy” (Reason 3).

4.    The learned primary judge erred by finding that the appellants’ conduct involved “non-Calderbank unreasonableness” and acted unreasonably by refusing to “settle” (Reason 5).

5.    The learned primary judge erred in refusing to set off the respondent’s costs against the previous costs orders made in favour of the appellants.

27 The primary judge’s orders the subject of this appeal concerned the costs of the proceeding before her Honour. They were made as a result of an exercise of a discretion on the part of the primary judge under r 22.02(2) of the Federal Circuit and Family Court (Division 2) (General Federal Law) Rules 2021 (Cth) which provides that in making an order for costs in a proceeding that court may, among other things, set the method by which costs are to be calculated.

28 Given the discretionary nature of the orders the subject of this appeal, in order to succeed, the Appellants must establish an error of the kind identified in House v The King (1936) 55 CLR 499. That is, they must establish that the primary judge acted on a wrong principle, allowed extraneous or irrelevant matters to guide her, or that the decision is unreasonable or plainly unjust.

29 Grounds 1 to 4 concern the primary judge’s finding that the Appellants should pay GKX18’s costs on an indemnity basis and ground 5 concerns the primary judge’s finding that the Appellants are not entitled to set off previous costs orders made in the Minister’s favour, against any costs order made in favour of GKX18 in the proceeding below. We consider the grounds of appeal in turn below.

Grounds 1 to 4: the indemnity costs order

30 The Appellants contend that the primary judge made four errors, which are reflected in the grounds of appeal, leading up to and including her ultimate finding that the Appellants should pay GKX18’s costs up to and including 20 January 2025 on an indemnity basis.

31 The first alleged error relied upon by the Appellants is a contention that the primary judge erred in finding that they had engaged in unreasonable conduct prior to the commencement of litigation. In summary, the Appellants submit that the primary judge misunderstood or misapplied relevant legal principle in concluding that they had acted unreasonably prior to the commencement of the litigation by detaining the respondent unlawfully, and that this prior conduct was relevantly connected with the litigation because it was the subject matter of the litigation.

32 This alleged error concerns the application by the primary judge of the principles in Hypec Electronics which the Appellants submit her Honour misunderstood or misapplied. In response, GKX18 submits that the primary judge faithfully adopted the reasoning as to breach of duty in Hypec Electronics at PJ 214 [41] and that is sufficient to dispose of this ground as a basis for leave to appeal as it rises no higher than being merely arguable.

33 GKX18 relies on Northern Territory v Sangare (2019) 265 CLR 164 where the High Court said at [24]:

It is well established that the power to award costs is a discretionary power, but that it is a power that must be exercised judicially, by reference only to considerations relevant to its exercise and upon facts connected with or leading up to the litigation.

(Footnote omitted.)

34 GKX18 observes that in support of that proposition the High Court cited the decision of the House of Lords in Donald Campbell & Co v Pollak [1927] AC 732 at 811-812, which GKX18 describes as the seminal authority on point, where Viscount Cave LC said at 812:

Thus, if to put a hypothesis which in our Courts would never in fact be realized – a judge were to refuse to give a party his costs on the ground of some misconduct wholly unconnected with the cause of action or of some prejudice due to his race or religion or (to quote a familiar illustration) to the colour of his hair, then a Court of Appeal might well feel itself compelled to intervene. But when a judge, deliberately intending to exercise his discretionary powers, has acted on facts connected with or leading up to the litigation which have been proved before him or which he has himself observed during the progress of the case, then it seems to me that a Court of Appeal, although it may deem his reasons insufficient and may disagree with his conclusion, is prohibited by the statute from entertaining an appeal from it.

35 GKX18 submits the relevant statute, s 214 of the Federal Circuit and Family Court of Australia Act 2021 (Cth), does not place a fetter on the exercise of the court’s discretion and on no fair view were the primary judge’s reasons as to costs wholly unconnected with the litigation. Her Honour’s decision fell within the reasoning in Sangare and Donald Campbell. GKX18 submits that the primary judge’s discretion did not miscarry by taking into account this consideration, as one of several considerations, in making her decision.

36 There was no dispute that in making the order that the Appellants pay GKX18’s costs on an indemnity basis her Honour exercised a discretion. Nor was there any dispute that in doing so there was no fetter on the exercise of that discretion other than that it be exercised judicially: see for example Edwards v Nine Network Australia Pty Limited (No 6) [2024] FCA 758 at 6. The question raised by this ground is whether the primary judge acted upon a wrong principle.

37 In drawing her conclusion that the Appellants’ prior conduct was relevantly connected to the litigation the primary judge relied on Hypec Electronics. That case concerned, among other things, an application by the liquidator of Hypec Electronics Pty Ltd (in liquidation) for indemnity costs against the first and second defendants, Mr and Mrs Mead. The liquidator argued that the proceedings were necessary because of Mr and Mrs Mead’s conduct and that accordingly costs should be awarded against them on an indemnity basis. Commencing at [40] Campbell J considered the principles relevant to an award of indemnity costs including noting at [42]:

In Cretazzo v Lombardi (1975) 13 SASR 4 at 11, Bray CJ (with whom the other members of the Full Court agreed) referred to the South Australian rule making costs in the discretion of the court, and (referring to Donald Campbell & Co v Pollak [1927] AC 732) said:

“Time and again attempts have been made to fetter that general discretion by the imposition of judge-made rules. Time and again those fetters have been released by appellate courts. I think the guiding principle still stands as it left the House of Lords in the famous case of Donald Campbell & Co v Pollak [1927] AC 732, that the general discretion is absolute and unfettered, except that it must be exercised judicially, not arbitrarily or capriciously, and that it cannot be exercised on grounds unconnected with the litigation.”

If that is true of the general discretion as to costs, it must also be true of the discretion to order indemnity costs. But what sort of connection with the litigation suffices?

38 In answering the question his Honour posed about the sort of connection with the litigation that would justify an order for indemnity costs Campbell J referred to a number of authorities. At [45]-[47] his Honour said:

45    In NMFM Property Pty Ltd v Citibank Ltd (No 2) (2001) 109 FCR 77, Lindgren J said (at 92 [56]):

“The ordinary rule is that an award of costs is on the party and party basis, and that it is only in a special case that the discretion to depart from that rule will be properly exercised: Venture Industries at 153 per Black CJ, 158 per Cooper and Merkel JJ. In my opinion, there is no counterpart ordinary rule that in the absence of special circumstances indemnity costs will be ordered where the losing party was guilty of ethical or moral delinquency in the antecedent facts which have given rise to the litigation. Even in a proved case of fraud, for example, in my opinion the presumption is that a costs order against the fraudulent party will be on the party and party basis. The conduct of a party that is relevant to the issue of indemnity costs is the party’s conduct as litigant. But, as noted below, the knowledge that a party has, including knowledge of his or her past conduct, may be relevant to an assessment of his or her conduct as litigant.”

46    See also, to similar effect, Sande v Medsara Pty Ltd (No 2) [2004] NSWSC 262 at [7], per Burchett AJ; White Constructions (ACT) Pty Ltd (in liq) v White [2004] NSWSC 303 at [10]–[11], per McDougall J. A connection with litigation, which takes the form of being the facts which are themselves the subject matter of the litigation, is not a relevant type of connection for the purposes of making an indemnity costs order. Nor is it a relevant sort of connection that the person has, in the circumstances which are the subject of the litigation, breached duties which they owe to one of the litigants, where that breach of duty is not itself the subject of the litigation. Nor is the fact that someone has engaged in tax fraud in the circumstances which have led up to the litigation.

47    In the present case, the liquidator points to no relevant conduct of Mrs Mead in the litigation itself, beyond her denying, initially, the entitlement of Hypec Electronics to properties concerning which she ultimately consented to orders requiring their transfer to the company. For the same reasons as apply to Mr Mead’s similar denial, that does not warrant an order for indemnity costs.

39 The primary judge referred to Hypec Electronics, particularly at [46]. However, having done so her Honour misapplied the principles set out therein. As recognised in Hype c Electronics (at [45]) the relevant conduct for the purposes of considering whether costs should be assessed on an indemnity basis is the conduct of the relevant party as litigant (our emphasis). As explained by Campbell J (at [46]) the conduct of the party against whom the order is sought must be connected to the litigation but not be constituted by the facts which are in issue in the litigation. Similarly, and relevant to the present case, the required connection is not constituted by the alleged breach of duty which is also the subject of the litigation. If it were otherwise, on each occasion that a respondent or defendant denied engaging in conduct or breaching its duty which was the subject of the proceeding and was ultimately unsuccessful in its defence, or, as was the case here, acceded to relief that was in issue, the successful applicant or plaintiff would prima facie be entitled to its costs on an indemnity basis.

40 In reaching her conclusion that the Appellants acted unreasonably, the primary judge relied on the conduct that was the subject of the litigation. That is, the primary judge relied on the alleged breach by the Appellants of their duty not to detain GKX18 unlawfully which her Honour observed “was the subject matter” of the proceeding and, it followed, the Appellants’ prior conduct, presumably in detaining GKX18, was “relevantly connected with the litigation”. That was, as we have already observed, contrary to and a misapplication of the principles set out in H ypec Electronics.

41 There may well be circumstances where, as was recognised in Sangare and Donald Campbell, “facts connected with or leading up to the litigation” can be taken into account in determining the basis on which an award of costs should be made. That is, a party’s conduct as a litigant can encompass facts leading up to the litigation, without encompassing the subject-matter of the proceeding itself. In NMFM Property Pty Ltd v Citibank Ltd (No 2) (2001) 109 FCR 77 (see [38] above) Lindgren J observed (at [56]) that the knowledge of a party, “including knowledge of his or her past conduct, may be relevant to an assessment of his or her conduct as litigant”. For example, if a party knows, or ought to have known, that he or she is acting improperly in bringing or defending a claim, but nonetheless proceeds to do so, that conduct may be relevant to the exercise of the costs discretion. But that is different to and to be contrasted with taking into account the facts in issue in the proceeding, including the alleged breach of duty that is the subject of the proceeding, on the question of costs.

42 GKX18 calls in aid R e Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 at 624. However, that does not assist him given the different application considered in that case.

43 Lai Qin concerned an application for an order for costs by an applicant who had commenced a proceeding in the High Court for writs of prohibition, certiorari and mandamus directed to the Minister for Immigration and Ethnic Affairs (as the Minister was then known) and the (former) Refugee Review Tribunal (RRT). The applicant had previously been refused a protection visa by the Minister and had been unsuccessful in her application for review in the RRT. One week after the applicant commenced the proceeding, the Minister exercised his discretion under s 417 of the Migration Act 1958 (Cth) and granted her a protection visa. The applicant contended that it was just to make a costs order in her favour because the Minister should have informed her legal advisers prior to commencement of the proceeding that he intended to review her application for a protection visa.

44 In considering that application McHugh J said at 624-625:

In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation. …

(Footnotes omitted; emphasis added.)

45 GKX18 relies in particular on the final two sentences in the extract above. However, there McHugh J was considering whether an order for costs against the Minister was justified and not whether an order for costs should be made on an indemnity basis. The relevant question in that case was whether the Minister acted unreasonably “in not informing the [applicant] that an application to review the decision to refuse a visa was being considered”. It was the answer to that question which would inform the question of whether a costs order should be made in the applicant’s favour.

46 The second alleged error is that the primary judge misunderstood the scheme of the Migration Act. This alleged error concerns the primary judge’s reliance on the Administrative Appeals Tribunal ’s (now the Administrative Review Tribunal) findings in 2022. Those findings were made by the Tribunal in its decision made on 19 April 2022 affirming the decision of a delegate of the Minister cancelling GKX18’s Subclass 030 (Bridging C) visa (BVC). The BVC was cancelled under s 116 of the Migration Act.

47 In that context, the Tribunal considered whether “non-refoulement obligations [were] owed to [GKX18]” and in doing so accepted GKX18’s claims in relation to the risks of harm to which he would be exposed if he was to return to Iraq, particularly in relation to his mental health with the remaining claims depending on intervening factors. The Tribunal found (at [177] of its reasons) that GKX18 “being forced to return to Iraq if his visa is cancelled would breach Australia’s non-refoulement obligations under international agreements” but continued by noting that this was not the re-agitation of GKX18’s application for a protection visa but was “one of many discretionary considerations the Tribunal must weigh in deciding whether [GKX18’s] visa should or should not be cancelled.”

48 The primary judge referred to the Tribunal’s non-refoulement findings in considering the question of indemnity costs:

(1) the Tribunal’s non-refoulement finding was one of the factors that informed the primary judge’s finding that the Appellants’ case in relation to habeas corpus “was always weak and speculative”: at PJ 215 [50];

(2) the primary judge found that it was unreasonable for the Appellants to consider that a pre-removal clearance assessment, “especially one that was ‘not sufficient’” or “thorough”, could override the Tribunal’s non-refoulement finding: at PJ 216 [57];

(3) the primary judge also found that the Minister gave GKX18 a BVE on 16 October 2024 in circumstances where the facts known before and after that date, “namely that the High Court had handed down its judgment in NZYQ and the Tribunal had made non-refoulement findings”, were the same and the Appellants did not seek to justify the view that a pre-removal clearance assessment conducted by the “[Secretary’s] own department” could displace the Tribunal’s non-refoulement findings: at PJ 218-9 [74]-[75]; and

(4) the primary judge concluded that GKX18 “should have been released from detention prior to the commencement of the proceedings because of the reasoning in NZYQ and because of the non-refoulement findings made by the Tribunal”, that it was “grossly unreasonable” for the Appellants to have opposed the habeas corpus application “based on nothing more than the departmental pre-removal clearance assessment” and that the Appellants ran their case “in wilful disregard of known facts or clearly established law” or “unduly prolonged the case by making ‘groundless contentions’”: at PJ 219 [80]-[81].

49 As the Appellants submit, in making these findings it is apparent that the primary judge considered that the Tribunal’s non-refoulement findings had some relevance or importance for the Minister’s department and in so doing gave them a significance which, on a proper understanding of the Migration Act, they did not have. As set out above, those findings were made as part of a review of a decision to cancel GKX18’s BVC under s 116 of the Migration Act and did not form part of the consideration of a valid application for a protection visa.

50 In broad terms, and depending on an individual’s particular circumstances, s 198 of the Migration Act requires an officer to remove an unlawful non-citizen as soon as reasonably practicable. Section 197C relevantly provides:

(1)    For the purposes of section 198, “it is irrelevant whether Australia has non-refoulement obligations in respect of an unlawful non-citizen.

(2)    An officer’s duty to remove as soon as reasonably practicable an unlawful non-citizen under section 198 arises irrespective of whether there has been an assessment, according to law, of Australia’s non-refoulement obligations in respect of the non-citizen.

51 In ASF17 v Commonwealth (2024) 98 ALJR 782 Gageler CJ, Gordon, Steward, Gleeson, Jagot and Beech-Jones JJ relevantly said in relation to the operation of subs 197C(1) and (2) and s 198 at [38]:

Section 197C(1) combines with s 197C(2) to make clear that, in the absence of an extant protection finding in respect of a country which engages the operation of s 197C(3) of the Act, the power and duty to remove an alien detainee under s 198(1) or s 198(6) of the Act is not affected by any non-refoulement obligations Australia may or may be claimed to have in respect of that alien. The statutory consequence is that a claim on the part of a detainee facing removal to fear harm in a country to which the detainee might be removed is insufficient to preclude removal to that country irrespective of whether that claim might be found on investigation to be genuine or well-founded. The scheme of the Act accommodates 11th-hour claims of that nature exclusively through the potential for the exercise of one or other of the personal non-compellable powers conferred on the Minister by s 48B or s 195A.

52 Thus, the Tribunal’s findings in 2022 that GKX18 was owed non-refoulement obligations were not a barrier to his removal. That said, s 197C(3) relevantly provides:

Despite subsections (1) and (2), section 198 does not require or authorise an officer to remove an unlawful non-citizen to a country if:

(a)    the non-citizen has made a valid application for a protection visa that has been finally determined; and

(b)    in the course of considering the application, a protection finding within the meaning of subsection (4), (5), (6) or (7) was made for the non-citizen with respect to the country (whether or not the visa was refused or was granted and has since been cancelled); and

…

53 The term “protection finding” is defined in subs 197C(4), (5) and (6) by reference to s 36A and s 36 of the Migration Act, and in s 197C(7) by reference to the “circumstances prescribed by the regulations”. Relevantly, there was no extant protection finding in relation to GKX18. His application for a protection visa had been refused.

54 It follows, as the Appellants submit, that the Tribunal’s non-refoulement findings had no legal status under the Migration Act. Notwithstanding that, the primary judge gave them such a status. Implicit in the emphasis her Honour gave to them is a misunderstanding of their relevance in light of GKX18’s circumstances and the scheme of the Migration Act. The primary judge erred in her approach to the Tribunal’s 2022 non-refoulement findings. This error in turn infected her Honour’s findings and reasoning (see [48] above) and, in particular, her ultimate finding that it was grossly unreasonable for the Appellants to defend the habeas corpus application or that they ran the case in wilful disregard of known facts or clearly established law.

55 This erroneous approach also informs the third alleged error which concerns the primary judge’s finding about the merits of the Appellants’ case, namely that it was “always weak and speculative”: at PJ 215 [50]. The Appellants contend that in the circumstances of this case it was wrong for the primary judge to embark upon this task and to make such a finding. For the following reasons we accept that is so.

56 First, for the most part, it is not appropriate for a court to make a finding about the outcome of a case on a costs application: see Lai Qin at 626 and Molnar v Good Mood Food Pty Ltd [2020] FCA 1242 at 27. Secondly, in this case the Minister exercised his power to issue a BVE to GKX18 at a time when the habeas corpus application was part heard. Thirdly, despite that application being part heard, the primary judge made a finding that the Appellants’ case was always weak and speculative and should not have been pursued. Lastly, the primary judge also seemed to have inferred that the reason why the Minister issued the BVE to GKX18 was because he recognised that his defence would fail, which is also the fourth alleged error in the primary judge’s reasons. In doing so, the primary judge engaged in speculation. There was no evidence before her Honour based upon which such an inference could be drawn. That the Minister did not provide reasons for granting the BVE on 16 October 2024 is not a sufficient basis to draw such an inference. The Minister was not required to give reasons for acting as he did. Indeed, there may have been several reasons why the Minister determined to issue the BVE to GKX18 when he did.

57 Relatedly, the power of the Minister to make a decision to grant a BVE to GKX18 did not depend on whether GKX18’s detention prior to the grant of the BVE was unlawful. The grant of the BVE might have been influenced by the Minister’s view of the Appellants’ prospects of success on the habeas corpus application, but it might well have been influenced by other considerations that did not imply any acceptance on the part of the Minister that GKX18 had been, or was being, detained unlawfully. For example, the Minister could have decided that it was appropriate to grant a BVE to GKX18 if the Minister had formed the view that GKX18 was required to be detained for the purpose of his removal, because s 197C of the Migration Act did not prevent his removal, but that he should not be removed in circumstances where there had been conflicting assessments of whether Australia owed non-refoulement obligations to him. This may be especially so in light of the acceptance by the Appellants’ own witnesses that the departmental pre-removal clearance assessment that had been undertaken did not involve a thorough assessment of Australia’s non-refoulement obligations.

58 Each of these errors informed the primary judge’s ultimate finding that the Appellants acted unreasonably in defending the application for habeas corpus which was, in turn, the basis on which the primary judge determined that the Appellants should pay GKX18’s costs on an indemnity basis up to and including 20 January 2025. We are satisfied that in making that order the primary judge’s discretion miscarried.

Ground 5: set-off

59 Before the primary judge the Appellants sought an order that they be permitted to set-off three costs orders made in the Minister’s favour in 2019, 2020 and 2022 in other proceedings involving GKX18 (E arlier C osts O rders). The total amount of the Earlier Costs Orders is approximately $18,000. The primary judge refused to make such an order. The Appellants contend that her Honour erred in doing so. The primary judge’s reasons for refusing the order sought by the Appellants are summarised at [22]-[23] above.

60 The Appellants submit that the primary judge’s discretion in refusing the order for set-off miscarried for two reasons. First, by taking into account the unreasonable behaviour of the Appellants; and secondly, in misunderstanding the public interest in lawyers acting pursuant to a conditional costs agreement. As to the latter, the Appellants say that the primary judge acted on a wrong principle in applying different principles to the question of set-off where a party is represented by lawyers acting under a conditional costs arrangement.

61 In order to consider whether the primary judge erred as alleged, it is convenient to start with the authorities.

62 In Griffiths v Boral Resources (Qld) Pty L t d (No 2) (2006) 157 FCR 112 the appellant, who was represented by counsel acting on a pro bono basis, sought a direction that the costs order in his favour not be set off against a judgment debt owed by him to the respondent. Justice Collier (with whom Spender and Dowsett JJ agreed) considered the question of set-off commencing at [21]. At [26] her Honour referred to a case with similar facts to that before the Court, Re a Debtor (No 21 of 1950) (No 2); Ex parte the Petitioning Creditors v the Debtor [1951] 1 Ch 612. At [27] Collier J noted that Danckwerts J in Re a Debtor was of the view that there was a discretion to allow a set-off and thus power to order a stay of the order for payment of costs by the applicant to the debtor. Her Honour continued at [27]-[29]:

27    … In particular, he said at 618-619:

In the circumstances of this case should a stay be directed so as to prevent the debtor issuing execution against his creditor? Prima facie, it seems to me that it is most unfair that the creditor should have to pay his debtor. Sir George Jessel, MR in Pringle v Gloag (10 Ch D 676, 680) said: “If a solicitor says, unless I have a lien I cannot get paid, the answer is he should see before he undertakes a particular business for a client that that client is able to pay him for it: a solicitor is not compelled to work for an insolvent client”. On the other hand, it is said that unless the debtor recovers these costs, his solicitor will have no chance of being paid, and that this will discourage solicitors from giving persons who are in danger of being made bankrupt the legal assistance which they need against proceedings wrongfully instituted against them. It is said also that a set-off would enable the creditor to that extent to be paid in full. On the other hand, if the debtor recovers the costs, his solicitor obtains payment in full. It is unfortunate that in successive editions of Williams on Bankruptcy the statement has been repeated that in bankruptcy a set-off is only admissible as regards several orders for costs in bankruptcy, because this statement may have misled those who have to deal with bankruptcy matters. But it is difficult to see why an unpaid creditor should be required to provide for the costs of his debtor’s solicitor, and be subject to the risk of an execution to recover the amount of such costs. Accordingly it seems to me that a stay of execution should be granted in this case.

(emphasis added.)

28    Harman J agreed and said (at 620):

It seems to me … that as between the parties there can be no equity to refuse a set-off and that to suggest that there is some equity obliging one party to pay the costs of the solicitor to the other is absurd.

and later (at 621-622):

I cannot see any reason why the creditor should pay the costs of his debtor’s solicitor if the latter is unable to do so, nor do I believe that a solicitor accepting the retainer of a person against whom bankruptcy proceedings are pending does so in reliance on the view that petitioner’s solicitor may blunder and thus give him the advantage of an order for costs against the petitioner.

29    In my view the approach taken by the court in Re a Debtor (No 21 of 1950) (No 2) [1951] 1 Ch 612 is correct, and applicable in this case.

63 Justice Collier recognised that “there is a substantial public interest in practitioners acting on a pro bono basis (under O 80 of the former Federal Court Rules). Her Honour relevantly continued at [31]:

However Heerey J in CGP [2003] ASAL 55-090 recognised that, although O 80, r 9(2) does not say from whom the pro bono practitioner is entitled to recover, the better view is that the practitioner is entitled to recover his or her costs from the assisted litigant for whom the practitioner acts, rather than from the party ordered to pay the costs. In my view, this is the correct interpretation of O 80, r 9(2). To stretch the interpretation of O 80, r 9(2) to deprive the respondent of its right of equitable set-off as sought by the appellant in this case would, in my view, be an inappropriate exercise of the discretion of the Court under s 43 of the Federal Court Act. …

64 Justice Dowsett in agreeing with the reasons of Collier J added at [3]:

Firstly, whilst it is desirable that counsel who appears on a pro bono basis be recompensed if that is at all possible, it is equally desirable that a practitioner be paid when he or she appears in expectation of receiving a proper fee. If policy dictates that in the present circumstances any set-off should be barred in order to assist pro bono counsel, then the same course should be adopted if counsel appearing on instructions in the usual way will not otherwise be paid.

65 There was no dispute that the power to order a set-off of costs is discretionary: see Aristocrat Technologies Pty Ltd v Allam [2017] FCA 812 at [13]. In Aristocrat (at [13]) Perram J, referring to the decision of Beazley JA in Miller Director of Public Prosecutions (No. 2) [2004] NSWCA 249, observed that the discretion is a broad one under which a number of factors may be taken into account including “the public interest, the efficient administration of justice, and the conduct of the parties”.

66 Justice Perram identified three issues to be considered, the second of which was “[i]f the solicitors are entitled to a lien over the fruits of the High Court’s costs certificate, which prevails: the right of Aristocrat to set-off or the security entitlements of the solicitors?”: at [7]. Aristocrat had several costs orders in its favour against Mr Allam while Mr Allam (and Tonita Enterprises Pty Ltd) had the benefit of a costs certificate in the High Court against Aristocrat. His Honour answered the issue, relevantly saying at [9]:

However, it is equally well-established that if there would otherwise be a set-off between the parties to the litigation, a Court will not deprive a party of that set-off merely because to do so will eliminate the fund onto which a solicitor’s lien might otherwise attach. This is a matter of common sense because it is difficult to imagine that the solicitors can end up in a better position than the client could have vis-à-vis the judgment debt. Put another way, the stream cannot rise higher than the source. Common sense is borne out by the explanation by Jordan CJ in Ex parte Patience that the solicitor’s equitable right is a security right from which the impossibility of the solicitor’s right exceeding the client’s own rights may be readily discerned. …

67 In QJKY v Minister for Immigration, Citizenship and Multicultural Affairs [2024] FCA 879 Kennett J considered an application by the respondents to set-off, against any liability to pay costs, the applicant’s liability pursuant to a costs order made in 2021 in favour of the Minister. At [30] Kennett J recognised that there was power to order a set-off of costs orders when it is equitable to do so and observed that the “power can assist in circumstances where ordinary principles relating to set-off under the general law might not apply”.

68 Justice Kennett also observed at [31]:

The starting point is that the 2021 costs order should not be treated as optional. The applicant cannot expect reimbursement out of the public purse in respect of the present proceedings while his liability to reimburse one of the present respondents arising out of an earlier proceeding, in which he was unsuccessful, goes unmet. To put it another way, the Minister has the same right not to be left out of pocket in relation to the earlier proceeding (where the applicant failed) as the applicant does in relation to this proceeding.

69 Relevantly, Kennett J noted the possibility that the applicant may not be able to pay his solicitors. His Honour said at [37]:

The circumstances of the applicant indicate a possibility that he lacks the resources to pay his solicitors and counsel. It may be, therefore, that it is their interests (rather than those of the applicant himself) that are most affected by making an order for set-off. The Court is significantly assisted by the efforts of practitioners who take on cases such as this one despite the risk of receiving no payment for those efforts. However, no evidence or argument has been directed to this point. I have therefore treated the question of set-off as one involving issues of fairness as between the applicant and the respondents.

70 At [38] Kennett J concluded that an order should be made permitting the respondents to set off the costs of the proceeding against the 2021 costs order.

71 GKX18 referred the Court to a number of authorities about the concept of the “public interest”. While none of these cases concerned the question of set-off of costs we accept, as observed in Ruddock v Vardalis (N o 2) (2001) 115 FCR 229 at 14, that the concept of public interest is a broad one.

72 The primary judge accepted the submission that ordering a set-off would discourage lawyers acting on a conditional costs basis from acting in that capacity in the future because it would reduce the amount available to satisfy their costs. This would thus discourage lawyers from acting on a conditional costs basis and be contrary to the public interest. The primary judge concluded that this factor “weighed heavily”, particularly where, on the material before her Honour, the Appellants “have behaved unreasonably”: at PJ 220 [88]. Thus, the primary judge exercised her discretion not to permit a set-off against the Earlier Costs Orders.

73 In proceeding on the basis that the Appellants had “behaved unreasonably” and taking that into account as a factor in the exercise of the discretion not to permit set-off, her Honour’s discretion miscarried. That is because, for the reasons we have already given in relation to grounds 1 to 4 of the appeal, her Honour should not have found that the Appellants behaved unreasonably.

Disposition

74 It follows from the above that the Appellants should be granted leave to appeal from the orders made by the primary judge on 21 May 2025 and leave to file the notice of appeal in the form annexed to the affidavit of Adrian Patrick Downie affirmed on 4 June 2025.

75 For the reasons given the primary judge’s exercise of discretion in making the costs orders and in not permitting set-off miscarried.

76 Among others, the Appellants sought orders in the proceeding below that they pay GKX18’s costs on the ordinary basis and that any costs payable pursuant to that order be set off against the Earlier Costs Orders. However, it does not follow that, because the primary judge’s exercise of discretion was affected by error, the appeal should be allowed and those orders made. Rather, the question arises as to whether the matter should be remitted to the primary judge to re-exercise the discretion or whether this Court should do so. While the parties have not addressed us on their preferred course, we prefer the latter course and, based on the material before this Court, are in as good a position as the primary judge to re-exercise the discretion.

77 We first consider GKX18’s application for indemnity costs. He seeks his costs on that basis for the six reasons set out in his submissions relied on before the primary judge and addressed by her Honour. We have found that the Appellants did not act unreasonably in defending the application for habeas corpus, contrary to the finding of the primary judge and are of the view that none of the other matters relied on by GKX18 in support of his application for indemnity costs is compelling. In those circumstances, we would not exercise our discretion to make an order that the Appellants pay GKX18’s costs of the proceeding below up to 20 January 2025 on an indemnity basis. The Appellants should pay those costs on the ordinary basis, as agreed or taxed.

78 That leaves the Minister’s application to set-off the Earlier Costs Orders against their liability to GKX18 for his costs in the proceeding below up to 20 January 2025.

79 The Appellants submitted below that it would be just to make such an order, it is in the interests of finality and no equity would be served by requiring the Minister to bear the cost of taking enforcement action in the earlier proceedings to recover his costs from GKX18 or by requiring the Appellants, jointly and severally, to pay GKX18’s costs in the proceeding below while the Earlier Costs Orders remain unsatisfied.

80 GKX18 submitted below that, in considering a set-off, the Court is entitled to take into account a variety of factors including the public interest, the efficient administration of justice, and the conduct of the parties. He submitted that a set-off should not be ordered for the following reasons:

(1) he is not a commercial litigant. The subject matter of the proceeding involves the liberty of GKX18 in which he sought legal representation on a conditional costs basis. He is impecunious and has spent six years in detention;

(2) securing legal representation on a conditional costs basis means that he will only recover costs in accordance with such agreements. Making an order for a set-off has the potential to discourage legal practitioners from giving assistance on a pro bono or conditional costs basis and it is thus not in the public interest to order a set-off in these circumstances;

(3) given the Appellants’ conduct in defending the habeas claim, there is no equity in the Earlier Costs Orders being set-off against the costs of the habeas claim;

(4) he requires legal representation until the conclusion of the proceeding. He is otherwise impecunious and access to justice weighs in favour of not ordering a set-off;

(5) the nature of this proceeding is not connected with the Appellants’ previous proceedings;

(6) the Appellants are well resourced, compared to GKX18. He has spent six years in detention, is unable to earn a living to pay for legal costs and will not be able to pay his legal representatives in full if a set-off is ordered. This again can discourage legal representatives from accepting briefs on a conditional costs or pro bono basis. While the Appellants are entitled to be paid their costs of the previous proceedings, this is not the appropriate time for the set-off and it will cause them no injustice if the set-off is not ordered at this interim stage of the proceeding; and

(7) this is not a situation involving a matter where a counterclaim can be made.

81 There is no dispute that the Court has a discretion to allow a set-off of costs orders including as between different proceedings involving the same parties. Here there is a common identity of parties in that the Minister and GKX18 are parties to the proceeding below and were the parties to the proceedings in which the Earlier Costs Orders were made.

82 As set out above, the discretion to order a set-off of costs is broad and is likely to involve the same kinds of considerations that apply to the Court’s general discretion to award costs. Having considered the parties’ submissions we are satisfied that the Minister should be permitted to set off the Earlier Costs Orders against the costs awarded to GKX18 in the proceeding below up to 20 January 2025.

83 First, as explained above we are not persuaded that the Appellants acted unreasonably in defending the habeas corpus application in the manner alleged by GKX18.

84 Secondly, as Kennett J observed in QJKY (at [31]) the starting point is that the Earlier Costs Orders are not to be “treated as optional” and GKX18 “cannot expect reimbursement out of the public purse” for his costs of the proceeding below up to 20 January 2025 “while his liability to reimburse one of the present [Appellants] arising out of an earlier proceeding, in which he was unsuccessful, goes unmet”.

85 Thirdly, the remaining reason put forward by GKX18 in opposition to an order for set-off is, in effect, because his solicitors and counsel, who are acting on a conditional costs basis, may be out of pocket if set-off is permitted. That is, it appears that GKX18 does not have the resources to pay his legal representatives in full and the arrangement he has with those practitioners for payment of their costs is conditional. In the case of one of the two counsel retained to appear, whose costs agreement was in evidence, the liability for costs arises, among other things, upon GKX18 obtaining a costs order in his favour. As was the case in QJKY, it is the interests of the legal practitioners that are most affected by an order for set-off.

86 We accept that it is in the public interest for parties to have legal representation in proceedings such as those before the primary judge. The Court is greatly assisted by solicitors and counsel appearing for otherwise unrepresented parties. They do so, in a case such as this, with the risk that they may not be paid for their efforts. That risk is to be weighed against the fact that the party seeking the order has a costs order in its favour that is unsatisfied and the risk that it will remain that way. In undertaking that balancing exercise in the circumstances of this case we would, in the exercise of our discretion, make the orders sought by the Appellants for set-off. Among other things, there is limited evidence about the terms on which the legal practitioners are acting for GKX18 and little, if any, evidence of the effect of such an order on GKX18 and the proceeding below.

87 We are not persuaded that making an order for set-off in the circumstances of this case will act as a deterrent to legal practitioners taking on cases on a pro bono or conditional costs basis. Each case must turn on its own facts. We were informed that the quantum of costs payable by the Appellants to GKX18 in respect of the habeas corpus application is likely to be several times the quantum of costs which the Minister seeks to set off. Allowing a set-off in this case will not deprive the legal practitioners of their fees entirely, although it may result in their receiving less than they otherwise might have. Legal practitioners will have different reasons for taking on the representation of parties on a pro bono or a conditional costs basis. We do not think that the prospect of legal practitioners recovering a substantial proportion, but not all, of their fees on a party party basis is likely to deter practitioners from acting in cases like the present such that that consideration would lead us to decline a set-off.

88 Finally, the Appellants seek an order that GKX18 pay their costs of the costs submissions before the primary judge on the ordinary basis, as agreed or taxed, and an order that GKX18 pay their costs of the application for leave to appeal and the appeal. Given the conclusions we have reached, it follows that those orders should be made. As sought by the Appellants, and for the reasons set out at [83]-[87] above, the order for set-off will extend to the costs payable by GKX18 for the Appellants’ costs submissions in the proceeding below.

89 We will make orders accordingly.

| I certify that the preceding eighty-nine (89) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Markovic, Horan and McDonald. |
Associate:

Dated: 24 March 2026

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