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1 October 2013 PO Box Melbourne VIC DX 128 Melbourne Tel Fax justiceconnect.org.au

2 This information is current at 29 October 2013 and does not constitute legal advice. If you have a legal problem you should talk to a lawyer before making a decision about what to do. Full disclaimer and copyright notices, which apply, are at and

3 1. Summary About Justice Connect Why we exist What we do Australia The usual rule Public interest litigation in the High Court Public interest litigation in the Federal Court Public interest litigation in Victoria Public interest litigation in New South Wales Protective costs orders The United Kingdom: Protective Costs Orders Introduction The Civil Procedure Rules Corner House Subsequent Interpretation of the Corner House Decision European Court of Human Rights Environmental litigation and PCOs Canada: Interim Costs Awards Introduction The Power to Award Costs Okanagan Little Sisters (No. 2) South Africa: Limiting Adverse Costs Orders in Constitutional Litigation Introduction Public Interest Costs Before Biowatch The Impact of Biowatch on Constitutional Litigation The Biowatch Case The Biowatch Approach to Costs in Constitutional Litigation The Potential Effect of South African Jurisprudence in Australia

4 1.1 In common law jurisdictions, costs will usually follow the event. That is, a successful party can expect that costs will be awarded in its favour. Different jurisdictions have adapted this rule in different ways in respect of public interest litigation In most courts in Australia, the award of costs is in the discretion of the court. There is no general 'public interest' exception to the operation of the usual rule that costs will follow the event. However, courts in a number of Australian jurisdictions have shown a willingness to make no order as to costs (with the result that each party will bear its own costs) in public interest litigation where such an order is justified in the circumstances of the case. 1.4 It is not possible to state comprehensively the circumstances which will lead a court to make no order as to costs in public interest litigation many factors are relevant, and the exercise of the court's discretion will depend on the facts and circumstances of each individual case. What is clear is that the mere characterisation of litigation as having been brought in the public interest will not be sufficient. 1.5 In some Australian jurisdictions, legislation or court rules encourage courts to take public interest considerations into account in exercising their discretion as to costs. (a) (b) (c) In Victoria, ss 9(2)(g) and 65C of the Civil Procedure Act 2010 (Vic), when read together, require Victorian courts to have regard to the public importance of the issues in dispute in making orders as to costs. In New South Wales, r 4.2 of the Land and Environment Court Rules 2007 (NSW) requires the Land and Environment Court to have regard to public interest considerations in making costs orders in environmental planning and protection matters. In Queensland, s 49 of the Judicial Review Act 1991 (Qld) requires courts to consider the public interest nature of litigation in making costs orders in judicial review proceedings. 1.6 In the Federal Court and in Victoria, New South Wales and Queensland, legislation or court rules also allow courts to make orders in appropriate circumstances capping the costs of proceedings from the outset (protective costs orders) Two protective costs regimes operate in the English courts one for environmental claims and one for all other public interest litigation. 1.9 In relation to general public interest litigation, English courts may make a 'Protective Costs Order' at any stage of the proceedings which operates to insulate the litigant, wholly or in part, from the effects of an adverse costs order. The general public importance of a case can be a key factor in whether a Protective Costs Order is made In its decision in Corner House, the Court of Appeal set out general principles that a court may apply in order to determine whether a matter is entitled to some form of costs protection From April 2013, a separate protective costs regime has applied to environmental public interest litigation. This regime is found in the Part 45, Section VII of the Civil Procedure Rules. This regime was introduced to meet the UK's obligations under EU law. Under this regime, both parties' costs in environmental claims are capped in accordance with the Rules The House of Lords has not explicitly considered the question of costs in public interest matters The Supreme Court of Canada can award a plaintiff costs prior to the commencement of the merits portion of a proceeding. It may do this on the basis that the public interest in the matter is such that it must be heard, even if that necessitated awarding costs before the proceedings were complete. 2

5 1.15 The Supreme Court of Canada has emphasised the exceptional character of such an award and referred approvingly to the UK approach as an intermediate step in protecting public interest litigants The Constitutional Court of South Africa has confirmed that an exception to the basic rule that costs follow the event applies to constitutional litigation. In South Africa, 'constitutional litigation' applies broadly to cover most public interest litigation The new approach in constitutional matters is that where a private party achieves substantial success against the state, the state should bear the costs. Where a private party is unsuccessful against the state or another private party, the parties should bear their own costs. 3

6 We exist to help build a world that is just and fair where systems are more accessible and accountable, rights are respected and advanced and laws are fairer. Our unique contribution to this vision is to partner with pro bono lawyers to develop and strengthen pro bono capacity and strategically match this with unmet legal need. Our strength is our collaborative model that allows us to combine the skills and passion of a range of people and organisations in the legal community, to do more than each can do alone. We do this in three key ways: We build, support and engage a strong commitment to lawyers pro bono responsibility. We deliver access to justice through pro bono legal services, to people experiencing disadvantage and the community organisations that support them. We challenge and change unjust and unfair laws and policies, using evidence from our case work and the stories of our clients to bring about reform. 4

7 In general, a party which has been successful in its action will be awarded the costs of the proceedings. 1 This rule has been applied in a range of judgments, often in cases dealing with public interest litigation. 2 Sections 3.2 to 3.5 below examine public interest cost determinations made by courts once litigation has concluded. Section 3.6 below examines protective costs orders. (a) Oshlack The leading Australian judgment on the award of costs in public interest matters is Oshlack v Richmond River Council 3 (Oshlack) in particular, the judgment of Kirby J in that case. (i) The proceedings below Oshlack was an appeal from a decision of the NSW Land and Environment Court (Stein J). The plaintiff, Mr Oshlack, sued Richmond River Council and Iron Gates Developments Pty Ltd, alleging they had breached the Environmental Planning and Assessment Act 1979 (NSW). He was unsuccessful, and the defendants sought their costs. At that time, 4 s 69(2) of the Land and Environment Court Act 1979 (NSW) provided: Subject to the rules and subject to any other Act: (a) (b) (c) costs are in the discretion of the Court; the Court may determine by whom and to what extent costs are to be paid; and the Court may order costs to be taxed or otherwise ascertained on a party and party basis or on any other basis. After reviewing the applicable authorities, Stein J observed that the characterisation of proceedings as 'public interest litigation' may be a factor which contributes to a finding of 'special circumstances' sufficient to displace the usual rule that a successful party will be awarded its costs, but will not, of itself, warrant departure from the usual rule. 5 Stein J went on to note a number of features of Mr Oshlack's case which he believed demonstrated that there were sufficient special circumstances to justify a departure from the ordinary rule as to costs, including: 6 that Mr Oshlack's pursuit of the litigation was motivated by his desire to ensure obedience to environmental law and to preserve the habitat of the endangered koala on and around the site; that Mr Oshlack had nothing personally to gain from the litigation; that a significant number of members of the public shared Mr Oshlack's stance as to the matters at issue in the litigation; that the basis of the challenge was arguable; and that the litigation had raised and resolved significant issues as to the interpretation and future administration of the relevant statutory provisions and the development consent the subject of the litigation. 1 Donald Campbell & Co v Pollak [1927] AC See, for example, Oshlack v Richmond River Council (1998) 193 CLR 72; Ruddock v Vardalis (No. 2) (2001) 115 FCR 229; Board of Examiners v XY [2006] VSCA 190; and Thaina Town (on Goulbum) Pty Ltd v City of Sydney Council [2007] NSWCA (1998) 193 CLR Section 69(2) has since been repealed. The relevant provision is now r 4.2 of the Land and Environment Court Rules 2007 (NSW). 5 See Oshlack (1998) 193 CLR 72 at 80 [20] per Gummow and Gaudron JJ. 6 See Oshlack (1998) 193 CLR 72 at 80 [20] per Gummow and Gaudron JJ. 5

8 On this basis, Stein J exercised his discretion under s 69(2) to make no order as to costs. The Council appealed this decision to the NSW Court of Appeal, which upheld the appeal. Mr Oshlack appealed to the High Court. (ii) In the High Court A majority of the High Court (Gaudron, Gummow and Kirby JJ; Brennan CJ and McHugh J dissenting) upheld Mr Oshlack's appeal, and reinstated Stein J's decision to make no order as to costs. Gaudron and Gummow JJ did not specifically consider whether the litigation in question was in the public interest. 7 Instead, their Honours considered the narrower question of whether Stein J's discretion had miscarried. Their Honours found that Stein J had not taken into account anything that was definitely extraneous to any objects that Parliament could have had in view in enacting s 69(2) and that, in fact, the contrary was the case. 8 Kirby J took essentially the same approach, but was more vigorous in his conclusions. Like Gaudron and Gummow JJ, he considered the structure of s 69(2) and its context in environmental legislation. His Honour observed that the statutory context of the NSW Land and Environment Court altered some of the assumptions that had given rise to the traditional, adversarial nature of cost orders. Kirby J noted that: 9 Given the clear purpose of Parliament to permit, and even encourage, individuals and groups to exercise functions in the enforcement of environmental law before the Land and Environment Court, a rigid application of the compensatory principle in costs orders would be completely impermissible. It would discourage, frustrate or even prevent the achievement of Parliament's particular purposes. His Honour accepted that public interest litigation was a somewhat nebulous concept, but observed that, in a variety of cases from various jurisdictions: 10 a discrete approach has been taken to costs in circumstances where courts have concluded that a litigant has properly brought proceedings to advance a legitimate public interest, has contributed to the proper understanding of the law in question and has involved no private gain. In such cases the costs incurred have occasionally been described as incidental to the proper exercise of public administration. Upon that basis it has been considered that they ought not to be wholly a burden on the particular litigant. It is important to note that Oshlack only upheld Stein J's original decision, which itself said that public interest factors were not necessarily sufficient to justify declining to award costs to the successful party. Moreover, the scope of the decision was qualified when, only a few weeks after giving judgment in Oshlack, Kirby J said in South West Forest Defence Foundation v Department of Conservation and Land Management (No 2): 11 Nothing in the recent decision in Oshlack v Richmond River Council requires that every time an individual or body brings proceedings asserting a defence of the public interest and protection of the environment, a new costs regime is to apply exempting that individual or body from the conventional rule. To suggest that would be to misread what the court decided in Oshlack. It would require legislation to afford litigants such a special and privileged position so far as costs are concerned. No such general legislation has been enacted. (b) After Oshlack Despite the limited scope of the decision in Oshlack, it is clear that the High Court will take public interest considerations into account when making orders for costs on appeals and in matters brought in its original jurisdiction. 7 Oshlack (1998) 193 CLR 72 at 84 [30]-[31]. Their Honours did, however, refer to the case of Liversidge v Sir John Anderson [1942] AC 206 at [42], apparently indicating that general public importance of a matter is a relevant factor in the exercise of a court's discretion as to costs. 8 Oshlack (1998) 193 CLR 72 at 84 [31], 91 [49]. 9 Oshlack (1998) 193 CLR 72 at 122 [134]. 10 Oshlack (1998) 193 CLR 72 at 124 [136]. 11 (1998) 154 ALR 411 at

9 Perhaps the best illustration of this principle is Bodruddaza v Minister for Immigration and Multicultural and Indigenous Affairs 12 (Bodruddaza). The plaintiff in that case challenged the constitutional validity of s 486A of the Migration Act 1958 (Cth), but was unsuccessful. Rather than requiring the plaintiff to bear the Minister's costs, the Court ordered that the Minister should bear the costs of the plaintiff reasonably necessary for the determination of the public interest questions in the case. 13 In reaching this decision, the Court made the following relevant observations: 14 There is no absolute rule with respect to the exercise of the power to award costs. 15 In Oshlack v Richmond River Council, 16 for example, reference was made to Liversidge v Anderson, 17 where, in response to an intimation by the Law Lords that, the case being one of 'very general importance', costs should not be asked for, junior counsel for the successful Home Secretary responded that, in those circumstances, he 'should not dream' of asking for them. The present is a case of very general importance, so far as the validity of s 486A is concerned. Not only should the Minister not have the costs of [the questions relevant to the validity of s 486A], the Minister should bear the costs of the plaintiff reasonably necessary for the determination of [those questions]. More recently, in Attorney-General (SA) v Corporation of the City of Adelaide, 18 the Attorney-General for South Australia was only granted special leave to appeal to the High Court on the condition that the order for costs made by the court below not be disturbed, and that there be no order for the costs of the appeal. 19 (a) The legislative position The Federal Court, as with other Australian courts, has a broad discretion as to costs. Section 43 of the Federal Court Act 1976 (Cth) provides: (1) Subject to subsection (1A) [which deals with costs in representative proceedings], the Court or a Judge has jurisdiction to award costs in all proceedings before the Court (including proceedings dismissed for want of jurisdiction) other than proceedings in respect of which any other Act provides that costs shall not be awarded. (2) Except as provided by any other Act, the award of costs is in the discretion of the Court or Judge. Rule of the Federal Court Rules 2011 (Cth), which governs the making of protective costs orders in the Federal Court, is discussed in section 1.18(c)(iii)(a) below. There are no legislative provisions which expressly require the Federal Court to take the public interest nature of litigation into account in exercising its discretion as to costs. (b) Ruddock From a public interest litigant's perspective, the most significant Australian decision since Oshlack is the judgment of the Full Court of the Federal Court (Black CJ, Beaumont and French JJ) in Ruddock v Vardalis (No 2) (2001) 115 FCR 229 (Ruddock). Ruddock concerned the costs of applications for writs of habeus corpus filed on behalf of 'rescuees', who had been held on a foreign vessel directed by the Australian Government not to enter Australian territorial waters. A solicitor and a civil liberties organisation, acting pro bono, had filed applications against the Commonwealth claiming that the rescuees were being unlawfully detained. The applicants were successful at first instance, but this decision was overturned on appeal. Special leave to appeal to the High Court was refused. 12 (2007) 228 CLR Bodruddaza (2007) 228 CLR 651 at 676 [78] per Gleeson CJ, Gummow, Kirby, Hayne, Heydon and Crennan JJ. 14 Bodruddaza (2007) 228 CLR 651 at [77] per Gleeson CJ, Gummow, Kirby, Hayne, Heydon and Crennan JJ. 15 Oshlack (1998) 193 CLR 72 at 88 [40] per Gummow and Gaudron JJ, [143] per Kirby J. 16 (1998) 193 CLR 72 at 89 [42] per Gummow and Gaudron JJ. 17 [1942] AC 206 at (2013) 87 ALJR See Attorney-General (SA) v Corporation of the City of Adelaide (2013) 87 ALJR 289 at 324 [142]. 7

10 The applicants relied on the public interest nature of the litigation to argue that the Federal Court should make no order as to costs. In the course of a lengthy discussion of the principles governing the exercise of the discretion to award costs, Black CJ and French J made the following observations about the influence of public interest considerations on the exercise of the discretion: 20 [I]it must be recognised that the concept of the 'public interest' is a very broad one. For that reason it may be difficult in the realm of civil litigation, without further identification of particular circumstances, to essay any useful general proposition about how the fact that the pursuit of proceedings was in the public interest can be a relevant consideration in the discretion to award costs. The term may best be seen as an envelope or class description for a range of circumstances which, upon examination, may be found to be relevant to the question whether there should be a departure from the ordinary rule that costs follow the event. Their Honours ultimately observed that the Court's obligation was to exercise its discretion as to costs by reference to all the circumstances of the case before it. 21 In Ruddock, those circumstances led Black CJ and French J to the following conclusion: 22 This is a most unusual case. It involved matters of high public importance and raised questions concerning the liberty of individuals who were unable to take action on their own behalf to determine their rights. There was substantial public and, indeed, international controversy about the Commonwealth's actions. The proceedings provided a forum in which the legal authority of the Commonwealth to act as it did with respect to the rescued people was, and was seen to be, fully considered by the Court and ultimately, albeit by majority, found to exist. The case is quite different in character from the predominantly environmental litigation in which many of the previous decisions concerning the impact of public interest considerations on costs awards have been made. Having regard to its character and circumstances the appropriate disposition is that there be no order as to the costs of the appeal or the application before North J. What is clear from Ruddock is that merely invoking the public interest will not be enough to justify a departure from the usual rule as to costs. Black CJ and French J emphasised that the Court is obliged to exercise its discretion as to costs by reference to all of the circumstances of the case. It will therefore be necessary for an unsuccessful public interest litigant to point to specific circumstances warranting a departure from the usual rule in each case. (c) Other relevant cases In general, the Federal Court has tended to interpret Oshlack narrowly. In Friends of Hinchinbrook Society Inc v Minister for Environment and Ors (No 5), 23 for example, the Full Court of the Federal Court observed that Oshlack merely emphasised the width of the discretion as to costs, and did not create a rule as to how the discretion should be exercised in any given case. Similarly, in Save the Ridge Inc v The Commonwealth, 24 the Full Court of the Federal Court observed that: 25 [T]he courts have held that there is no special costs regime applicable to 'public interest' litigation: South West Forest Defence Foundation v Department of Conservation and Land Management (No 2) (1998) 154 ALR 411; 72 ALJR 1008; [1998] HCA 35 at [5]-[6] per Kirby J; Hollier v Australian Maritime Safety Authority (No 2) [1998] FCA 975; Edgley v Federal Capital Press of Australia Pty Ltd (2001) 108 FCR 1; 192 ALR 395 ; [2001] FCA 379 at [91]-[96] per Beaumont ACJ. In a passage cited with approval by Weinberg J in Mees v Kemp (No 2) [2004] FCA 549 at [19], the Full Court of the Supreme Court of Western Australia stated in Buddhist Society of Western Australia (Inc) v Shire of Serpentine-Jarrahdale [1999] WASCA 55 at [11]: In our opinion great care must be taken with the concept of public interest litigation that it does not become an umbrella for the exercise of discretion with respect to costs in an unprincipled, haphazard and unjudicial manner... In our view, the denial of costs to successful litigants upon the ground that the litigation bears a public interest 20 Ruddock (2001) 115 FCR 229 at 236 [14]. 21 Ruddock (2001) 115 FCR 229 at 240 [24], 241 [25]. 22 Ruddock (2001) 115 FCR 229 at 242 [29]. 23 (1998) 84 FCR 186 at (2006) 230 ALR Save the Ridge Inc v The Commonwealth (2006) 230 ALR 411 at 413 [6]. 8

11 character should continue to be the rarity which this Court supposed it would be in the South West Forests Defence Foundation case. In Construction, Forestry, Mining and Energy Union v Queensland Coal and Oil Shale Mining Industry (Superannuation) Ltd, 26 Wilcox J considered the application of Ruddock to a case concerning superannuation entitlements. His Honour quoted the passage in Ruddock set out above and observed that: 27 None of the circumstances referred to in Ruddock was present in this case. It is true to say that the present case raised important and difficult questions of law affecting many people; that is, employees and employers engaged in the coal mining industry. However, standing alone, that circumstance has not generally been considered a sufficient basis upon which to refrain from making the conventional costs order. In Wilderness Society Inc v Minister for Environment and Water Resources, 28 the Full Court of the Federal Court relied on the following factors in deciding that the unsuccessful appellant should pay only 70 per cent of the Minister's costs and 40 per cent of the second respondent's costs: 29 [I]t was of general importance both to the Minister and to the public that the law concerning the proper construction of the provisions of the EPBC Act with which this appeal was concerned should be clarified. Significance may also be seen to attach to the fact that the appellant was concerned, along with a large segment of the Australian community, to avoid harm to the Australian environment. The appellant was not seeking financial gain from the litigation; rather it appropriately sought to resolve a dispute, which had engaged the emotions of many, concerning the proper administration of the EPBC Act in the court rather than elsewhere. In Blue Wedges Inc v Minister for Environment, Heritage and the Arts, 30 Heerey J held that there should be no order as to costs, even though the applicant had been unsuccessful in challenging the Minister's decision to approve the proposed deepening of the shipping channels in Port Phillip Bay. His Honour held that: 31 [T]his is a clear case for the application of the Oshlack approach. The condition of Port Phillip Bay is a matter of high public concern, and not only for the four million or so Victorians who live around it There is a public interest in the Approval Decision itself, and equally in whether it has been reached according to law. Also, the application raised novel questions of general importance as to the approval process under the Environment Act: cf Save the Ridge Inc v Commonwealth (2006) 230 ALR 430 at [11]-[12]. Heerey J also concluded that, despite the fact that Blue Wedges Inc's solicitor represented some businesses who feared they would be commercially damaged by the proposed project, this commercial element of the case did not gainsay the public interest that lay at the base of the application. In the second Blue Wedges case, Blue Wedges Inc v Minister for the Environment, Heritage and the Arts (No 2), 32 following a further unsuccessful application in relation to the proposed channel deepening in Port Phillip Bay, North J refused the applicant's submission that there should be no order as to costs. Although North J agreed that there were public interest issues in the litigation, he did not believe that Oshlack should be applied. First, North J held that the application did not raise significant issues as to the interpretation and future administration of the relevant Act, and on this basis was able to distinguish this case from Heerey J's judgment. Second, North J rejected the argument that the applicant's cooperative conduct during the litigation was a special feature that merited a no costs ruling. North J emphasised that the applicant's original pleadings contained many causes of action based on 26 (2003) 132 FCR Construction, Forestry, Mining and Energy Union v Queensland Coal and Oil Shale Mining Industry (Superannuation) Ltd (2003) 132 FCR 516 at 519 [6]. 28 [2008] FCAFC Wilderness Society Inc v Minister for Environment and Water Resources [2008] FCAFC 19 at [9]-[10]. See also Lansen v Minister for the Environment and Heritage (No 3) [2008] FCA 1367, in which the public interest issues in the case meant that it would be appropriate for the applicants to pay only 35 per cent of the taxed costs of the respondent (this was further reduced to 25 per cent for other reasons). 30 (2008) 165 FCR Blue Wedges Inc v Minister for Environment, Heritage and the Arts (2008) 165 FCR 211 at 228 [73]. 32 [2008] FCA

12 misconceptions of the law and that, while it responded quickly to the obvious deficiencies in its case, two hearing days were wasted dealing with clearly untenable causes of action. Similarly, in dismissing an application for a no costs order in Your Water Your Say Inc v Minister for the Environment, Heritage and the Arts (No 2), 33 Heerey J distinguished his own judgment in Blue Wedges and held that the present case did not raise any novel questions of general importance about the operation of the relevant Act, nor any difficult questions of construction. In Lawyers for Forests Inc v Minister for Environment, Heritage and the Arts (No 2), 34 Tracey J refused the unsuccessful applicant's submission that there should be no order as to costs. His Honour did so on the basis that the case did not raise novel issues of interpretation of the relevant Act, the applicant's capacity to meet a costs order was not a relevant consideration, and the public interest nature of the applicant's objects and its lack of potential financial gain from litigation alone was not a reason to depart from the ordinary rule as to costs. In Australian Crime Commission v NTD8 (No 2), 35 the Full Court of the Federal Court held that the special circumstances of the litigation, which had been brought in the public interest, were such that it was just and proper that there be no order for costs. The Australian Crime Commission had issued a notice under the relevant Act requiring NTD8, an Aboriginal community-controlled health services provider, to produce detailed personal and health records of eight Aboriginal children. NTD8 issued proceedings resisting the notice, as it was concerned that releasing the documents would be perceived as a breach of trust such that the children might not continue to seek its medical services. Applying Ruddock, the Full Court stated that: 36 There were undoubtedly special public interest elements in this case, as it concerned the possible acquisition under compulsion of law of highly personal and sensitive information about young women or girls in circumstances in which (though quite unintended) there could be harmful consequences to them of both a direct and indirect nature. The consequences, were they to occur, would be the result of the exercise of extraordinary powers. If information about young women or girls attending a medical practice to obtain advice about matters of an especially private nature is to be obtained under compulsion of law, in circumstances where those directly affected are unable to challenge the exercise of that power, there is a high public interest in a legitimate challenge, by a person or entity with a legitimate and caring interest in the matter, to the lawfulness of the exercise of the powers under which the information is sought. In Bat Advocacy NSW Inc v Minister for Environment Protection, Heritage and the Arts (No 2), 37 the Full Court of the Federal Court emphasised that: 38 the mere categorisation of litigation as having been brought in the public interest is, on its own, not sufficient to justify departure from the usual order that costs should follow the event. The Full Court of the Federal Court was asked to consider whether the removal of grey-headed flying foxes from the Royal Botanic Gardens in Sydney would be considered a special circumstance so as to justify ordering public interest costs. While the Full Court accepted that there were some members of the public who demonstrated an interest in the removal of the flying foxes, this did not automatically 'elevate [the case] to a class of public interest litigation.' 39 Parties that have attempted to raise Oshlack to obtain a 'no costs' order in Victoria have generally been unsuccessful. 40 This may be, in part, because the kind of matters in which Oshlack has typically been 33 [2008] FCA [2009] FCA [2009] FCAFC Australian Crime Commission v NTD8 (No 2) [2009] FCAFC 143 at [8]. 37 [2011] FCAFC Bat Advocacy NSW Inc v Minister for Environment Protection, Heritage and the Arts (No 2) [2011] FCAFC 84 at [6]. 39 Bat Advocacy NSW Inc v Minister for Environment Protection, Heritage and the Arts (No 2) [2011] FCAFC 84 at [18]. 40 See, for example, Knight v Secretary, Department of Justice [2004] VSC 29; Board of Examiners v XY [2006] VSCA 190 at [14]; Weinstein v Medical Practitioners Board of Victoria (No 2) [2008] VSCA 224; Mulholland v Victorian Electoral Commission [2011] VSC 161; Challenger Property Asset Management Pty Ltd v Stonnington City Council (No 2) [2012] VSC

13 applied (ie, environmental matters) are largely handled by the Victorian Civil and Administrative Tribunal (VCAT). VCAT does not ordinarily make any order as to costs. 41 (a) The legislative position The power of the Supreme Court of Victoria to award costs is governed by s 24 of the Supreme Court Act 1986 (Vic), which provides: (1) Unless otherwise expressly provided by this or any other Act or by the Rules, the costs of and incidental to all matters in the Court, including the administration of estates and trusts, is in the discretion of the Court and the Court has full power to determine by whom and to what extent the costs are to be paid. (2) Nothing in this section alters the practice in any criminal proceeding. The power of Victorian courts to award costs is also addressed in the Civil Procedure Act 2010 (Vic). Notably, with effect from 24 December 2012, s 65C of that Act provides: (1) In addition to any other power a court may have in relation to costs, a court may make any order as to costs it considers appropriate to further the overarching purpose. (2) Without limiting subsection (1), the order may: (a) (b) (c) (d) make different awards of costs in relation to different parts of a proceeding or up to or from a specified stage of the proceeding; order that parties bear costs as specified proportions of costs; award a party costs in a specified sum or amount; fix or cap recoverable costs in advance. (3) An order under subsection (1) may be made: (a) (b) at any time in a proceeding; in relation to any aspect of a proceeding, including, but not limited to, any interlocutory proceeding. The 'overarching purpose' referred to in s 65C(1) is defined in s 7 as being 'to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute'. The availability of protective costs orders under s 65C of the Civil Procedure Act 2010 (Vic) is discussed in more detail in section 0 below. Relevantly in relation to public interest litigation, s 9(2)(g) of the Civil Procedure Act 2010 (Vic) provides that, in making any order or giving any direction in a civil proceeding, a court may have regard to 'the public importance of the issues in dispute and the desirability of a judicial determination of those issues' in order to further the overarching purpose. As such, although s 65C (read together s 9(2)) does not require Victorian courts to have regard to public interest considerations when making costs orders, it does expressly allow this, and may encourage courts to be more open-minded about the types of costs orders likely to be appropriate in a proceeding. (b) Decisions involving the Civil Procedure Act 2010 (Vic) (pre s 65C(1) (i) MyEnvironment v VicForests [2012] VSC 111 (MyEnvironment) The plaintiff in MyEnvironment failed in its claim against VicForests to restrain timber harvesting in the Central Highlands of Victoria. The plaintiff submitted that it should not be required to pay VicForests' costs or, alternatively, that it should only be required to pay 50% of VicForests' costs, on the ground that proceedings were bought in the public interest. VicForests had made an offer of settlement prior to trial, and submitted that it was entitled to its costs on an indemnity basis from that point forward. Osborn JA noted that, in exercising its discretion as to costs, the court must assess what is 'fair as between the parties' but also have regard to 'issues of public interest.' 42 His Honour specifically referred to s 9(2)(g) of the Civil Procedure Act 2010 (Vic), and observed that it was relevant to the exercise of the 41 See Victorian Civil and Administrative Tribunal Act 1998 (Vic), s MyEnvironment [2012] VSC 111 at [6]. 11

14 court's discretion in this case. However, although Osborn JA acknowledged that the plaintiff's claim raised issues of public importance, his Honour held that the plaintiff should pay VicForests' costs of the proceeding on a party and party basis. In deciding that VicForests should not have to bear its own costs, Osborn JA was particularly influenced by the fact that VicForests had been entirely successful in defending the lawfulness of its actions, and had made a reasonable offer of settlement prior to trial.43 However, Osborn JA expressly relied on public interest considerations in declining to award VicForests its costs on an indemnity basis (to which it would otherwise have been entitled following its settlement offer). His Honour observed that:44 The proceedings were of a public interest character and raised a question of interpretation of the relevant controls having broader implications beyond the three coupes in issue. Moreover, in one respect at least, MyEnvironment was successful, namely the question whether the words mature and senescing should be construed cumulatively or as alternatives. The present proceeding is one like Oshlack to the extent that it was motivated by the desire to preserve the habitat of an endangered species; was brought by a plaintiff which has no motive of private gain; was concerned with questions of public interest; raised arguable questions as to the interpretation of the relevant controls and resolved significant issues as to the interpretation and future administration of statutory provisions relating to the protection of endangered fauna. The interpretation of the provisions in issue in the present case has particular practical significance, and is of general public importance, because of the destruction and damage to large parts of the mountain ash forest in the Central Highlands by the 2009 Black Saturday fires. This result demonstrates both the continuing relevance of Oshlack and the flexibility afforded to Victorian courts by the Civil Procedure Act 2010 (Vic). (c) Decisions pre-dating or not involving the Civil Procedure Act 2010 (Vic) (i) Knight v Hastings [2012] VSC 423 (Knight) The plaintiff in Knight was a prisoner at Port Phillip Prison, serving a life sentence for murder. The plaintiff had sought an order in the nature of mandamus against the defendant, the Commissioner of Corrections Victoria, but had failed. Because the matter was not a civil proceeding, it was not subject to the provisions of the Civil Procedure Act 2010 (Vic). The plaintiff submitted that the proceedings should be characterised either as being in the public interest or as a test case, claiming that that the public had an interest in public sentence management. Williams J accepted the general principle that special circumstances would justify a departure from the general rule that costs follow the event. However, her Honour did not agree that special circumstances existed in this case. Williams J held that the application did not involve 'any meaningful testing of the requirements of the regulations' and that, 'even if the proceeding concerned the public interest, its major focus was on Mr Knight s own particular situation'.45 Accordingly, Williams J ordered the plaintiff to pay the Commissioner's costs of the proceeding. (ii) Environment East Gippsland Inc v VicForests (No 2) [2009] VSC 421 (EEG Inc) Whilst EEG Inc is relevant as a decision on security for damages, rather than a costs order per se, it is of interest because of the court s consideration of public interest criteria. The plaintiff in EEG Inc was seeking an interlocutory injunction against VicForests to prevent timber harvesting in certain areas of Victoria. VicForests sought an order requiring the plaintiff to provide security in addition to the usual undertaking as to damages. Forrest J held that the plaintiff should not be required to provide security because it was an exceptional case brought 'in the public interest' that involved 'consideration of the obligations (imposed by State legislation) of a State statutory corporation to comply with principles of conservation as they affect an endangered species'. 43 MyEnvironment [2012] VSC 111 at [20]. 44 MyEnvironment [2012] VSC 111 at [22]-[24]. 45 Knight [2012] VSC 423 at [12]. 12

15 In reaching this decision, Forrest J relied on obiter comments by Mandie J in an earlier decision of the Supreme Court of Victoria, 46 as well as a line of authority in the NSW Land and Environment Court to the effect that the usual undertaking as to damages or the need for security for the undertaking may not be required where an interlocutory injunction is sought in the public interest. Forrest J also appeared to be influenced by the fact that an order requiring the plaintiff to provide even a modest amount of security would likely stultify its ability to run its case. 47 (iii) Geeveekay Pty Ltd v Director of Consumer Affairs Victoria [2008] VSC 152 (Geeveekay) In Geeveekay, Bell J recognised that the substantive question at issue had national importance, the resolution of the question was in the public interest, the appeal became a virtual test case on the question, and the decision was likely to have application beyond the immediate parties to the appeal. However, Bell J still held that those considerations were not sufficient to bring the case within the category of special and exceptional cases involving public interest like Oshlack, because it was an appeal of a private nature that pursued commercial interests. 48 (a) The legislative position The power of New South Wales courts to award costs is governed by s 98 of the Civil Procedure Act 2005 (NSW), which relevantly provides: (1) Subject to rules of court and to this or any other Act: (a) (b) (c) costs are in the discretion of the court, and the court has full power to determine by whom, to whom and to what extent costs are to be paid, and the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis. (3) An order as to costs may be made by the court at any stage of the proceedings or after the conclusion of the proceedings. Rule 42.1 of the Uniform Civil Procedure Rule 2005 (NSW) goes on to provide that: Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs. Rule 42.4 of the Uniform Civil Procedure Rule 2005 (NSW), which governs the making of protective costs orders in New South Wales, is discussed in section 0 below. In New South Wales, public interest considerations are most commonly raised in costs disputes in the Land and Environment Court. 49 Section 69(2) of the Land and Environment Court Act 1979 (NSW), which dealt with the award of costs in that Court at the time that Oshlack was decided, is set out at section 3.2(a) above. In January 2008, s 69(2) was replaced by r 4.2 of the Land and Environment Court Rules 2007 (NSW), which provides: (1) The court may decide not to make an order for the payment of costs against an unsuccessful applicant in any proceedings if it is satisfied that the proceedings have been brought in the public interest. 46 Blue Wedges Inc v Port Melbourne Corporation [2005] VSC 305 at [11]. 47 EEG Inc [2009] VSC 421 at [29]-[31]. 48 Geeveekay [2008] VSC 152 at [4]-[6]. 49 See, for example, Oshlack v Rous Water (No 3) [2012] NSWLEC 132; Olofsson v Minister for Primary Industries [2011] NSWLEC 137. In both of these cases, the Court identified s 98 as the source of its broad discretion as to costs. 13

16 (2) The court may decide not to make an order requiring an applicant in any proceedings to give security for the respondent s costs if it is satisfied that the proceedings have been brought in the public interest. (3) In any proceedings on an application for an interlocutory injunction or interlocutory order, the court may decide not to require the applicant to give any undertaking as to damages in relation to: (a) (b) the injunction or order sought by the applicant, or an undertaking offered by the respondent in response to the application, if it is satisfied that the proceedings have been brought in the public interest. Rule 4.2 applies in cases which fall within Class 4 of the Land and Environment Court's jurisdiction, namely environmental planning and protection. In all other cases, the general position stated in s 98 of the Civil Procedure Act 2005 (NSW) and Part 42 of the Uniform Civil Procedure Rule 2005 (NSW) continues to apply to the extent that it is not inconsistent with the Land and Environment Rules 2007 (NSW). In December 2012, the New South Wales Law Reform Commission released its report on security for costs and associated orders. 50 Chapter 4 of the report deals with public interest and protective costs orders, and provides a useful overview of the relevant law in this area. Significantly, the Commission recommends that r 42 of the Uniform Civil Procedure Rules 2005 (NSW) be amended to adopt a rule based on r 4.2 of the Land and Environment Court Rules 2007 (NSW) that will expressly provide courts in New South Wales with the power to make appropriate costs and security for costs orders in public interest proceedings. It is not yet clear whether this recommendation will be implemented. (b) Decisions involving r 4.2 of the Land and Environment Court Rules 2007 (NSW) (i) Anderson and Anderson In Anderson v Minister for Planning, 51 Biscoe J observed that, under r 4.2, the fact that litigation is brought in the public interest may be sufficient to warrant a departure from the usual rule as to costs. However, his Honour went on to note that, in most cases, it would be necessary to establish special circumstances additional to the public interest in order to justify such a departure: 52 [I]n my opinion, the discretion under the new rule is only enlivened if departure from the usual costs order is justified. The public interest consideration alone may be of such moment or magnitude as to ground that justification. An example might be an unsuccessful proceeding, based on a good arguable case, brought to stop or limit the development of one of the last habitats of an endangered species. In most cases, however, I expect it would also be necessary to establish special circumstances additional to the public interest in order to enliven the discretion. In such cases the practical application of the new rule would not be different from the pre-existing position. Biscoe J's reasoning was applied by Lloyd J in Anderson v Director-General of the Department of Environment and Climate Change 53 (Anderson v Director-General). Lloyd J considered that r 4.2 simply gave statutory recognition to Oshlack, which remained binding on the Court. On this basis, his Honour stated that 'in most cases one would expect it would also be necessary to establish special circumstances additional to the public interest in order to enliven the discretion'. 54 In Anderson v Director-General, the applicant had objected to the decision by the Director-General to permit a third party to disturb or remove Aboriginal objects from certain land. In rejecting the applicant's application for a 'no costs' order, Lloyd J observed that the proceedings involved the application of settled principles of administrative law to the facts of the case, and did not involve any questions of general significance. 50 New South Wales Law Reform Commission, Security for costs and associated orders, Report No 137 (2012). 51 [2008] NSWLEC [2008] NSWLEC 272 at [11]. 53 [2008] NSWLEC 299. This interpretation of r 4.2 was also subsequently applied by Biscoe J in Ku-Ring-Gai Council v Minister for Planning (No 2) [2008] NSWLEC 276 and Arnold v Minister Administering the Water Management Act 2000 (No 4) [2009] NSWLEC Anderson v Director-General [2008] NSWLEC 299 at [9]. 14

17 (ii) Parramatta Business Freedom Association Inc v Parramatta City Council No 2 [2012] NSWLEC 176 (Parramatta) The applicants in Parramatta sought to challenge various public smoking bans in New South Wales. The applicants were successful in obtaining two declarations of invalidity, but failed on four out of six distinct grounds of challenge. Biscoe J observed the four grounds on which the applicants failed comprised substantial issues in contest, and were separable and discrete from the matters on which the applicants succeeded. On this basis, his Honour considered that he was justified in departing from the usual rule as to costs, and that the costs awarded to the applicants should be reduced. The applicants sought to rely on the public interest nature of the litigation in support of their contention that Biscoe J should not depart from the usual rule as to costs. Biscoe J considered this submission to be 'novel and without authority', and went on to make the following observations: 55 The applicants' public interest submission proposes that the public interest purpose of litigation may be used as a sword by a successful applicant to obtain costs to which it otherwise would not be entitled under apportionment of costs principles or for other reasons. Environmental proceedings brought in the public interest may, and often do, provide a shield against costs if a public interest litigant is unsuccessful, although usually more has to be demonstrated than just the public interest aspect Given this costs shield regime, it is reasonable for a litigant to adduce evidence to show that the proceedings are brought in the public interest. The reasonable costs of such evidence should not be disallowed on costs awarded to a successful applicant. It may be that r 4.2 of this Court's rules does not necessarily spell out the metes and bounds of all the circumstances to which the Court may have regard when exercising its costs discretion under s 98 of the Civil Procedure Act and r 42.1 of the Uniform Civil Procedure Rules. However, in my opinion, public interest considerations should not result in an award of costs to a successful public interest litigant to which it is disentitled under apportionment principles or for other reasons, at least in the circumstances of this case. Accordingly, I do not accept the applicants' public interest submission. Biscoe J went on to order that the respondent pay only 75% of the applicants' costs. While is Honour's judgment does not entirely foreclose the possibility of a plaintiff relying on public interest considerations as a 'sword' in costs disputes in an appropriate case, it does appear to indicate that such an argument would be quite unlikely to succeed. (c) Decisions pre-dating or not involving r 4.2 of the Land and Environment Court Rules 2007 (NSW) (i) Caroona Coal Action Group Inc v Coal Mines Australia Pty Ltd (No 3) [2010] NSWLEC 59 (Caroona (No 3)) The plaintiff in Caroona (No 3) challenged the validity of certain mining authorities. The plaintiff was unsuccessful, and relied on the public interest nature of the litigation to seek a 'no costs' order. As mining cases fall within Class 8 of the Court's jurisdiction, and r 4.2 applies only in Class 4 cases, Preston J applied the usual cost rules under Part 42 of Uniform Civil Procedure Rules 2005 (NSW). As noted above, r 42.2 of the Uniform Civil Procedure Rules 2005 (NSW) provides that costs follow the event unless it appears to the court that some other order should be made. Preston J comprehensively analysed the principles governing departure from the usual rule as to costs in public interest cases. His Honour held that the following three-step approach should be adopted in such cases: 56 Can the litigation be characterised as having been brought in the public interest? If so, is there something more than the mere characterisation of the litigation as being brought in the public interest? Are there any countervailing circumstances, including in relation to the conduct of the applicant, which speak against departure from the usual costs rule? 55 Parramatta [2012] NSWLEC 176 at [9]. 56 Caroona (No 3) [2010] NSWLEC 59 at [13]. 15

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