In litigation, costs usually follow the event in accordance with Uniform Civil Procedure Rule 681. That is, the successful party is usually awarded costs to be paid by the unsuccessful party. In Oshlack-v-Richmond River Council (1999) 193 CLR 72 the court considered whether litigation that is in the public interest should change the usual rule that costs follow the event.
Facts of the case
The appellant, Oshlack, commenced proceedings in the Land and Environment Court of New South Wales seeking to halt development in the area of Evans Head in order to protect the koala population there. In a reserved judgment, the primary judge, Stein J, dismissed the application. The successful parties, the developer and the council, then sought orders that the appellant pay their costs. Stein J reserved his decision upon those applications and determined that there should be no order as to costs. Stein J considered that there were “sufficient special circumstances to justify a departure from the ordinary rule as to costs” and in coming to that conclusion he took in to account the public interest in the case.
The Court of Appeal reversed his Honour’s decision with respect to the costs of the council. It ordered that Oshlack pay the council’s costs, both at first instance and in the Court of Appeal. Their Honours held that, in exercising his discretion to decline to award costs in favour of the council, Stein J took into account an irrelevant consideration, namely the public interest nature of the litigation. The Court of Appeal held that none of the factors relied on by Stein J justified a departure from the usual order as to costs. The court ordered that Stein J’s ruling that there be no order as to costs should be set aside and that, in substitution, Oshlack should be ordered to pay the council’s costs in the Land and Environment Court and in the Court of Appeal.
In the High Court, Oshlack sought to reinstate the decision of Stein J denying the council its costs at first instance, and sought orders that his costs in the Court of Appeal and in the High Court be borne by the council. On the other hand, the council relied upon what in the High Court has been identified as “a general rule that a wholly successful defendant should receive his costs unless good reason is shown to the contrary” and submitted that no good reason to the contrary was shown in this case.
Held
The High Court upheld Justice Stein’s decision in the New South Wales Land and Environment Court not to award costs against an unsuccessful litigant in an environmental matter.
Key statements
The High Court allowed an appeal against a decision of the New South Wales Court of Appeal upholding a costs order made in the Land and Environment Court of New South Wales. Justice Stein took several issues into account in exercising discretion as to costs:
“(i) The ‘traditional rule’ that, despite the general discretion as to costs being ‘absolute and unfettered’, costs should follow the event of the litigation ‘grew up in an era of private litigation’. There is a need to distinguish between the nature of private commercial litigation and of applications to enforce ‘public law obligations’ which arise under environmental laws lest the relaxation of standing by s123 have little significance.
(ii) The characterisation of proceedings as ‘public interest litigation’ with a ‘prime motivation’ being the upholding of ‘the public interest and the rule of law’, may contribute to a finding of ‘special circumstances’ but is not, of itself, enough to constitute special circumstances warranting a departure from the ‘usual rule’; something more is required.
(iii) The appellant’s pursuit of the litigation, motivated by his desire to ensure obedience to environmental law and to preserve the habitat of the endangered koala. Also, the appellant had nothing to gain from the litigation ‘other than the worthy motive of seeking to uphold environmental law and the preservation of endangered fauna’.
(iv) Whether ‘a significant number of members of the public’ shared the stance of the appellant as to the development to take place on the site, and the preservation of the natural features and flora of the site. In that sense, there was a ‘public interest’ in the outcome of the litigation.
(v) The basis of the challenge was arguable and had raised and resolved ‘significant issues’ as to the interpretation and future administration of statutory provisions; these issues had implications for the council, developer and the public.”
Key takeaways of the case
Essentially, this case is an authority for allowing the court to advert to a concept of ‘public interest litigation’ in deciding as to costs. The court’s primary task is to determine whether the facts of the case or specific costs provisions impact upon the court’s jurisdiction to make costs orders.
The list of factors relevant to ousting the presumption that costs follow the event, were identified by Justice McHugh in Oshlack v Richmond River Council (1998):
“Thus, the court may properly depart from the usual order as to costs when the successful party by its lax conduct effectively invites the litigation; unnecessarily protracts the proceedings; succeeds on a point not argued before a lower court; prosecutes the matter solely for the purpose of increasing the costs recoverable; or obtains relief which the unsuccessful party had already offered in settlement of the dispute.”
It is noted that whilst McHugh J, was a dissenting judge in Oshlack, the list of factors is not considered to be inconsistent with the majority.
Although these kinds of tactics are indeed used in private disputes, these tactics have a different effect in litigation where a person or group is litigating an issue in which they are not protecting a personal or private right. The very fact that public interest litigants often have to raise funds to mount a legal challenge already acts as a barrier to this kind of litigation. Nevertheless, Justice McHugh still argued that: “as a matter of policy, one beneficial by-product of this compensatory purpose may well be to instill in a party contemplating commencing, or defending, litigation a sober realisation of the potential financial expense involved”.
The significance of the case
In the case of Friends of Hinchinbrook Society Inc v Minister for Environment & Ors, 1998, FCA 432, the Full Court of the Federal Court, in favouring the decision of the trial judge to order costs upon a public interest environmental litigant, concluded:
“…the majority decision of the High Court in Oshlack does not lay down a rule for application in other cases in the making of costs orders. It affirms the width of the discretion conferred upon a court in relation to costs, with particular reference to the especially wide discretion it held to exist under the legislation with which Oshlack v Richmond River Council was concerned.”
However, public interest of the litigation was a factor in determining costs orders in the following Queensland cases:
Save Bell Park Group v Kennedy, 2002, QSC 174 per Dutney J:
“In the end I have found that the public interest aspects of the matter are the most compelling taking into account that the respondent as the delegate of the relevant minister is in truth the government.”
Each party bear their own costs.
Crime and Misconduct Commission v Swindells, 2009, QSC 411 per Applegarth J:
“The matter also involves some broader issues concerning the approach of the Misconduct Tribunal, or its successor, the Queensland Civil and Administrative Tribunal, in dealing with such matters, and that public interest consideration also is a factor that I take into account.”
Cairns Port Authority v Albietz, 1995, 2 Qd R 470 at 475 per Thomas J:
“Too rigid an application of the ‘loser pays all’ approach might adversely impact upon the effectiveness of judicial review as a remedy. Bearing in mind the nature of the litigation, the extent to which there is a public aspect in the proceedings, and the potential oppression of multiple costs orders, it will often be the case that limitation of costs which an unsuccessful party has to pay will be an appropriate exercise of the very wide discretion entrusted to the courts. Such an approach is by no means new in cases where matters affecting the public interest are ventilated (Liversidge v. Anderson[1942] A.C. 206, 283; R. v. Commissioner of Police, Ex parte Blackburn (No. 3) (C.A.) [1973] Q.B. 241, 265).”
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