FEDERAL COURT OF AUSTRALIA

PRactice and procedure – costs – losing party with limited financial means – alleged public interest litigation – whether relevant that respondents are public bodies

Federal Court of Australia Act 1976 (Cth), s 43(2)

Oshlack v Richmond River Council (1998) 152 ALR 83 distinguished

Ohn v Walton (1995) 36 NSWLR 77 followed

Latoudis v Casey (1990) 170 CLR 534 referred to

Australian Conservation Foundation v Forestry Commission (1988) 81 ALR 166 at 171 referred to

Loveday v Sun Newspapers Ltd (1938) 59 CLR 503 at 413 mentioned

Morosi v Mirror Newspapers Ltd [1977] 2 NSWLR 749 at 777 mentioned

London Artists Ltd v Littler [1968] WLR 607 at 619 mentioned

WILLIAM HOLLIER & ANOR V AUSTRALIAN MARITIME SAFETY

AUTHORITY & oRS (NO 2)

NOS. VG 667 of 1997 and VG 116 OF 1998

JUDGES:       HEEREY, WHITLAM and north jj

DATE:            14 AUGUST 1998

PLACE:          MELBOURNE

THE COURT ORDERS THAT:

1.         The appellants pay the costs of the respondents of the application for leave to appeal in VG 667 of 1997 and the appeal VG 116 of 1998. 

2.         The costs of VG 184 of 1998 will be payable in accordance with O 52 r 19 of the Federal Court Rules.

Note:                Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

THE COURT:

The Court has dismissed the appellants’ appeal against the judgment of Sundberg J which rejected the appellants’ claim to “permanent and exclusive rights” of occupancy in respect of Deal Island in Bass Strait.  Following upon leave reserved by the order of the Court on 24 July 1998, the parties have filed written submissions as to costs. 

It will be convenient to identify at the outset the various proceedings. 

The application tried before Sundberg J was VG 667 of 1997.   The appeal from his Honour’s judgment was VG 116 of 1998.  The appellants also sought leave to appeal against his Honour’s refusal of an adjournment at the start of the trial.  In VG 184 of 1998 the appellants appealed against an order of his Honour on 17 April 1998 refusing to stay orders for costs made against them in VG 667 of 1997.  Notice of discontinuance of VG 184 of 1998 was given to the respondents on 21 July 1998 and filed on 22 July (the day the appeal was heard).

Another proceeding, VG 716 of 1997, was an application for an order to review decisions of the Minister for Workplace Relations and Small Business which affected the appellants' alleged rights and interests in relation to Deal Island.  That proceeding was finally determined in favour of the Minister and is not a subject of the present appeals, although it needs to be considered in connection with some of the costs issues. 

Costs of the trial and appeal

The appellants submitted that there should be no orders as to costs in relation to the entirety of the proceedings in VG 667 of 1997 (the trial) and VG 116 of 1998 (the appeal).  The reasons advanced were as follows:

(i)         the appellants have very limited financial means; enforcement of a costs order would have “devastating consequences including bankruptcy”;

(ii)        the appellants have pursued bona fide litigation to determine a question of real significance to the livelihood of Mr Hollier and the role of the second appellant the Engen Institute, namely whether they have an interest in Deal Island where Mr Hollier and his family lived and worked for nearly six years;

(iii)       the appellants’ conduct and proposed conduct of scientific research on Deal Island is in the public interest and to that extent the litigation can be characterised as having a public interest purpose: Oshlack v Richmond River Council (1998) 152 ALR 83;

(iv)       neither the trial judge nor the Full Court suggested that the appellants prolonged litigation or instituted action without any foundation;

(v)        the Australian Maritime Safety Authority achieved cost savings said to be $400,000 a year as a result of the appellants providing a manned presence on Deal Island; further, the appellants have been limited in pursuing further income opportunities as a result of providing that manned presence; and

(vi)       the respondents are respectively a statutory authority, a State, and a Minister of the Crown.  They have a greater ability to bear the cost of litigation.  The compensatory purpose of costs ought not to weigh as heavily in the exercise of the Court’s discretion.

Grounds (i), (ii), (iv) and (v) raise matters personal to the appellants and can be considered together.  Costs are in the absolute discretion of the Court:  Federal Court of Australia Act 1976 (Cth), s 43(2).  However the usual rule is that costs follow the event, that is to say the successful party will recover costs incurred, assessed on a party and party basis (today this will usually be significantly less than a complete indemnity).  Such an order will usually be made even though the losing party acted reasonably in the sense that it had some prospects of success and did not unduly prolong the litigation or otherwise act improperly.  Litigation is inherently uncertain and unpredictable.  It would be extremely disruptive and time consuming if courts had to determine not only who should win and who should lose, but whether the losing party acted “reasonably”.  Moreover, and notwithstanding the decision in Oshlack to which we shall shortly turn, the purpose of an order for costs is to compensate the person in whose favour it is made, not to punish the person against whom it is made:  Ohn v Walton (1995) 36 NSWLR 77 at 79.  As Mason CJ said in Latoudis v Casey (1990) 170 CLR 534 at 543:

“If one thing is clear in the realm of costs, it is that, in criminal as well as civil proceedings, costs are not awarded by way of punishment of the unsuccessful party.  They are compensatory in the sense that they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings”.

It follows that lack of blameworthy conduct on the part of the losing party provides in itself no reason for refusal of an order for costs to the successful party.

Likewise the fact that the losing party has very limited financial means is not relevant, any more than it would be in the case of a creditor seeking judgment for a debt otherwise undisputed.  

Turning to ground (iii), the supposed “public interest” consideration, it will be necessary to refer briefly to Oshlack.  Mr Oshlack brought proceedings in the Land and Environment Court of NSW challenging a council’s development approval on the ground that it had been made without adequate consideration of the impact on the local koala population.  Stein J dismissed the action but refused the council an order for costs, essentially on grounds that there was a public interest in the outcome of the litigation and that Mr Oshlack had acted reasonably: see 152 ALR at 103-104.  The NSW Court of Appeal upheld an appeal by the council and made an order for costs.  Mr Oshlack appealed to the High Court which by a majority (Gaudron, Gummow and Kirby JJ, Brennan CJ and McHugh JJ dissenting) reinstated Stein J’s order.

However the reasoning in Oshlack is not applicable in the present case.  It was a significant factor that Mr Oshlack proceeded under s 123(1) of the Environmental Planning and Assessment Act 1979 (NSW) which provided that “any person” might bring proceedings in the Land and Environment Court for an order to remedy or restrain breaches of the Act.  The majority of the High Court considered it would be inconsistent with this conferral of standing on any member of the public to impose a costs penalty on an unsuccessful plaintiff:  152 ALR at 85, 87,  95-96.  As Kirby J said (at 122):

“Given that statutory context [of the functions, powers and peculiar procedural provisions governing the Land and Environment Court] and 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.”

But the appellants’ proceedings in the present case were not founded on any comparable statutory basis.  Mr Hollier and his Institute sought to obtain a private benefit, the permanent and indefinite occupation of Deal Island.  There was no evidence as to the value or otherwise of the scientific research conducted by the Institute.  It was not a relevant issue in the case.  As to whether it necessarily had to be conducted on Deal Island, Mr Hollier readily conceded that his research activities could equally be undertaken “in a suburban backyard in Melbourne”.  

We do not read Oshlack as establishing any general principle that the usual order as to costs should not apply if the subject matter of the litigation is a matter of “public interest”.  The latter concept is a particularly elusive one.  As McHugh J pointed out (152 ALR at 104):

“Without an organising principle to apply or a set of criteria to guide, there is a real danger that, by invoking the ‘public interest litigation’ factor in cases that affect the public interest or involve a public authority, an award of costs will depend on nothing more than the social preferences of the judge, a dependence that will be masked by reliance on the protean concept of public interest litigation.”

See also Australian Conservation Foundation v Forestry Commission (1988) 81 ALR 166 at 171. 

In a common law jurisdiction decisions of the courts, in private as well as public law, often clarify the law or lay down new law for the benefit of citizens, taxpayers, traders, patentees, insurers and insureds, landlords and tenants, etc etc.  To that extent, much litigation has a public interest going beyond the interests of the parties.  But this feature is inherent in common law litigation and provides no ground for departure from the usual rule as to costs.  And, as has been pointed out in another context, what interests the public is not necessarily in the public interest:  Loveday v Sun Newspapers Ltd (1938) 59 CLR 503 at 513, Morosi v Mirror Newspapers Ltd [1977] 2 NSWLR 749 at 777, London Artists Ltd v Littler [1968] WLR 607 at 619. 

As to (v), cost savings by the Authority, the only evidence was that Mr Hollier spent a maximum of $10,000 over five years in return for effectively rent free accommodation.  The $400,000 figure was for a manned presence for an operational lighthouse.  The lighthouse on Deal Island ceased to operate in 1992 and before Mr Hollier took up occupation.  In any event the point is quite irrelevant on the issue of costs.

Finally (vi), the status of the respondents as public bodies of one sort or another is not relevant.  They successfully defended a claim which sought the indefinite alienation of land otherwise available for public purposes.  The taxpayer should not have to bear the burden.  As McHugh J pointed out in Oshlack (at 109):

“Every irrecoverable dollar spent on litigation is one dollar less to spend on the services that public authorities do and ought to provide.”

Costs of the Minister

The appellants submitted that no order for costs should be made in relation to the Minister for Workplace Relations and Small Business because the Minister himself initiated his joinder to VG 667 of 1997 and he is an intervener but not a successful party. 

However the appellants on 13 February 1998 consented to the Minister being joined to VG 667 of 1997.  This course was necessitated by the fact that the appellants had issued proceeding VG 716 of 1997 (which was also directed to establishing the appellants’ rights over Deal Island) against the Minister but had filed no affidavit or other material which would indicate the factual basis for the application for an order of review.  For that reason, the Court was not in a position to determine whether findings of fact made in VG 667 of 1997 might be relevant to the issues raised in VG 716 of 1997.  This was important, given the possibility of inconsistent findings if overlapping issues arising in the two proceedings were litigated separately.  The joinder of the Minister to VG 667 of 1997 in fact advantaged the appellants because it bound the Minister to any findings of fact made in VG 667 of 1997 for the purposes of VG 716 of 1997.  The appellants have already availed themselves of this benefit, by relying on the evidence adduced in VG 667 of 1997 in their application for an injunction in VG 716 of 1997, which was heard on 3 and 8 April 1998.

Moreover, the issues raised on the appeal were of direct concern to the Minister, given particularly that the appellants sought a new trial.  The Minister would be exposed to the costs of preparing for and participating in a fresh trial, since the evidence relied upon by the appellants as substantiating their interest in Deal Island dated back to a time when the Commonwealth owned Deal Island (prior to its transfer to the Authority).  Moreover the Minister remained at risk of adverse findings of fact which could bind him in proceeding VG 716 of 1998.

Costs on application for leave to appeal

The appellants argued that there should be no separate order for costs in relation to their seeking leave to appeal Sundberg J’s ruling in this proceeding.  At the commencement of the hearing of the appeal the Court pointed out that leave to appeal was not necessary since the decision complained of, the trial judge’s refusal to grant an adjournment, had merged in the final judgment.  The substance of this matter was subsequently dealt with in the course of the appeal. 

Since the application for leave to appeal was clearly inappropriate and unnecessary, the appellants ought to pay the costs of the respondents of the application for leave to appeal.  The quantum of those costs will be a matter for the taxing officer.  Only such costs as are separately attributable will be allowed.

Costs in VG 184 of 1998

Notice of discontinuance was not given to the Authority’s solicitors until 21 July 1998.  There is no basis for an order departing from the ordinary course under O 52 r 19(3) of the Federal Court Rules that the “party filing a notice of discontinuance under subrule (1) shall be liable to pay the costs of the other party or parties occasioned by his appeal”. 

Orders

There will be orders that the appellants pay the costs of the respondents of the application for leave to appeal in VG 667 of 1997 and the appeal VG 116 of 1998.  As to VG 184 of 1998, costs will be payable in accordance with O 52 r 19.  Sundberg J’s order for the costs of the trial remains undisturbed.

Associate:

Dated:              14 August 1998