FEDERAL COURT OF AUSTRALIA

Scott v Secretary, Department of Social Security (No 2) [2000] FCA 1450

PRACTICE AND PROCEDURE – appeal costs – general rule that costs follow the event – impecunious litigants – whether “public interest” litigation – whether costs order should be made

RALPH SCOTT and SOPHIE SCOTT v SECRETARY, DEPARTMENT OF SOCIAL SECURITY

V 31 of 2000

JUDGES:       BEAUMONT, FRENCH & FINKELSTEIN JJ

DATE:            16 OCTOBER 2000

PLACE:          MELBOURNE

On appeal from a single judge of the Federal Court of Australia

THE COURT ORDERS THAT:

The appellants pay the respondent’s costs of the appeal.

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

On appeal from a single judge of the Federal Court of Australia

REASONS FOR JUDGMENT

BEAUMONT and FRENCH JJ:

1                     The appellants were wrongly deprived of benefits under the Social Security Act 1991 (Cth).  It was only after recourse to the court that they were able to receive those benefits.  Then the appellants brought an action against the respondent alleging that they had suffered loss and damage from the delay in the receipt of those benefits.  They alleged misfeasance in public office, an action on the case, breach of statutory duty and common law negligence.  They did not succeed at trial and their appeal to the Full Court was dismissed.  The respondent now seeks his costs of the appeal.

2                     The power to award costs given by s 43 of the Federal Court of Australia Act 1976 (Cth) is, as has often been observed, absolute and unfettered in its terms though it must be exercised judicially:  Re Wilcox; ex parte Venture Industries Pty Ltd (1996) 141 ALR 727 at 732-733.   So there are no absolute rules either that, absent disentitling conduct, a successful party is to be compensated by the unsuccessful party, or that a successful party cannot be made to bear the costs of the unsuccessful party:  Oshlack v Richmond River Council (1998) 193 CLR 72.  Nonetheless the ordinary, though by no means invariable, consequence of failure in litigation is that the unsuccessful party will be ordered to pay the other party’s costs:  Friends of Hinchinbrook Society Inc v Minister for the Environment (1998) 84 FCR 186 at 188; Re Wilcox, above, at 732.  This is the “usual rule as to costs”, derived from the English common law.

3                     The appellants say that the usual rule should not be followed.  They argue that there exist special circumstances which make it appropriate that there be no order as to costs.

4                     The first ground relied upon relates to the financial position of the appellants.  The appellants are litigants in person. They are impecunious.  They rely on social security benefits. They are not able to satisfy any costs order made against them.  However sympathetic one may personally be to arguments of this kind, inability to meet a costs order or the fact that the losing party has limited financial means has never been a sufficient reason to deny a successful party his costs:  Yilan v Minister for Immigration and Multicultural Affairs [1999] FCA 1212; Hollier v Australian Maritime Safety Authority (No 2) [1998] FCA 975.

5                     The second ground upon which the appellants rely is that there is a public interest in the litigation such that it would be appropriate for the Court to allow the costs to lie where they fall.  There is increasing judicial recognition that the usual rule as to costs should not apply to proceedings brought in the public interest.  In Oshlack the High Court upheld a decision that costs should not be ordered against an environmental activist who unsuccessfully challenged a council’s development approval. In refusing to make a costs order, the trial judge took into account factors such as the characterisation of the proceedings as “public interest litigation” with the “prime motivation” being the upholding of “the public interest and the rule of law”, the plaintiff’s pursuit of the litigation being motivated by his desire to ensure obedience of environmental law, the fact that the plaintiff had nothing much else to gain from the litigation, that “a significant number of members of the public” shared the stance of the plaintiff, and that the basis of the challenge was arguable and had raised and resolved “significant issues” concerning the interpretation and future administration of statutory provisions:  see 193 CLR at 80-81. Here however, no such factors arise.  The causes of action relied upon were not novel.  The issues raised were not complex.  The case does not stand as a significant precedent for other litigants.

6                     In any event, here we are concerned with the costs of an unsuccessful appeal.  Whatever may be said in favour of a “no costs order” at trial, there is no justification for denying the successful respondent his costs of defending an appeal in a case which had little legal merit.

7                     Accordingly, there being no reason to depart from the usual rule, the order will be that the appellants pay the respondents’ costs of the appeal.

Associate:

Dated:                          16 October 2000

On appeal from a single judge of the Federal Court of Australia

REASONS FOR JUDGMENT

FINKELSTEIN J:

8                     In substance, I agree with what the majority has said are the principles to be applied on costs.  However in the special circumstances of this case, I think it is appropriate that no order for costs be made.  The appellants are social security recipients.  They do not have the means to satisfy an order for costs, either now or in the future.  It is true that impecuniosity is ordinarily not a ground to be considered when awarding costs.  However the award of costs is discretionary and I would not exercise my discretion by making an order in favour of the respondent, an officer of the Commonwealth, when there is no prospect of recovery and the only effect of the order would be to oppress the appellants.

Associate:

Dated:                          16 October  2000