FEDERAL COURT OF AUSTRALIA

Corcoran v Virgin Blue Airlines Pty Ltd [2008] FCA 864

COSTS – Order 62A rule 1 of Federal Court Rules – claim of direct and indirect discrimination in relation to Independent Travel Criteria imposed by airline respondent – criteria require disabled passengers who cannot comply to fly with carer – applicants seek maximum costs order under O 62A r 1 – factors relevant to Court’s discretion – public interest in determination of issues – public interest alone not decisive – arguable case – novel questions raised – application brought in timely manner – no financial benefit to applicants in bringing proceedings – applicants reluctant to continue litigation without order – combination of factors make it appropriate to make order – difficult to determine complexity of case – approximate amount of maximum costs

Civil Aviation Act 1988 (Cth)

Civil Aviation Regulations 1988 (Cth)

Disability Discrimination Act 1992 (Cth) ss 5, 6, 24

Federal Court Rules O 62A rr 1, 2, 3, 4

Legal Aid Commission Act 1979 (NSW) s 47

Trade Practices Act 1974 (Cth) s 51AB

Access For All Alliance (Hervey Bay) Inc v Hervey Bay City Council [2007] FCA 974 considered

Australian Federation of Consumer Organisations Inc v Tobacco Institute of Australia Ltd (1991) 100 ALR 568 considered

British Columbia (Minister of Forests) v Okanagan Indian Band 2003 SCC 71, 313 N.R. 84 cited

Dibb v Avco Financial Services Limited [2000] FCA 1785 cited

Fetherston v Peninsula Health (No 2) (2004) 137 FCR 262 considered

Flew v Mirvac Parking Pty Ltd [2006] FMCA 1818 considered

Hanisch v Strive Pty Ltd (1997) 74 FCR 384 cited

Little Sisters Book & Art Emporium v Canada (Commissioner of Customs & Review Agency) 2007 SCC 2, J.E 2007-211 cited

McLean v Airlines of Tasmania Pty Ltd (1996) EOC 92-862 considered

Minns v State of NSW (No. 2) [2002] FMCA 197 cited

Oshlack v Richmond River Council (1998) 193 CLR 72 applied

Physical Disability Council of NSW v Sydney City Council [1999] FCA 815 considered

Regina (Corner House Research) v Secretary for Trade and Industry [2005] 1 W.L.R. 2600 cited

Ruddock v Vadarlis (No 2) (2001) 115 FCR 229 applied

Sacks v Permanent Trustee Australia Ltd (1993) 45 FCR 509 cited

Woodlands v Permanent Trustee Company Limited (1995) 58 FCR 139 considered

MAURICE GERARD CORCORAN v VIRGIN BLUE AIRLINES PTY LTD

NSD 739 of 2007

TOM FERGUSON v VIRGIN BLUE AIRLINES PTY LTD

NSD 1890 of 2007

BENNETT J

17 JUNE 2008

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 739 of 2007

BETWEEN:

MAURICE GERARD CORCORAN

Applicant

AND:	VIRGIN BLUE AIRLINES PTY LTD Respondent

JUDGE:	BENNETT J
DATE OF ORDER:	17 JUNE 2008
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. Both parties provide written submissions within 14 days on:

(a) the proposed maximum costs order under O 62A r 1 of the Federal Court Rules;

(b) the effect on this order of the proceedings being heard together with NSD 1890 of 2007; and

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

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 1890 of 2007

BETWEEN:

TOM FERGUSON

Applicant

AND:

VIRGIN BLUE AIRLINES PTY LTD

Respondent

JUDGE:	BENNETT J
DATE OF ORDER:	17 JUNE 2008
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. Both parties provide written submissions within 14 days on:

(a) the proposed maximum costs order under O 62A r 1 of the Federal Court Rules;

(b) the effect on this order of the proceedings being heard together with NSD 739 of 2007; and

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

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 739 of 2007

BETWEEN:

MAURICE GERARD CORCORAN

Applicant

AND:	VIRGIN BLUE AIRLINES PTY LTD Respondent

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 1890 of 2007

BETWEEN:

TOM FERGUSON

Applicant

AND:

VIRGIN BLUE AIRLINES PTY LTD

Respondent

JUDGE:	BENNETT J
DATE:	17 JUNE 2008
PLACE:	SYDNEY

REASONS FOR JUDGMENT

INTRODUCTION

1 Virgin Blue Airlines Pty Ltd (‘Virgin’) has implemented certain criteria for passengers wishing to fly on its aircraft, the Independent Travel Criteria (‘the ITC’). The ITC require that passengers are able to carry out certain actions independently. By way of example, a passenger is required to be able to reach for, pull down and secure the overhead oxygen mask if needed. If a passenger cannot carry out the specified actions, Virgin requires him or her to travel with a carer, another person who can assist the passenger to comply with the ITC. Mr Corcoran and Mr Ferguson (together, ‘the applicants’) each claim that they are unable to comply with the ITC and have commenced proceedings claiming that, in implementing and applying the ITC, Virgin has discriminated against them, directly and indirectly, under the Disability Discrimination Act 1992 (Cth) (‘the Act’).

2 Both of the applicants are legally aided. Each grant of legal aid provides for the payment of costs up to $15,000. Each applicant has filed a notice of motion seeking an order that, pursuant to O 62A r 1 of the Federal Court Rules, the maximum costs that may be recovered by each party on a party/party basis be limited to $15,000. If the order were made and if Virgin were successful, its costs recovery in the proceedings heard together would therefore be limited to $15,000 from each of Mr Corcoran and Mr Ferguson, $30,000 in total.

GUIDELINES FOR THE APPLICATION OF O 62A R 1

The content of the rule

3 Order 62A rule 1 of the Federal Court Rules provides that the Court may specify the maximum costs that may be recovered on a party and party basis. Rule 2 excludes costs from that maximum amount where a party:

(a) has failed to comply with an order or with any of these Rules; or

(b) has sought leave to amend its pleadings or particulars; or

(c) has sought an extension of time for complying with an order or with any of these Rules; or

(d) has otherwise caused another party to incur costs that were not necessary for the economic and efficient:

(i) progress of the proceedings to trial; or

(ii) hearing of the action.

4 Rule 3 provides for such further directions as the Court considers necessary to effect the economic and efficient progress of the proceedings to trial or the hearing of the action. Rule 4 provides for a variation of the maximum recovered costs ordered under rule 1 if there are special reasons to do so and it is in the interests of justice.

5 An order made pursuant to O 62A r 1 applies equally to all parties to the proceedings (Hanisch v Strive Pty Ltd (1997) 74 FCR 384 at 389 per Drummond J).

Factors relevant to the exercise of discretion in making an order under rule 1

6 The parties agree on many of the factors to be taken into account in the exercise of the Court’s discretion to make an order under rule 1. As discussed in the authorities which consider O 62A r 1 and the equivalent provision in the Federal Magistrates Court Rules, the factors include:

· the timing of the application (Sacks v Permanent Trustee Australia Ltd (1993) 45 FCR 509 at 511 per Beazley J; Flew v Mirvac Parking Pty Ltd [2006] FMCA 1818 at [48] per Barnes FM; Minns v State of NSW (No. 2) [2002] FMCA 197 at [9] per Raphael FM]);

· the complexity of the factual or legal issues raised in the proceedings (Hanisch at 387 per Drummond J; Dibb v Avco Financial Services Limited [2000] FCA 1785 at [15] per Sackville J);

· the amount of damages that the applicant seeks to recover (Hanisch at 387) and the extent of any other remedies sought (Flew at [48]);

· whether the applicant’s claims are arguable and not frivolous or vexatious (Flew at [15]);

· the undesirability of forcing the applicant to abandon the proceedings (Woodlands v Permanent Trustee Company Limited (1995) 58 FCR 139 at 148 per Wilcox J; Flew at [9]); and

· whether there is a public interest element to the case (Woodlands at 146; Flew at [23], [47]).

7 Virgin contends that, in addition, the Court should take into account:

· the costs likely to be incurred by the parties in the preparation for, and hearing of, the matter (Flew at [48]);

· whether the party opposing the making of the order has been uncooperative and/or has delayed the proceedings (Dibb at [17]; Hanisch at 390); and

· ‘…any other matters which may go towards establishing that there should be a departure in advance from the usual rules as to quantification of the amount of costs to be payable by the ultimately unsuccessful party’ (Flew at [48]).

8 The general principle is that costs ordinarily follow the event and that a successful litigant receives costs in the absence of special circumstances justifying some other order (Ruddock v Vadarlis (No 2) (2001) 115 FCR 229 at [11] per Black CJ and French J). This reflects the principle that the award of costs to a successful party is principally by way of perceived restorative justice (Ruddock at [12]). In Ruddock at [13], Black CJ and French J discussed the fact that novel legal issues and public interest litigation are cases where the usual rationale for the award of costs, that the successful party has been wronged at the hands of the losing party, does not necessarily apply. A losing party may, as their Honours point out, have had very good legal grounds for its position and conducted itself in the litigation in an entirely reasonable way and an order that costs follow the event may work unfairness. It may also, as their Honours observed, pose a significant barrier against parties of modest means even if the contemplated claim has substantial merit.

9 Chief Justice Black and French J said at [13] that criticisms concerning costs in public interest litigation did not justify a global modification of the usual rule that costs follow the event, but that the ability to exercise discretion is desirable. Further, as noted at [14], the compensatory principle ‘was long subject to a limited public interest qualification at common law’. The further factor, that a party is deprived of costs because of its conduct of the proceedings, does not presently apply to Virgin, although Virgin submits that the applicants’ conduct of the proceedings to date, in the amendment of pleadings and provision of particulars, is relevant.

10 The fact that the proceedings are brought otherwise than for the personal or financial gain of the applicant does not detract from the general proposition that ordinarily costs follow the event (Ruddock at [18]). The fact that litigation can be characterised as being “in the public interest” does not, of itself, mean that the usual order is not made. However, the nature and purpose of the proceedings are still relevant in the exercise of the discretion to award costs and the exercise of the discretion takes account of all of the circumstances (Ruddock at [18]–[19]; [24]). There is no error in taking into account in a decision whether to award costs matters such as the absence of personal gain on the part of the applicants, the fact that a significant number of members of the public may be affected and that the basis of the challenge is arguable and raises “significant issues” as to the interpretation and application of statutory provisions (Oshlack v Richmond River Council (1998) 193 CLR 72 at [20] per Gaudron and Gummow JJ, at [49] per McHugh J). The same circumstances are relevant to an order under Order 62A r 1 which, while making provision for the costs of a successful party, departs from the usual order that would otherwise be made.

11 It is of some interest to note that maximum costs orders, also known as protective costs orders, are made in other jurisdictions within the discretion of the court. For example, in the United Kingdom the Court of Appeal has set out the discretionary considerations in Regina (Corner House Research) v Secretary for Trade and Industry [2005] 1 W.L.R. 2600 at [74] as whether:

· the case is a public law case raising issues of general public importance.

· the public interest requires that those issues be resolved.

· the applicant has no private interest in the outcome of the case.

· having regard to the financial resources of the applicant and the respondent and the amount of costs that are likely to be involved, it is fair and just to make the order.

· if the order is not made, the applicant will probably discontinue the proceedings and will be acting reasonably in so doing.

12 In Canada, the Supreme Court in British Columbia (Minister of Forests) v Okanagan Indian Band 2003 SCC 71, 313 N.R. 84 (at [40]–[41] per LeBel J) and Little Sisters Book & Art Emporium v Canada (Commissioner of Customs & Review Agency) 2007 SCC 2, J.E 2007-211 (at [36]–[41] per Barstarache and LeBel JJ) discussed factors such as:

· access to justice;

· the right of indemnity for costs incurred by a successful party;

· the need to establish special circumstances where an order is sought that the usual costs order not apply in public interest litigation;

· the ability of a party to continue the litigation if an order were not made;

· whether the litigant could show that he or she genuinely cannot afford to pay for the litigation and that no other realistic option exists for bringing the issues to trial;

· the existence of a prima facie case of sufficient merit; and

· special circumstances sufficient to satisfy the court to depart from the usual order for costs.

13 If present, there are, therefore, a variety of factors that may be taken into account in exercising the Court’s discretion. These may all be relevant.

CONSIDERATION OF THE FACTORS RELEVANT TO THE EXERCISE OF DISCRETION IN THESE PROCEEDINGS

14 The applicants and Virgin wish the matter to remain in the Court. Despite the lower costs that may be incurred, neither party wants the matter remitted to the Federal Magistrates Court. It is therefore not necessary to consider this as a factor relevant to the Court’s discretion.

The timing of the application

15 In Physical Disability Council of NSW v Sydney City Council [1999] FCA 815, the applicant requested a O 62A r 1 order after Madgwick J declined to grant the interlocutory injunction sought. This weighed against the exercise of his Honour’s discretion to make the order. Unlike the applicant in Physical Disability the applicants have filed the notice of motion at an early stage in the proceedings. This is clearly appropriate. However, the timing means that the extent of the evidence and the costs to be incurred cannot be fully assessed at this stage. If an order is to be made, it is difficult to determine the amount at which costs should be capped.

16 Virgin raises the history of the litigation to date and asserts that a number of steps have been taken unnecessarily because of the way in which the applicants have conducted the proceedings. There have been amendments to the application and to the points of claim and also correspondence in respect of the provision of particulars. Certain claims have been abandoned. The applicants do not really dispute that there has been a somewhat unfortunate procedural history or that any order capping the costs may exclude costs arising from the amendments or that any order under O 62A r 1 should take effect from the date of filing of the notice of motion.

17 The filing of the notice of motion early in the proceedings is relevant as is the procedural history prior to that filing.

The complexity of the factual and legal issues and the length of the hearing

18 The applicants maintain the claims of direct (s 5) and indirect (s 6) discrimination under the Act. However, there has been an attempt by the parties to limit the issues:

· The proceedings commenced by the two applicants are to be heard together and raise the same issues under the Act.

· The applicants have abandoned claims under s 51AB of the Trade Practices Act 1974 (Cth) and, as a condition of an order under O 62A r 1, a claim of discrimination under s 23 of the Act.

· Mr Ferguson did travel with Virgin on previous occasions. Mr Corcoran has not travelled with Virgin or attempted to do so. Mr Corcoran relies on s 5 of the Act which includes proposed treatment of a person for the purposes of direct discrimination. Only the ITC effective from 21 June 2007 (as currently enforced) are challenged, subject to two provisos:

· That, if it is necessary to refer to documents concerning the past versions of the ITC in order to understand the reasons for the current ITC, Virgin will, subject to legal professional privilege, provide the necessary documents or information.

· Virgin takes no issue with the fact that the current ITC were not the ITC in place at the time that Mr Corcoran’s proceedings were filed or at the time that Mr Ferguson sought to fly with Virgin.

19 The applicants say that their evidence will be limited to:

· their ability to comply with the ITC, which should not be in dispute.

· documentary material in respect of Virgin’s policies regarding the carriage of unaccompanied minors.

· documents recording the policies of other airlines.

· subpoenaed material from Virgin on its reasons for adopting the ITC.

20 The applicants also suggest that it should not be in dispute that the requirements of the ITC, with which the applicants cannot comply, are ones with which a substantially higher proportion of persons without the disability are able to comply.

21 Virgin submits that the trial will be complex and estimates that the party/party costs arising from the hearing are likely to be in the order of $39,000. This estimate does not include costs associated with discovery, preparation of evidence and preparation for trial. Virgin contends that all of the issues of fact and law are complex and thus outside the intended application of O 62A r 1 (Hanisch at 387) and that the preparation of the evidence will be both complex and costly.

22 In relation to discovery Virgin points to what it describes as the broad, ambiguous and/or irrelevant categories of disclosure sought by the applicants. Virgin says that the applicants’ reliance on the current ITC does not necessarily narrow the scope of discovery, as those criteria also formed part of the earlier ITC. The reasonableness of those criteria may, Virgin says, involve consideration of the reasons why they were initially adopted by Virgin. This may require evidence from past and present employees.

23 Virgin says that it will necessarily adduce extensive evidence in response to the applications concerning:

· the history associated with the development of the ITC and the reasons why the ITC were introduced;

· changes in the policy that took place on 30 September 2003, 1 June 2006 and 21 June 2007;

· an explanation of the implementation of the ITC;

· the physical movements involved in putting an aircraft seat belt on, donning a life jacket, putting on an oxygen mask and responding to cabin crew directions;

· what can occur in certain emergency situations;

· responses that Virgin’s staff are required to make during mid-air turbulence, mid-air cabin decompression and emergency evacuation from the aircraft including water ditching;

· the effect on those procedures of an inability to comply with the ITC; and

· policies implemented by other airlines.

24 Some of the areas on which the parties disagree or which are unclear and which Virgin contends will extend the hearing include:

· why it is necessary to bring both sets of proceedings;

· the alleged vagueness of the points of claim and the inadequacy of particulars; and

· if the applicants contend that Qantas is the benchmark for what is reasonable, there will be a need to adduce evidence as to the differences between that airline and Virgin.

25 In relation to the medical evidence, at this stage it may either give rise to agreed facts upon further medical examination of the applicants and the subsequent medical reports or it may be in reasonably short compass. Virgin does not presently accept that Mr Corcoran is unable to comply with the ITC although it accepts that Mr Corcoran is claiming that he cannot comply. Mr Ferguson is to be medically examined, although Virgin generally accepts he cannot comply with the ITC. I shall proceed on the basis that neither applicant can comply.

26 Virgin also says that it will need to devote significant resources to the conduct of the proceedings because of the importance of the outcome to its operations. Virgin says that if it is not able to implement the ITC, its officers and employees will be exposed to a risk of prosecution and civil actions and, further, that its employees’ and customers’ safety could be compromised. That, presumably, will also be the subject of evidence.

27 In order to establish indirect discrimination under s 6 of the Act, the applicants have the burden of establishing that the requirement or condition is not reasonable having regard to the circumstances of the case (s 6(2)(b) of the Act). As described in argument, the applicants’ case seems to be based on two matters. First, that other airlines do not require persons not able to comply with the ITC to travel with a carer. Secondly, that children may fly with Virgin unaccompanied, although they would require assistance to comply with the ITC. While the applicants referred to the comparator of a 5 year old unaccompanied child, they clarified this contention by accepting that the comparator for the purposes of discrimination under the Act is an adult with no disability.

28 The applicants say that the evidence and arguments concerning the reasonableness of the ITC will be the same as those concerning unjustifiable hardship. Virgin relies upon the differences in onus. The onus is on the applicants to show unreasonableness and on Virgin to demonstrate unjustifiable hardship.

29 It is difficult to assess the scope of discovery and evidence required at this stage. If the applicants intend simply to compare the requirements imposed by different airlines, discovery by Virgin would not be extensive. However, Virgin may choose to present evidence on the reasonableness of the criteria and is likely to rely on unjustified hardship as a defence to a claim of direct discrimination (s 24 of the Act). Whether considered as part of the applicants’ case as unreasonableness or as a defence, it is apparent that the reasonableness of the policy and the effect of persons unable to comply with the ITC on the running of the airline and on Virgin staff will be the subject of consideration. Even if the evidence is not the subject of challenge, or cross-examination, the evaluation of the evidence and the reasons for the adoption of the ITC will undoubtedly raise complex considerations. It will also be necessary to consider the ITC within the framework of the requirements and application of the Civil Aviation Act 1988 (Cth), the Civil Aviation Regulations 1988 (Cth) and the Civil Aviation Orders.

30 If the evidence is not itself challenged, the length of the hearing may not be extensive. Virgin estimates a hearing of approximately two weeks. Accepting that the applicants do not intend to seek detailed discovery or call extensive evidence beyond material publicly available on airline websites, the length of the hearing will be determined to some extent by the evidence adduced by Virgin which cannot, at this stage, be estimated.

31 Accordingly, the complexity of the factual or legal issues to be addressed in the proceedings is currently not capable of full assessment.

Do the proceedings disclose a public interest?

32 The parties have referred to only one other case that has raised similar issues under the Act, McLean v Airlines of Tasmania Pty Ltd (1996) EOC 92-862. In that case the Human Rights & Equal Opportunity Commission considered discrimination by an airline on the basis of disability. The applicant was seeking to fly on a small plane which was not easily wheelchair accessible and which had no cabin attendant. The Commission found that the discrimination was not unlawful as, in light of the facts of that case, it was reasonable for the airline to refuse access to the disabled applicant. While similar, these proceedings raise different and new issues to those addressed in McLean.

33 It is not seriously contended by Virgin that there is no question of public interest raised in the proceedings. Virgin submits, however, that the claims involve self interest on the part of the applicants as well as public interest. This does not derogate from the broader impact of the ITC. The ability of disabled persons to fly with Virgin, a major commercial airline in Australia, without the extra cost of a carer raises questions of public interest beyond the private interests of the applicant.

Do the applicants claim financial compensation?

34 Claims for financial compensation by each of the applicants have been abandoned. Accordingly, the amount of damages that the applicants may seek to recover is not a factor that assists in the exercise of the Court’s discretion.

The strength of the applicants’ case

35 The applicants say that their case is arguable. Virgin does not suggest that the cases are vexatious or frivolous. In order to establish direct discrimination, the applicants must show that the ITC are not reasonable, which cannot be assessed on the evidence presently filed. Virgin has a statutory defence of unjustifiable hardship to the claim of indirect discrimination. That, also, cannot be assessed at present.

The applicants’ ability to pay costs

36 The applicants submit that a party should not be deterred from prosecuting a proper claim because of a fear of a costs order that he or she could not afford to pay. However, as the applicants recognise, this needs to be balanced against the right of a successful party to its costs of proceedings.

Would the applicants be forced to abandon proceedings if their applications were unsuccessful?

37 The applicants rely on the grant of legal aid and submit that costs should be capped at the extent of the legal aid indemnity provided to the applicants, as in Woodlands at 149. Mr Ferguson says that he ‘may be unable to pursue the litigation in the event of his application being unsuccessful’ (emphasis added) as he does not have the means to meet an adverse costs order and does not wish to be made a bankrupt. Mr Ferguson says that he is unemployed and in receipt of a Disability Support Pension.

38 Mr Corcoran does have assets and could meet an adverse costs order but does not wish to be forced to sell property and thereby deprive himself and his family of financial security. He wishes to have the costs capped, even if the Court deemed $15,000 to be inadequate.

39 A deterrent effect of a potential adverse costs order is insufficient of itself to warrant an order under O 62A r 1 (Dibb at [16]; Flew at [52]). Virgin says each applicant must establish that he will be ‘prevented or inhibited from conducting his case’ if no order is made (Dibb at [16]). Virgin submits that, while not determinative of the entitlement to an order, the applicants need to establish that they would be forced to abandon the litigation. It is not sufficient, Virgin says, that the applicants do not want to be exposed to an order for costs in the ordinary course if they are unsuccessful.

40 Virgin submits that, as found by Barnes FM in Flew at [53], the fact that an applicant would need to go into debt to meet costs does not lead to an inference that he or she would be forced to abandon the proceedings if no order were made. Further, Virgin says that there is no sufficient evidence that either Mr Ferguson or Mr Corcoran would be forced to discontinue the proceedings if the costs were not capped. Mr Corcoran and his wife are in receipt of income and have assets. Those assets may, Virgin submits, enable Mr Corcoran to obtain a loan rather than sell the assets. In any event, reluctance to be exposed to the risk of selling an investment property cannot, Virgin submits, be equated to being “forced” to abandon the claim.

41 As Barnes FM said in Flew at [52], impecuniosity of one party or claims about the relative financial significance of the cost of proceedings cannot of themselves be determinative. It would not be unusual that fear of exposure to costs acts as a deterrent to litigation. It is in that context that the comment that a party should not be “forced” to abandon litigation because of the possibility of an adverse, uncapped, costs order should be considered. While it may not be necessary to establish that the party was forced to abandon litigation for fear of costs, mere concern as to the effect of an adverse costs order on a party’s asset position, or a concern that a party may become bankrupt if unable to meet a costs order are not, by themselves, factors that sufficiently render the applicants’ position different from other litigants faced with the usual costs order.

CONSIDERATION

42 The applicants rely on a juxtaposition of factors, some but not all of which have been present in cases previously decided:

(a) there is no financial benefit to the applicants in bringing the proceedings;

(b) there is a public interest in the resolution of the issues;

(c) the need for a sufficiently disabled person to provide a carer on flights is likely to affect numbers of people for whom the incremental cost is likely to be insufficient to justify the commencement of proceedings under the Act;

(d) each of the applicants has asserted that he would be likely to be unable to proceed with the litigation if the O 62A r 1 order were not made;

(e) the explanation given by each applicant is reasonable and has not been challenged as a bona fide reason;

(f) the application has been brought in a timely manner;

(g) the applicants have, after an initial period clarifying their case, sought to narrow the issues to be determined;

(h) if the matter had proceeded in the Supreme Court of New South Wales, a cap would have applied automatically (s 47 of the Legal Aid Commission Act 1979 (NSW)).

43 Many of these factors have not been challenged by Virgin. However, Virgin submits that they are not sufficient to depart from the usual costs order. Virgin points out that, as was recognised in Fetherston v Peninsula Health (No 2) (2004) 137 FCR 262and Flew, there is nothing in the Act or in other legislation to indicate that policy considerations warrant a special provision for costs in human rights litigation.

44 There is, of course, O 62A r 1 and the circumstances in which this rule applies are not limited.

Public interest

45 The existence of a public interest in the determination of the issues in litigation is a factor of some significance in the awarding of costs. However, public interest and an arguable case are not necessarily decisive and not, of themselves, sufficient to prevent the usual costs order being made (Ruddock at [18]–[19]; Woodlands at 148; Physical Disability at [7]). The usual order for costs applies notwithstanding that the Act is beneficial legislation (Fetherston at [9] per Heerey J). However, discretionary considerations may lead to a different result (Fetherston at [12]).

46 As stated by Madgwick J in Physical Disability at [7]:

…if proceedings can properly be characterised as public interest litigation, the prime motivation of which is the upholding of the public interest in the rule of law, that may be a factor which contributes to a finding that there are special circumstances justifying a departure from the traditional rule…the characterisation of proceedings in that way is not alone enough to warrant such departure. Something more is required. That additional quality or requirement may be met by its being shown that the unsuccessful moving party had an arguable case and that the case had raised and resolved significant issues as to the interpretation and future administration of a statute dealing with matters of public interest and concern, which has practical implications for relevant sections of the public and for private persons.

(original emphasis)

47 Virgin says that, while there is an undeniable public interest in people with disabilities having dignified access to goods and services, the applicants do not explain the importance of independent travel for people with disabilities or how the ITC undermine their sense of personal dignity. Virgin points out that persons with disabilities rendering them unable to comply with the ITC may require care during a flight, either from a carer or from one of the airline staff and that the applicants do not explain why the existence of a carer affects their ability to travel independently or their sense of personal dignity.

48 The applicants may not have explained these matters. They may or may not be relevant to a final determination of discrimination. That does not, however, derogate from the public interest in the subject matter of these proceedings.

Costs and damages

49 The relevance of the cost of public interest litigation to an individual was discussed by Wilcox J in Woodlands at 147. His Honour adopted the approach of Morling J in Australian Federation of Consumer Organisations Inc v Tobacco Institute of Australia Ltd (1991) 100 ALR 568, namely that it was not in the public interest for a litigant to be heavily out-of-pocket for taking public-spirited action. The applicants do not seek financial gain from the litigation. Even if they do intend to fly with Virgin and do not wish to pay for a carer to accompany them, the costs of the litigation far outweigh that cost, so as to render it irrelevant to a question of personal financial, rather than public, benefit.

50 The applicants have not established that they would be forced to abandon the litigation if no order were made capping the costs. A large proportion of applicants in the Court are concerned at the possibility of being required to pay costs if they are unsuccessful (Dibb at [16] per Sackville J). However, I accept that these applicants would be inhibited or reluctant to continue the litigation if there were no order made under O 62A r 1. In circumstances where neither applicant seeks a monetary outcome from the litigation, I do not see that their inhibition or reluctance to continue the proceedings for the reasons given to be unreasonable or irrelevant.

51 Mr Ferguson is unlikely to be able to meet any substantial costs order. It is not apparent that, even if he were made bankrupt, he would be able to do so. The maximum costs order that he seeks directly relates to the indemnity provided under the grant to him of legal aid. Mr Corcoran is in no different a position from many applicants in the Court. He has sufficient assets to meet a costs order but is disinclined to put them at risk. The difference between his position and that of other litigants is that he will receive no financial gain if he succeeds in obtaining the orders sought. While, if successful, he would be able to fly on Virgin without a carer, he is presently able to fly on other airlines without that extra cost.

Arguable case and the complexity of issues raised

52 On the pleadings and the accepted facts of the disability of the applicants and their inability to comply with the ITC, the applicants have an arguable case of direct and indirect discrimination under the Act. The questions raised in the pleadings have not previously been considered in the Court and raise novel questions, a relevant factor (Woodlands at 148). In order to establish direct discrimination, the applicants must establish that the ITC are not reasonable. The factual considerations for an assessment of reasonableness are likely to be coextensive, or at least overlap, with the available defence of unjustifiable hardship in respect of the indirect discrimination claim. The evidence concerning reasonableness/unjustifiable hardship is likely to be largely adduced by Virgin. The applicants have indicated the nature of the evidence they intend to adduce and it is in short compass and documentary in form. At this stage of the proceedings, the extent of Virgin’s evidence is not apparent. It should be possible for the parties to formulate agreed facts as to some of the matters to be relied on by Virgin, such as statutory requirements. The issues have already been narrowed. If the scope of the factual issues can be further narrowed, the complexity will arise in submissions and in the evaluative process and will not necessarily mean a lengthy final hearing. If that is not the case, I can reconsider the maximum amount of recoverable costs.

53 It cannot be said that the case lacks complexity. As pointed out by Beazley J in Sacks at 511, the intention on the introduction of O 62A r 1 was to apply the rule principally to commercial litigation at the lower end of the scale in terms of complexity and the amount in dispute. That is, it was introduced to keep costs proportionate in low value litigation. The original object of O 62A r 1 as set out in a letter from the Chief Justice of the Federal Court to the President of the Law Council of Australia regarding the introduction of the rule, was to ‘define a budget so that the management of the case might be tailored according to its economic limits’ (cf Sacks at 511, Flew at [7]). That, however, is not a limitation on the availability of an order. There is no reason why it should not apply, in appropriate situations, to cases that are somewhat complex.

CONCLUSION

54 The applicants have brought the applications reasonably early in the litigation. They do not claim any personal financial reward. The claims advanced are arguable and not frivolous. There is a public interest in the subject matter of the proceedings. If an order is not made, the applicants may discontinue the litigation or, at the least, be inhibited from continuing. That position on their part has been explained in evidence and is reasonable. Mr Ferguson cannot afford to continue the litigation and Mr Corcoran is not prepared to risk his assets for a case in which he has no personal financial interest and from which he seeks no personal financial gain. In order to reduce costs and the complexity of the case, they have abandoned a number of claims.

55 The case is clearly of some importance to Virgin. Questions of reasonableness of the introduction and application of the ITC and the hardship for Virgin if they do not apply arise. For that reason, Virgin may choose to adduce more evidence than have the applicants. Such a decision would not be unreasonable. It is in Virgin’s interest to respond to the broader issues that arise under the Act. There is no suggestion that Virgin cannot afford financially to continue the proceedings if an order is made capping recoverable costs.

56 As Collier J observed in Access For All Alliance (Hervey Bay) Inc v Hervey Bay City Council [2007] FCA 974 at [10], in the context of the exercise of the discretion concerning costs, the issue is whether there is anything about the particular proceedings to persuade me that it is appropriate to depart from the usual order. Other decided cases in which some but not all factors are present or cases that present different considerations are ‘not particularly helpful’ (Fetherston at [12] per Heerey J). I note that in no other case cited by the parties were all of the factors present that arise in these proceedings. For example, the application was only made after judgment was given (Dibbs; Access For All Alliance) or the case could not be characterised as public interest litigation (Access For All Alliance).

57 I have found the factors to be weighed in deciding whether to make the order to be very finely balanced. A successful litigant is entitled to the usual order for costs. The existence of a public interest is not, of itself, sufficient to alter that entitlement. However, there are, in this case, additional factors that, together, persuade me to exercise my discretion and make an order for maximum costs under O 62A r 1. On balance, I am satisfied that it is appropriate to make that order.

COSTS LIKELY TO BE INCURRED – THE AMOUNT OF THE ORDER

58 Virgin contends that the costs likely to be incurred will be substantially in excess of $15,000 and in excess of the combined proposed cap of $30,000. Virgin estimates that the costs will be well in excess of $53,000, reflecting the considerable time, expense and resources that will be required for the preparation and the hearing. Virgin also contends that the applicants have, to date, demonstrated a failure to conduct the matter in an efficient and economical manner. It has been noted (by Heerey J in Fetherston and by Barnes FM in Flew) that neither the Act nor the Federal Court Rules provide for a limitation to the usual costs order or any special provision for costs in proceedings brought under the Act. Unlike the Federal Magistrates Court, the Federal Court Rules do not limit and prescribe costs, enabling a party better to calculate at the outset of litigation the likely costs to be awarded to the successful party. However, this is only of assistance when an estimate can be made of the length of hearing and the costs of the evidence. In Flew, as here, Virgin has estimated the costs of a likely hearing, not including its costs of preparation and evidence.

59 Order 62A r 2(b) provides that a maximum amount specified under rule 1 shall not include an amount that a party is ordered to pay because the party has sought leave to amend its pleadings or particulars. On balance, I am presently of the view that the progress of the matter to date requires that neither the costs incurred prior to the filing of the notice of motion nor the costs associated with the amendments to the claim and consequential amendments to the defence and the provision of particulars that make clear the applicants’ claims should be part of any order under O 62A r 1. Those costs would then be payable in the ordinary course. However, I will give the parties the opportunity to make submissions on the time from which the order should operate.

60 Further, I am not satisfied that, in the case of Mr Corcoran, whose income and asset position are reasonably substantial, the proffered $15,000 representing the legal aid indemnity is appropriate. The evidence and submissions are unclear as to whether he would discontinue the proceedings if a higher costs cap were imposed and, if so, that position is reasonable.

61 In the circumstances, I propose to fix the maximum amount for recoverable costs for the proceedings commenced by Mr Ferguson at $15,000 and the maximum amount for the proceedings commenced by Mr Corcoran at $40,000. As discussed above, these amounts do not include the costs incurred prior to the filing of the notice of motion, the costs associated with the amendments to the claim and consequential amendments to the defence or the provision of particulars that make clear the applicants’ claims. I will give the parties the opportunity to make submissions on this proposal and on the effect of the proceedings being heard together before making the orders.

ORDERS

62 The parties in both proceedings are to provide written submissions within 14 days on:

(a) the proposed maximum costs order under O 62A r 1 of the Federal Court Rules;

(b) the effect on this order of both proceedings being heard together; and

I certify that the preceding sixty-two (62) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett.

Associate:

Dated: 16 June 2008

Counsel for the Applicants:	Dr C J Birch SC

Solicitor for the Applicants:	Public Interest Advocacy Centre Ltd

Counsel for the Respondent:	Ms K Eastman

Solicitor for the Respondent:	Corrs Chambers Westgarth

Date of Hearing:	14 December 2007, 7 April 2008

Date of Judgment:	17 June 2008

Top