Appellants v Respondent

2 The usual rule is that the court's discretion to award or not award costs[2] should not be exercised against the successful party except for some reason connected with the case.[3] This is the statement of the rule and its rationale by McHugh J in Oshlack v Richmond River Council:[4]

The expression the 'usual order as to costs' embodies the important principle that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour. The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party. If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation.

His Honour went on to say "there are very few, if any, exceptions to the usual order as to costs outside the area of disentitling conduct."[5] There has been no such conduct in the present case.

3 Geeveekay submits the nature of the litigation in the present case supplies a reason for not making the usual order. In its submission, the litigation involved an important question of law the resolution of which was in the public interest.

4 That question was the central one in the appeal, being whether the terms contracts for the sale of land were credit contracts regulated by the Code, which is uniform national legislation. As I said in the substantive judgment, "[i]t is a standing controversy whether a terms contract for the sale of land provides credit and constitutes a credit contract for the purposes of the Code."[6] I accept Geeveekay's submissions that this question had national importance, that the resolution of the question was in the public interest, that the appeal became a virtual test case on the question and that, subject to any decision of a higher court, my decision is likely to have application beyond the immediate parties to the appeal.

5 Nonetheless, I do not think those considerations are sufficient to bring this case within the category of special or exceptional cases involving the public interest in which the court will not make the usual order as to costs.

6 Even though the appeal involved an important question of law whose resolution was in the public interest, it was an appeal of a private nature between Geeveekay and the Director. Geeveekay was defending the Director's application in the Tribunal, and brought the appeal, in the (legitimate) pursuit of its own commercial interests as a company whose business was buying and selling land. This distinguishes the present case from other cases involving private litigation between a member of the public and a government agency in which the usual order for costs was not made, such as Ruddock v Vadarlis[7] and Smith v Airservices Australia.[8] In the first, it was relevant that the losing party had no financial interest in the litigation and was bringing the proceeding in the public interest on behalf of a community organisation.[9] In the second, it was relevant that the losing party had no personal or private interest in the litigation and was uniquely placed as an individual to bring the proceeding in the public interest.[10] These considerations do not apply in the present case. This case is more like De Silva v Ruddock,[11] which also involved the resolution of an important legal question, yet the court made the usual order for costs, because the "proceeding was brought for the individual benefit of the applicants" and not "for the benefit of the public or to enforce a public duty."

7 The categories of cases in which the court might not follow the usual rule are not closed. I do not entirely reject the possibility that a proceeding brought or defended for private reasons may be regarded as a case in which there should be no order for costs, or an order other than the usual one. But the circumstances would have to be special or exceptional.

8 The mere fact that the appeal involved or affected public interests would not of itself be enough to bring it into this category. As McHugh J pointed out in Oshlack v Richmond River Council:[12]

Much litigation concerns the public interest. Prosecutions and most constitutional and administrative law matters almost invariably affect or involve the public interest. So do many ordinary civil actions concerning private rights and duties. Many defamation actions, for example, involve the defence of fair comment on a matter of public interest or the truth of an imputation that 'relates to a matter of public interest'. If the present case is 'public interest litigation', it is difficult to see how prosecutions, most administrative and constitutional matters and many ordinary civil matters are not also 'public interest litigation' entitling a court to depart from the usual order as to costs.

9 Departing from the usual rule therefore requires "something more"[13] than that the proceeding involves the public interest. In Oshlack, for example, the trial judge's decision to make no order as to costs was upheld because (among other things) the proceeding was brought to secure compliance with a public duty to protect the habitat of an endangered native animal and because the relevant environmental legislation enabled any person to bring such proceedings.[14] The present case is far removed from that kind of case.

10 Nor is the fact that the decision of the court resolved an important legal question necessarily a sufficient reason to make an order other than the usual order as for costs. As was held in Hollier v Australian Maritime Safety Authority (No 2):[15]

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.

11 It is helpful to examine the problem in counterpoint against what would have happened had Geeveekay been successful in the appeal. That general issue was considered in Quinn v Law Institute of Victoria Limited (No 2).[16] The Institute unsuccessfully defended a decision of the Legal Profession Tribunal, yet submitted it should not be ordered to pay costs. After reviewing the like cases, the Court of Appeal rejected that submission. Maxwell P, Chernov and Nettle JJA held: "If the decision-making agency seeks unsuccessfully to defend such an appeal, it will be ordered to pay the appellant's costs."[17] That would have been the case had the Director been unsuccessful in the present case; the public interest issues involved in the appeal would have been no reason for doing otherwise.

12 For these reasons, I consider I should make the usual order for costs. The appellants must pay the respondent's costs of the appeal, including reserved costs.

[1] Geeveekay v Director of Consumer Affairs Victoria [2008] VSC 50.

[2] See s 24(1) of Supreme Court Act 1986.

[3] Donald Campbell & Co v Pollak [1927] AC 732, 811-812; Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534, 567-569; Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, 121.

[4] [1998] HCA 11; (1998) 193 CLR 72, 97 (footnote omitted).

[6] Geeveekay v Director of Consumer Affairs Victoria [2008] VSC 50, [166].

[7] (2001) 115 FCR 229.

[8] [2005] FCA 997; (2005) 146 FCR 37.

[9] (2001) 115 FCR 229, 241-242.

[10] [2005] FCA 997; (2005) 146 FCR 37, 55-57.

[11] [1998] FCA 311, p 3.

[12] [1998] HCA 11; (1998) 193 CLR 72, 98-99 (footnote omitted).

[13] This expression comes from the judgment of the trial judge which led to the appeal in Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, 91.

[14] Ibid 91 per McHugh J and 120 per Kirby J.

[15] [1998] FCA 975, p 5.

[16] [2007] VSCA 132.