CF v The State of New South Wales

Applicable Law 6 Section 76 of The Supreme Court Act 1990 provides that: "(1) Subject to this Act and the rules, and subject to any other Act - (a) costs shall be in the discretion of the Court; (b) the Court shall have full power to determine by whom and to what extent costs are to be paid; and (c) (not relevant)" 7 Part 52A rule 4 of the Supreme Court Rules mandates that the exercise of the discretion conferred by s 76 is to be subject to, and in accordance with, such Part. Rule 11 provides that: "If the Court makes any order as to costs, the Court shall, subject to this Part, order that the costs follow the event, except where it appears to the Court that some other order should be made as to the whole or any part of the costs." 8 The rule is said to enshrine the general provision under the common law that, although costs are in the discretion of the court, normally the proper exercise of such discretion will require that an unsuccessful party be ordered to pay the successful party's costs. (Shorten v Shorten (No. 2) [2003] NSWCA 60 at para 14). In Latoudis v Casey (1990) 170 CLR 534 Mason CJ said: "… in the realm of costs … 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." (supra at 543)

and: "… in ordinary circumstances, an order for costs should be made in favour of a successful defendant." (supra at 544)

Mason CJ further said that the courts have traditionally made orders for costs without regard to considerations of legal aid having been granted or being available to a party and that to focus on the reasonableness of the conduct of the unsuccessful party in instituting the proceedings involves an error in principle. 9 McHugh J stated the applicable principle as follows: "An order for costs indemnifies the successful party in litigious proceedings in respect of liability for professional fees and out-of-pocket expenses reasonably incurred in connection with the litigation… The rationale of the order is that it is just and reasonable that the party who has caused the other party to incur the costs of litigation should reimburse that party for the liability incurred. The order is not made to punish the unsuccessful party. Its function is compensatory. Thus, in civil proceedings an order may, and usually will, be made even though the unsuccessful party has nearly succeeded or has acted reasonably in commencing the proceedings. It may, and usually will, be made even though the action has failed through no fault of the unsuccessful party." (supra at 566-567);

and: "In civil proceedings, the relevant statute or rule often provides that costs follow the event unless the court thinks that some other order should be made. But even when the discretion is uncontrolled, civil courts act on the basis that a successful party has a reasonable expectation of obtaining an order for costs and that the discretion to refuse to award costs should not be exercised against the successful party except for a reason connected with the case." (supra at 568) 10 In Ohn v Walton (1995) 36 NSWLR 77 the Medical Tribunal had refused an order for costs in favour of a medical practitioner on the dismissal of complaints against him following an enquiry under the then Medical Practitioners Act 1938. Whilst finding that the complaints against the medical practitioner had not been made out, and despite the fact that no criticism could be made of such practitioner in defending himself against the complaints, the Medical Tribunal nonetheless declined to make an award of costs in his favour on the basis that it was the complainant's duty to refer the complaints to such Tribunal. The Tribunal held that it was satisfied that: "(i.) There were compelling reasons for referring the complaints to the tribunal. The evidence of complaint taken at face value if accepted would attract a strong reprobation of respondent's profession of good repute and competence. (ii.) No criticism can be made of the conduct of the respondent in defending the charge made against him." (supra at 83) 11 In applying Latoudis v Casey (supra), Gleeson CJ said that: "What is of importance, however, is the fundamental proposition on which that decision rests. It concerns the nature of an order for costs. That proposition is of equal validity in the context of civil litigation, summary proceedings, and disciplinary proceedings. This does not mean that the discretionary considerations relevant to those proceedings are identical. However, the subject of the discretion, that is, an order for costs, has the same nature, and that guides the exercise of the discretion."

and "…the purpose of an order for costs is to indemnify or compensate the person in whose favour it is made, not to punish the person against whom it is made. When legislation confers a power to order costs it is, in the absence of any contrary indication, to be understood as conferring a power to be exercised for that purpose." (supra at 79) 12 In deciding that the decision of the Medical Tribunal in relation to costs should be set aside, Gleeson CJ said that the Tribunal had "acted in a manner inconsistent with (the) principles" referred to in paragraph 11 above (supra at 79). Powell JA, who agreed that the decision should be set aside, said that "in ordinary circumstances where a complaint against a medical practitioner has failed, the Tribunal should make an order for costs in the practitioner's favour" (supra at 81). Cole JA was also of the opinion that the decision of the Medical Tribunal in relation to costs should be set aside. He said that the principles in Latoudis v Casey (supra) "should be applied … absent contrary legislation or regulation." (supra at 85) 13 It follows from the foregoing that in a civil case, in the absence of grounds connected with the case or the conduct of the proceedings which would make it unjust or unreasonable to award costs in favour of the successful party and, absent any contrary legislative or regulatory provision or indication, an order for costs reimbursing the successful party should ordinarily be made (see also Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd (1991) 1 All ER 873 at 874, per Devlin J, as applied by McHugh J in Oshlack v Richmond River Council (supra at 97)). Furthermore, the test of whether an order for costs should be made against an unsuccessful party is whether, in the circumstances, the successful party should be compensated. 14 It was submitted on behalf of the plaintiffs, that a government or government department should be treated differently from other litigants. No authority was cited for this proposition and it is not in accordance with general principle. The thrust of Latoudis v Casey (supra) is to the contrary. The thrust of Ohn v Walton (supra) is likewise to the contrary. The former case concerned a police prosecutor; the latter, the authorised delegate of The Director General, New South Wales Department of Health. Orders for costs were made against both. The correct approach in relation to this submission is as set out by McHugh J in Oshlack v Richmond River Council (supra), namely: "Nor is the status of the respondent as a public authority presently relevant. The law judges persons by their conduct, not their identity. In the exercise of the costs discretion, all persons are entitled to be treated equally and in accordance with traditional principle. The fact that a successful respondent is a public authority should not make a court less inclined to award costs in its favour. Gone are the days when one could sensibly speak of a public authority having 'available to them almost unlimited public funds'. Moreover, if costs awards are not made in favour of successful respondents such as the Council, the public services which those authorities provide must be adversely affected. Every recoverable dollar spend on litigation is one dollar less to spend on the services that public authorities do and ought to provide. … Such results cannot be in the public interest." (at 107) 15 The plaintiffs' proposition that the ordinary rule in respect of costs should be varied in a case involving a matter of public interest was founded on Oshlack v Richmond River Council (1998) 193 CLR 72. In that case the appellant had sought relief from the Land and Environment Court in respect of a consent granted by the council to a developer for a development which the appellant claimed was likely to significantly affect the environment of endangered fauna without the council having required the preparation of a fauna impact statement under the National Parks and Wildlife Act 1974 (NSW). The appellant's application was dismissed, the trial judge holding that it was open to the council to determine that a fauna impact statement was not required. However, he also determined that there should be no order as to costs, on the basis that there were "sufficient special circumstances to justify a departure as to the ordinary rule as to costs." (Oshlack v Richmond River Council (1994) 82 LGERA 236 at 246). This order was reversed by the Court of Appeal (1996) 39 NSWLR 622, but by majority (Brennan CJ and McHugh J dissenting) it was restored by the High Court. 16 In deciding that the order for costs made by the trial judge should be restored, Gaudron and Gummow JJ referred extensively to the provisions of s 69(2) of the Land and Environment Court Act 1979 (NSW) ("the Court Act") that confers power to award costs and to the provision in s 123 of the Environmental Planning and Assessment Act 1979 (NSW) ('the EPA Act") that empowers any person to bring proceedings in the Land and Environment Court to remedy or restrain a breach of such Act. They pointed out that the difference of opinion on costs between the trial judge and the Court of Appeal "turned to a significant degree upon the construction placed upon and significance attached to certain provisions of the EPA Act and the Court Act." (supra at 78) Having examined s 123 of the EPA Act and s 69(2) of the Court Act, they concluded that s 69 of the Court Act conferred a discretion in respect of which it was inappropriate to read "conditions or … limitations which are not found in the words used." (supra at 81) They also pointed out that the exercise of the power "favours a liberal construction" and that "(c)onsiderations which might limit the construction of such a grant to some different body do not apply" to the Land and Environment Court (id; italics added). 17 It should be noted that the trial judge took into account that the litigation could "properly (be) characterised as public interest litigation." He said that it raised "serious and significant issues resulting in important interpretation of new provisions relating to the protection of endangered fauna. The application concerned a publicly notorious site amidst a continuing controversy. Mr Oshlack had nothing to gain from the litigation other than the worthy motive of seeking to uphold environmental law and the preservation of endangered fauna. Important issues relevant to the ambit and future administration of the subject development consent were determined… These issues have implications for the Council, the developer and the public." (see Richmond River Council v Oshlack (1996) 39 NSWLR 622 at 624-625) 18 In the light of the construction they had placed on s 69(2) of the Court Act, Gaudron and Gummow JJ held that the trial judge had not taken into account irrelevant matters in concluding that there were "sufficient special circumstances to justify a departure from the ordinary rule as to costs." (Oshlack v Richmond River Council (supra) It is significant to note in this regard that they also said: "The true issue here is not whether this was 'public interest litigation'. Rather, to adapt the terms used by Dixon J in Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492 at 505 … the question is whether the subject matter, the scope and purpose of s 69 are such as to enable the Court of Appeal to pronounce the reasons given by Stein J to be 'definitely extraneous to any objects the legislature could have had in view' in enacting s 69" (supra at 84) 19 Kirby J distinguished Latoudis v Casey (supra) on the basis that: "It says nothing about exceptional or special circumstances which warrant a departure from the general rule (as to costs) . Such departures have quite often arisen in the past, as I have demonstrated. Public interest litigation is just one category into which may be grouped particular kinds of cases that will sometimes warrant departure from the general rule. The possibility of such departure cannot be denied, given the breadth of the statutory language in which the discretion is expressed. In particular, the possibility, contemplated by s 69(2)(b) of the Land and Environment Court Act that the Court 'may determine by whom and to what extent costs are to be paid' envisages that, in particular circumstances, an order might be made in favour of a losing party and even to the full extent of that party's costs. Whilst such orders would be extremely rare, they must be possible given the statutory grant of power. On the face of par (b) there is an express denial of a parliamentary intention that the only applicable rule should be the one of compensating the litigious victor with its costs." (supra 126-127; italics added) 20 In my opinion, the conclusion by the majority of the court that the trial judge had not gone beyond the considerations envisaged by the legislation in making no order as to costs, depended in essence on the special provisions of the Land and Environment Court Act 1979 when considered in conjunction with the provisions of the Environmental Planning and Assessment Act 1979, which two enactments form part of a package of provisions relating to the environment and its protection. 21 None of the judges in majority in the High Court state that Latoudis v Casey (supra) is intended to be over-ruled. Rather, Gaudron and Gummow JJ state that it is not "determinative of the issue whether, in the present litigation, the primary judge erred in law in the exercise of the discretion conferred upon the Court by s 69(2) of the Court Act by taking irrelevant matters into account" (supra at 83; italics added). Kirby J distinguished it on the basis that it was erroneous to derive from the decision "a general rule governing the exercise of all unqualified statutory cost discretions, whatever the terms in which they were stated, whatever the context concerning the court and the purpose for which they were provided and whatever the peculiarities of the jurisdiction in which costs orders would play a part." (supra at 119-120). 22 The provisions of Part 52A rules 4 and 11 are a positive indication of a legislative intent that in exercising the discretion as to costs conferred by s 76 of the Supreme Court Act 1970, the ordinary rule is that it should be exercised in favour of the successful party, absent the qualifying circumstances referred to in such rules. These provisions are different from the provisions considered in Oshlack v Richmond River Council (supra). There are no indications in the relevant legislation and rules to the contrary of the application of the ordinary rule that costs should, in ordinary circumstances, follow the event. As a consequence, in my opinion the decision in Latoudis v Casey (supra) should be applied to the discretion conferred on the court by s 76. Ohn v Walton (supra) supports such an approach. Furthermore, in Chen v Karandonis [2002] NSWCA 412, both of these cases were cited with approval by Beazley JA (at para 110), with whom Heydon and Hodgson JJA agreed. See also State of Victoria v Horvath (No. 2) [2003] VSCA 24 at para 6.

Analysis 23 The defendant was successful in resisting the claim for a continuation of the injunction that had been obtained ex parte by the plaintiffs. The suggestion in the material in support of such ex parte application was that the plaintiffs had not been given a proper, perhaps any real, hearing. Furthermore, the claim in respect of the first plaintiff was that she had been told that the breach of discipline for which her suspension was being considered was that of absenting herself from school on a school day without permission or other proper cause, ie, "wagging". The fact, as established at the hearing and undenied by any of the plaintiffs at that time, was that each of them had been afforded a hearing of reasonable duration, each had been properly and adequately informed of the breach of discipline in respect of which their suspensions were being considered. As was decided on 12 June 2003 on the basis of the evidence then before the Court, the Principal of the School gave them a full and fair hearing. He did so in an objective, unbiased manner. There was no misconduct (Oshlack v Richmond River Council, supra at 97 per McHugh J) on the part of the Principal as the employee of the defendant, or of the defendant itself, either in the lead-up to, or in the conduct of, the case that should disentitle the defendant to its costs in accordance with the ordinary rule referred to in Latoudis v Casey (supra) and Ohn v Walton (supra) and embodied in Part 52A rule 11. 24 Two departures from the Procedures for the Suspension and Expulsion of School Students were identified in the judgment of 12 June 2003. Neither of them was relied on by the plaintiffs in their initial application; both were revealed in the Principal's affidavit. They were not determinative of the application; indeed they did not result in any adverse outcome in relation to any of the plaintiffs. In my opinion they were not matters of a kind that should lead to a departure from the ordinary rule as to costs. 25 The submission that the litigation was, like that instituted by Mr Oshlack, in the public interest, is not, in my opinion, made out. As was stressed in the High Court, the action by Mr Oshlack was one from which no personal gain would have flowed to him should he have been successful. His interest in the litigation was entirely altruistic. In the present case the interests of the plaintiffs to sit for their examinations and engage in work experience at a particular time were the basis for the litigation and were the objects of the relief sought, so far as the first, second and fourth plaintiffs were concerned. They were important factors, personal to them, that prompted the litigation, and the outcomes they sought may properly be regarded as personal gains for them in the event that the litigation had proved to be successful. The concern of the third plaintiff was to ensure that his suspension did not prevent him from participating in a grand final football match. Although this was held not to constitute a basis for a claim of irreparable harm or injury, it was nonetheless a factor of personal gain in the mind of the relevant plaintiff. 26 The case brought by the plaintiffs was thus for their respective personal benefits. The relief they sought related to themselves. As a consequence considerations of the "nebulous concept" (Oshlack v Richmond River Council (supra at 84); South Melbourne City Council v Hallam [No 2] (1994) 83 LGERA 307 at 311) of "public interest litigation" should not in my opinion give rise to a displacement of the ordinary rule that costs should follow the event in proceedings such as the present in which there was no conduct on the part of the successful party as would operate to disentitle it to its costs. 27 The application for interlocutory relief was a discrete proceeding. In respect of that proceeding, I am of the opinion that the discretion in respect of costs should be exercised in favour of the successful defendant and as a consequence the plaintiffs should be ordered to pay the costs of the interlocutory proceedings, including the costs associated with the argument as to costs.

Order 28 The order of the Court is that the plaintiffs are to pay the defendant's costs of the interlocutory proceedings, including the cost of the argument as to costs.

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