Field v Jenolan Caves Reserve Trust and Ors

THE CROWN IN THE RIGHT OF THE STATE OF NEW SOUTH WALES Fourth Respondent

CATCHWORDS: Costs - questions of public interest - whether a discretionary departure should be made from the usual costs order - no departure to be made - applicant to pay respondents' costs as agreed or assessed

LEGISLATION CITED: Industrial Relations Act 1996 Industrial Relations Commission Rules

CASES CITED: Field & Anor v Jenolan Caves Reserve Trust and Ors [2007] NSWIRComm 113 Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72

APPLICANT: Mr JW Shaw SOLICITORS: The People's Solicitors Pty Limited

LEGAL REPRESENTATIVES: RESPONDENTS: Ms E Brus of counsel SOLICITORS: IV Knight, Crown Solicitor

ARCHER FIELD v JENOLAN CAVES RESERVE TRUST AND OTHERS

Application under s.106 of the Industrial Relations Act 1996

1 On 4 June 2007, I refused a motion filed by Mr Field, seeking an order for the extension of time for filing an application under s 106 of the Industrial Relations Act 1996 ('the Act'). (See Field & Anor v Jenolan Caves Reserve Trust and Ors [2007] NSWIRComm 131.) This judgment deals with the question of costs. 2 The usual order as to costs was sought by the respondents, namely that Mr Field be ordered to pay its costs, as agreed or assessed. For Mr Field it was argued that in the circumstances, the Court would make no order as to costs. 3 The case advanced for the respondents was that there was no reason for any departure from the usual costs order in this matter. Mr Field had sought the exercise of a discretion in his favour; the application had failed; there had been no misconduct by the respondents and the fact that they were government agencies, was not a basis for departing from the usual order. (See Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72.) 4 The case advanced for Mr Field was that the Court's discretion to decline to make a costs order, would be exercised in this case. The proceedings concerned public interest questions, going to the appointment of an administrator of a group of trustees appointed by statute, the appointment being permitted by subsequent legislation, which had no retrospective operation. It followed that an important point of public law was raised by the application, with the result that a proper exercise of the discretion would be to refuse the costs order sought (see Oshlack). Furthermore, it was relevant that the costs order was only sought after the judgment had been given, it had not earlier been sought by pleadings or submissions. It followed that each side should bear its own costs. 5 In reply, it was argued that the out of time application had not raised any questions of public interest and that Rule 203 of the Court's Rules, made it clear that costs need not be sought before judgment was given in a case such as this. It was also relevant that neither side had sought costs before judgment and that if the applicant had succeeded, the costs would have been costs in the cause. Consideration 6 The Court's power to make a costs order flows from s 181 of the Act, which provides: 181 Costs (1) Subject to the rules of the Commission and any other Act or law: (a) the Commission may award costs, and (b) costs are in the discretion of the Commission, and (c) the Commission may determine by whom and to what extent costs are to be paid, and (d) the Commission may order costs to be assessed on the basis set out in Division 11 of Part 3.2 of the Legal Profession Act 2004 or on any other basis. (2) However, the Commission when it is not in Court Session may award costs only in the following cases: (a) the Commission may award costs against an applicant if it considers that the application to it was frivolous or vexatious, or (b) the Commission may award costs against a party to proceedings who, in the opinion of the Commission, instituted proceedings without reasonable cause, or (c) the Commission may award costs against a party to proceedings under Part 6 of Chapter 2 (Unfair dismissals) who, in the opinion of the Commission, unreasonably failed to agree to a settlement of the claim or whose application was frivolous or vexatious, or (c1) the Commission may award costs against an industrial agent representing an applicant or employer in proceedings under Part 6 of Chapter 2 if: (i) the industrial agent fails to file a certificate as required by section 90A, or (ii) the Commission finds that the industrial agent has filed a certificate under that section certifying that the agent has reasonable grounds for believing, on the basis of provable facts, that the applicant's claim or employer's response to the claim had reasonable prospects of success when the agent did not have reasonable grounds for believing, on the basis of provable facts, that it had reasonable prospects of success, or (d) the Commission may award costs in proceedings for a breach of an industrial instrument or the recovery of money under Chapter 7, as provided by sections 357 and 373. (3) The Commission in Court Session may not award costs in proceedings for a contravention of a dispute order or in proceedings under Division 2 of Part 4 of Chapter 5 (Rules of industrial organisations). (4) In this section, costs includes: (a) costs of or incidental to proceedings in the Commission, and (b) in the case of an appeal to the Commission, the costs of or incidental to the proceedings giving rise to the appeal, as well as the costs of or incidental to the appeal. 7 Rule 203 of the Court's Rules provides: 203 Time for dealing with costs (1) The Commission may in any proceedings exercise its powers and discretions as to costs at any stage of the proceedings or after the conclusion of the proceedings. (2) Where the Commission makes an order in any proceedings for the payment of costs the Commission may require that the costs be paid forthwith notwithstanding that the proceedings are not concluded. 8 In Oshlack, the High Court was dealing with what had been described as 'public interest litigation' - proceedings before the Land and Environment Court, where environmental considerations in relation to the protection of endangered fauna were raised in relation to the residential development of certain crown land. The trial judge had declined to make the usual costs order against the unsuccessful applicant, because of the view reached that such public interest litigation could be 'a factor in finding that special circumstances exist to justify a departure from the ordinary rule as to costs' (at [54] per McHugh J, with whom Brennan CJ agreed). 9 McHugh J discussed the difficulty inherent in identifying 'public interest litigation', warning at [75]:

His Honour's judgment does not refer to any principle or criterion which would enable other courts to determine why the matters that he mentioned made the case "public interest litigation". Nor does he refer to any principle or criterion that would enable other courts to distinguish this case from prosecutions, and constitutional and administrative law matters that are matters of public controversy in which there is a public interest in the outcome of the litigation or which involve an analysis of statutory provisions which should prove helpful in other cases. 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.

10 His Honour observed that the 'fact that a successful respondent is a public authority should not make a court less inclined to award costs in its favour' (at [92]), but that: 94 No doubt the fact that the successful party is a public authority may occasionally mean that a court will see the case as falling within one of the traditional exceptions to the usual order for costs. Public authorities have many obligations that have no counterpart in private relationships. A suspected or apparent breach of one or more of them may fairly have invited litigation with the result that a court will refuse to make a costs order in its favour[ Jones [1964] 1 WLR 960; [1964] 2 All ER 842; Bostock [1900] 2 QB 616 at 622, 625, 627]. However, it is one thing to apply an established principle to the unique situation of public authorities. It is another matter to make a special rule for public authorities.

95 The traditional principles give the courts scope for refusing to award costs in favour of a public authority whose conduct has invited litigation. To uphold the argument of Mr Basten in this case, however, would be to uphold a "principle" that involves a departure from the authority of Latoudis and from the basic principles that, with a handful of anomalous exceptions, have informed the exercise of the costs discretion for more than a century. 11 Gaudron and Gummow JJ approached the question in a different way. They said at [31] that the 'true issue here is not whether this was 'public interest litigation'. They approached the costs order from the point of view of the particular legislation, which permitted 'any person, otherwise than as a relator, to institute and conduct such proceedings to secure the observance of legislation enacted for the benefit of the public or a section of the public' (at [48].) At [49], they took the view that the trial judge had not erred in finding a basis for a departure from the usual costs order, given the special circumstances identified as being raised by the litigation, which was 'concerned with public rather than private rights'. Those circumstances included:

(iii) The appellant's pursuit of the litigation was motivated by his desire to ensure obedience to environmental law and to preserve the habitat of the endangered koala on and around the site; he had nothing to gain from the litigation "other than the worthy motive of seeking to uphold environmental law and the preservation of endangered fauna" [(1994) 82 LGERA 236 at 246].

(iv) In the present case, "a significant number of members of the public" shared the stance of the appellant as to the development to take place on the site, the preservation of the natural features and flora of the site, and the impact on endangered fauna, especially the koala. In that sense there was a "public interest" in the outcome of the litigation [(1994) 82 LGERA 236 at 246].

(v) The basis of the challenge was arguable and had raised and resolved "significant issues" as to the interpretation and future administration of statutory provisions relating to the protection of endangered fauna and relating to the ambit and future administration of the subject development consent; these issues had "implications" for the Council, the developer and the public [(1994) 82 LGERA 236 at 244-246].

12 Kirby J also dealt with the legislative scheme which gave 'open standing' to any person to enforce the provisions of the Act affecting the environment in a relevant way (at [113]). At [134], Kirby J observed in relation to the statutory scheme in question:

A number of general remarks may be made about s 69(2) and provisions like it:

The common law did not provide for costs although equity from an early date asserted "the fullest power to order a defeated party to pay costs" [ Latoudis v Casey (1990) 170 CLR 534 at 557 per Dawson J]. It was by statute that English law afforded to the common law courts the power to award costs, culminating in the Judicature Acts which reposed a general discretion in the courts of England to so provide [ Latoudis v Casey (1990) 170 CLR 534 at 557 per Dawson J]. A point of distinction was drawn between civil jury trials and non-jury trials. In the former, costs would follow the event, unless the court for good cause ordered otherwise. In the latter, costs were left to the discretion of the court but under a power to be exercised judicially by reference only to facts pertinent to the litigation [ Latoudis v Casey (1990) 170 CLR 534 at 557].

Notwithstanding the width of the statutory language by which the discretion was conferred on the trial court, it came to be said in civil non-jury trials that a successful party, in the absence of special circumstances, had a reasonable expectation of obtaining an order for costs in its favour unless "for some reason connected with the case" a different order was specially warranted [ Donald Campbell & Co v Pollak [1927] AC 732 at 812 cited by McHugh J in Latoudis v Casey (1990) 170 CLR 534 at 569; see also at 557 per Dawson J]. Any departure from this expectation would require that there should be material upon which the adverse discretion could be properly exercised [ Ritter v Godfrey [1920] 2 KB 47 at 60 per Atkin LJ]. It could not be exercised by reference to idiosyncratic notions or to facts and circumstances irrelevant to the case. Yet, until the discretion had been exercised and a costs order made in favour of a successful party, that party had no right to the order of costs, notwithstanding its success in the litigation [ Donald Campbell & Co v Pollak [1927] AC 732 at 811].

Against this background, judicial descriptions of a statutory discretion to award costs as "absolute and unfettered" [ Donald Campbell & Co v Pollak [1927] AC 732 at 811 per Viscount Cave LC], "unqualified" [ Latoudis v Casey (1990) 170 CLR 534 at 558 per Dawson J], "uncontrolled" [ Latoudis v Casey (1990) 170 CLR 534 at 568 per McHugh J] or "unconfined"[ Latoudis v Casey (1990) 170 CLR 534 at 540 per Mason CJ] cannot be taken at face value. Because the discretion is typically conferred upon a court or tribunal obliged to act judicially, fetters, confinement and controls of a sort are provided by the law. Although appellate courts should avoid the imposition of rigid requirements which would gloss the statute and narrow the discretion afforded to the donees of the statutory power, they retain a function to guide those who are obliged to exercise cost discretions. Such guidance may be afforded by referring in general terms to the considerations which the decision-maker can take into account. Such considerations may be listed for the avoidance of arbitrariness and inconsistency in such decisions [ Latoudis v Casey (1990) 170 CLR 534 at 562 per Toohey J]. They are not intended to confine the decision-maker to a rigidly mechanical approach [ Latoudis v Casey (1990) 170 CLR 534 at 558 per Dawson J]. Arbitrariness and inconsistency would be potentially unjust and therefore undesirable. Mechanical rigidity would amount to an abdication of the discretion afforded to the decision-maker in large terms.

It is because the general purpose of an order for costs in favour of a successful party is to provide compensation in the form of a partial indemnity for the costs incurred that the ordinary principle observed in civil litigation under the "English rule" (as contrasted to the "American rule" [A lyeska Pipeline Co v Wilderness Society 421 US 240 at 247 (1975); Ruckelshaus v Sierra Club 463 US 680 (1983) is that legal costs will usually be ordered in favour of the successful party. Absent special statutory provisions, Australian law has followed this English rule. But the compensatory principle cannot be treated as an absolute rule. Otherwise, the discretion conferred in unqualified terms would indeed be shackled and confined. To permit this would be incompatible with statutory language expressed in such terms [ Donald Campbell & Co v Pollak [1927] AC 732 at 811-812]. Therefore, although there are "rules" [ Ritter v Godfrey [1920] 2 KB 47 at 61-62 per Atkin LJ] or ordinary principles [ Latoudis v Casey (1990) 170 CLR 534 at 567 per McHugh J] which will guide the donee of power in the exercise of the discretion, they cannot extinguish the element of discretion. They must not be allowed to harden into rigid or inflexible requirements.

The proper approach to the exercise of a statutory discretion may be illuminated by the particular language in which it is expressed and the purpose for which it has been provided [ Latoudis v Casey (1990) 170 CLR 534 at 542 per Mason CJ, at 567 per McHugh J]. Thus the purpose in Latoudis clearly enough, was to substitute a new and different rule in criminal proceedings for the old rule governing the payment and receipt of costs by the Crown. In the present case, when determining the considerations that might be relevant to the exercise of the discretion in question, it would be a mistake, equivalent to that exposed in Latoudis, to ignore the functions, powers and peculiar procedural provisions governing the Land and Environment Court in the jurisdiction which it had exercised.

Given that statutory context 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. The compensatory principle is adequately reflected by the adoption of a general practice by which, ordinarily (including in a case brought by a party under the "open standing" rule and purportedly in the public interest), costs are ordered in favour of the successful party. However, the general objects of the legislation must also find reflection in orders providing for costs. Regard may therefore be had to any public interest served by the party which has initiated the litigation, although it is ultimately unsuccessful. It has often been said that costs are not awarded against such a party as a punishment [ Cilli v Abbott (1981) 53 FLR 108 at 111; Latoudis v Casey (1990) 170 CLR 534 at 543 per Mason CJ]. Nor are they awarded to express disapproval of the public or private inconvenience which that party has caused. If the party unreasonably pursues, or persists with, points which have no merit, such conduct will constitute a consideration relevant to the ordering of costs, even in circumstances where that party is generally successful [ Latoudis v Casey (1990) 170 CLR 534 at 544 per Mason CJ]. A particular approach to a party which has ventured upon litigation ostensibly in the public interest is not adopted to reward that party's subjective motivation at the cost of another public or private person. As Cole JA pointed out in the Court of Appeal, litigation necessarily engenders cost. The purpose of the jurisdiction conferred to award costs is to permit the fair allocation of the costs which the parties have necessarily incurred [ Richmond River Council v Oshlack (1996) 39 NSWLR 622 at 636-637 per Cole JA; cf Walpin, "America's Failing Civil Justice System: Can We Learn From Other Countries?" (1997) 41 New York Law School Law Review 647 at 657]. Courts, whilst sometimes taking the legitimate pursuit of public interest into account, have also emphasised, rightly in my view, that litigants espousing the public interest are not thereby granted an immunity from costs or a "free kick" in litigation [ Australian Conservation Foundation v Forestry Commission (1988) 81 ALR 166 at 170-171; Botany Municipal Council v Secretary, Department of the Arts (1992) 34 FCR 412 per Gummow J]. At least this is so unless such an immunity is conferred by Parliament. Law reform bodies have lately made recommendations for legislation specially providing for public interest cost orders [Australian Law Reform Commission, Costs shifting - who pays for litigation . Report No 75 (1995) at 147-150, 201-204. For a discussion of the overseas position, see Law Commission (England and Wales) Adm inistrative Law: Judicial Review and Statutory Appeals . Report No 226 (1994) at par 10.5.]. No such special orders are expressly provided either under the Land and Environment Court Act 1995 , or as an adjunct to s 123 of the Environmental Planning and Assessment Act or under rules made by the Land and Environment Court (assuming such a rule to be possible). Consideration of the factors relevant to the conduct of the appellant must therefore be sustained, if at all, within the general language of s 69(2) of the Land and Environment Court Act read in its context. No other special statutory provision exists.

142 The Council relied upon the absence of an express rule as to the costs of public interest litigation in the legislation governing the Land and Environment Court. The change in the standing rule did not necessitate a novel costs rule, particularly as Parliament, having enacted the former, held back from enacting the latter. There is some merit in this point. However, the mere fact that law reform bodies have investigated, and recommended, special orders as to costs in public interest litigation does not mean that, in appropriate cases, the general discretion will not suffice. The Australian Law Reform Commission in its report on the subject has acknowledged that special orders are sometimes made under the general discretion. Its explanation for the recommendation of express provisions is that special orders are "relatively uncommon", that courts generally uphold the compensatory principle and sometimes order indemnity costs against an unsuccessful public interest litigant, despite the public purposes of the litigation [Australian Law Reform Commission, Costs shifting - who pays for litigation. Report No 75 (1995) at 144].

143 The Council complained that endorsement of the approach adopted by Stein J would, effectively, mark a retreat by the Court from the compensatory principle endorsed in Latoudis. This argument also rests upon a misreading of that decision. Once it is appreciated that compensation to the successful party is the reason why that party will ordinarily have a reasonable expectation of recovering its proper costs, the limits of the principle are clear. It says nothing about exceptional or special circumstances which warrant a departure from the general rule. 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 one of compensating the litigious victor with its costs.

14 It is against those observations that the costs argument here before the Court must be considered. The basis upon which it was argued that the public interest questions raised by Mr Field's application, provided a proper footing for a departure from the usual costs order, was not dealt with in any detail. 15 What must be considered, nevertheless, in resolving that issue, it seems to me, is that what was dealt with in the June judgment was firstly, the question of whether the application had been brought within time, given when the alleged arrangement in question had come to an end; and secondly, the application for extension of time to bring the proceedings, as provided for by s 108B(3) of the Act, given the conclusion that the proceedings had been brought out of time. 16 I concluded that the application for an extension of time had to be refused, because the necessary 'exceptional circumstances justifying the making of the late application', required by s 108B(3) had not been established on the evidence. 17 In support of the out of time application, it had been argued for Mr Field, amongst other things, that '[s]erious points of public law were raised by the application, which it was in the public interest for a court of superior record to determine. Questions of the validity of the appointment of an administrator under the National Parks and Wildlife Amendment (Jenolan Caves Reserves) Act 2005 arose. There had been a hiatus in the way the Jenolan Caves and Jenolan Caves House had been administered' (at [25]). 18 That argument was also relied upon in relation to the question of costs, to make good the submission that these proceedings raised public interest questions, which would lead to the exercise of a discretion against the making of the usual costs order. 19 I am unable to accept that argument. While Mr Field wished to argue that the administrator had been invalidly appointed, that argument was to be advanced in the context of a claim brought under s 106 of the Act, for orders of avoidance and variation of the arrangement which Mr Field claimed he had entered with various of the respondents, and under which he performed work in the conduct and operation of Jenolan Caves House. That claim provided the foundation for money orders sought in his favour, of over $46 million. 20 Undoubtedly, the operation of Jenolan Caves is a matter in which the public interest arises, as is the validity of the appointment of an administrator of the Trust operating the Caves. Unlike Oshlack, however, the public interest in such matters was not the purpose for which they were sought to be raised in these proceedings. Rather, they were raised in order to support Mr Field's personal interest in the claims he wished to advance in the proceedings, in relation to the arrangement under which he claimed to have performed work for the respondents. 21 There is nothing wrong with Mr Field making and pursuing such an application, indeed, unlike the circumstances dealt with in Oshlack, having such a personal interest in the arrangement which he sought to attack, was fundamental to Mr Field's standing to bring the proceedings. It follows, nevertheless, that the proceedings which Mr Field wished to pursue under s 106 were quite different to the application dealt with in Oshlack. Mr Field sought to pursue matters of personal, not public concern. In Oshlack the legislation being dealt with permitted persons who had no personal interest in the development application in question, to bring the proceedings which had been initiated in the Land and Environment Court. That legislation had at its heart, important public interest considerations, reflected in the wide class of persons empowered to bring the proceedings in question. This legislative scheme, by way of contrast, restricts those who might initiate proceedings under s 106 of the Act, in quite a different way (see s 108). 22 That does not mean that s 106 proceedings may not raise public interest considerations. The statutory scheme itself points to such a possibility. The orders contemplated by s 107 of the Act for instance, show that a wider class of persons than the parties to the immediate proceedings, may be affected by, or interested in the proceedings in question. Section 146 of the Act also requires that the Court must take the public interest into account, when exercising its functions, including those arising under s 106. Nevertheless, it must be concluded that questions touching upon the public interest were not before the Court to be dealt with in the June judgment. Then, the Court was concerned with the time at which the alleged arrangement between the parties had come to an end; whether the proceedings had been brought within the time fixed by the Act for the commencement of s 106 proceedings and whether the evidence permitted the granting of an extension of time, given the provisions made in s 108B(3). None of those matters raised public interest questions. 23 In those circumstances, I am unable to conclude that Mr Field established any basis for a discretionary departure from the usual costs order. No different conclusion could flow from the time at which the costs order was sought, given the provision made in Rule 203.

Order 24 For the reasons given, I order that Mr Field pay the respondents' costs, as agreed or assessed.

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