Plaintiff v Defendant

2 VicForests now seeks the costs of the proceeding and further seeks an order that such costs be awarded on a special basis from 27 January 2012, being the date of a detailed offer of settlement made on its behalf which was not accepted by MyEnvironment.

3 MyEnvironment submits that it should not be ordered to pay VicForests' costs or, at worst, it should be ordered to pay no more than 50 per cent of VicForests' costs on a party and party basis.

4 MyEnvironment submits that the critical matters bearing on the Court's discretion are:

(a) the proceedings were brought in the public interest;

(b) the proceedings raised a matter of particular public importance in respect of the construction of the Central Highlands Forest Management Plan ('FMP') which was resolved in part in MyEnvironment's favour; and

(c) MyEnvironment is a non-profit organisation carrying out its activities for the benefit of the Victorian and Australian community.

5 The Court has a discretionary power with respect to costs pursuant to s 24 of the Supreme Court Act 1986. In turn, r 63.02 of the Supreme Court (General Civil Procedure) Rules 2005 provides that the power and discretion of the Court shall be exercised subject to, and in accordance with, O 63. Rule 63.31 provides that generally costs shall be taxed on a party and party basis.

6 In exercising its discretion, the Court must assess what is fair as between the parties but may also have regard to issues of the public interest.

7 The general rule is that costs follow the event. Costs are not awarded to punish the unsuccessful party but to indemnify the successful party. In the present case, prima facie, VicForests is entitled to recover the reasonable costs it would not have incurred if the unsuccessful proceeding had not been brought.

8 Nevertheless, I accept that the present proceedings were brought in good faith for the purpose of seeking to protect and conserve the habitat of an endangered species, the Leadbeater's Possum ('LBP'). They are fairly characterised as having been pursued in the public interest. Further, the case brought about a material refinement of VicForests' timber harvesting proposal with respect to Gun Barrel.

9 Section 9 of the Civil Procedure Act 2010 provides that in making any order, a Court shall further the overarching purpose[1] stated under that Act by having regard to a number of listed objects including:

(a) the just determination of the civil proceeding;

(b) the public interest in the early settlement of disputes by agreement between parties;

(c) the efficient conduct of the business of the court;

(d) the efficient use of judicial and administrative resources;

10 In turn, s 9(2) provides the Court may have regard to:

• the extent to which the parties have reasonable endeavours to resolve the dispute by agreement or to limit the issues in dispute; and

• the public importance of the issues in dispute and the desirability of a judicial determination of those issues.

11 Both these latter factors are potentially relevant to the exercise of the discretion in this case.

12 In my view, VicForests' offer of 27 January 2012 was an entirely reasonable offer. It offered significant restriction of the areas proposed to be harvested and the implementation of variable retention harvesting as against a clear-felling regime. A copy of that offer (without plans) is annexed to these reasons as annexure A. The making of the offer reinforces the strength of the proposition that the costs should follow the event in this case and raises the question whether costs should be awarded on a higher than ordinary basis.

13 On the other hand, the reference to public interest litigation in s 9 points to a factor which has, in appropriate cases, been taken into account with respect to the discretion bearing on costs. In Oshlack v Richmond River Council,[2] the High Court upheld the exercise of a discretion as to costs which had had regard to public interest considerations relating to the preservation of the habitat of an endangered species.

14 Nevetheless, neither at common law nor pursuant to the provisions of the Civil Procedure Act, is it is sufficient simply to characterise proceedings as public interest litigation in order to avoid the normal rule as to costs. In Southwest Forest Defence Foundation v Department of Conservation and Land Management No 2,[3] Kirby J agreed in the costs order proposed by the majority and said:

Nothing in the recent decision in Oshlack v Richmond River Council requires that every time an individual or body brings proceedings asserting a defence of the public interest and protection of the environment, a new costs regime is to apply exempting that individual or body from the conventional rule. To suggest that would be to misread what the Court decided in Oshlack. It would require legislation to afford litigants such special and privileged position so far as costs are concerned. No such general legislation has been enacted.[4]

15 I accept that the present case both raises issues of public importance and questions of the construction of the subsidiary legislation intended to protect the LBP, which apply not only to the three coupes in question but to the timber harvesting of regrowth montane ash forests within the Central Highlands generally.

16 Despite these considerations (to which I will return below) VicForests should, in my view, get its costs of the proceeding because it succeeded in defending claims which challenged the lawfulness of its actions, both by reference to specific prescriptions and the precautionary principle, and in addition, in the course of that proceeding, it made an entirely reasonable offer of settlement prior to trial.

17 I accept the proposition that to deny a costs order to VicForests would discourage the making of reasonable offers of settlement in cases of this type, where the making of such offers should be encouraged by the Court. Such offers facilitate cost effective litigation and the attainment of appropriate settlements on a broader basis than litigation may necessarily achieve.

18 The present offer was made on the basis that each party would bear its own costs. It was made prior to the very substantial costs of the trial. It was entirely reasonable in respect of the proposal as to costs, in addition to the substantive proposals for settlement that were put forward.

19 The public interest characteristics of the proceeding do not outweigh VicForests' claim for costs flowing, first, from its successful defence of the proceeding and, secondly, from the reasonable manner in which it conducted itself and in particular the open offer made by it prior to trial.

20 Further, I do not accept that VicForests should get only 50 per cent of its costs. VicForests was overwhelmingly successful in its defence of the proceeding. The judgment as to costs should not descend to the analysis of the evidence of particular witnesses unless the case is capable of analysis on a separate issues basis. I am not persuaded this is such a case.

21 Neither the Court's preference for the alternative construction to that preferred by VicForests in respect of the phrase 'mature and senescing', nor the Court's conclusions with respect to Dr Schirmer's evidence, are sufficient to outweigh the general rule that costs should ordinarily follow the event, coupled with the reasonable conduct of VicForests and in particular the making of the open offer.

22 Conversely, however, I am not persuaded VicForests should get its costs on an indemnity basis. The proceedings were of a public interest character and raised a question of interpretation of the relevant controls having broader implications beyond the three coupes in issue. Moreover, in one respect at least, MyEnvironment was successful, namely the question whether the words 'mature and senescing' should be construed cumulatively or as alternatives.

23 The present proceeding is one like Oshlack to the extent that it was motivated by the desire to preserve the habitat of an endangered species; was brought by a plaintiff which has no motive of private gain; was concerned with questions of public interest; raised arguable questions as to the interpretation of the relevant controls and resolved significant issues as to the interpretation and future administration of statutory provisions relating to the protection of endangered fauna.

24 The interpretation of the provisions in issue in the present case has particular practical significance, and is of general public importance, because of the destruction and damage to large parts of the montane ash forest in the Central Highlands by the 2009 Black Saturday fires.

25 I am fortified in the conclusion that costs should not be awarded on a higher basis by the fact that, as my principal judgment demonstrates, the construction of the subordinate legislation is not free from difficulty and falls to be interpreted within a series of overlapping complex and labyrinthine controls.

26 I am not persuaded that MyEnvironment's institution of the proceeding, or its refusal of the open offer of settlement, was so unreasonable it should be required to pay costs on the higher basis. I reach this conclusion despite the fact that the offer was made at a time when the evidence had been filed; was left open until the conclusion of final address; embodied a reasonable if not generous compromise; addressed inadequacies in MyEnvironment's case; was expressed with clarity; and foreshadowed an application for indemnity costs if it were not accepted.[5]

(b) the plaintiff pay the defendant's costs including reserved costs and costs of transcript;

(c) order 1 of my orders in this proceeding made on 19 September 2011 be vacated, being the existing interlocutory injunction;

(d) the defendant, by itself, its employees, servants, agents or howsoever otherwise, be restrained from conducting timber harvesting operations within the meaning of section 3 of the Sustainable (Forests) Timber Act 2004 (Vic) within Gun Barrel for 14 days, save for the marking out of the coupe and the marking of trees which it is proposed not to log.

28 I am prepared to grant a further limited restraint of timber harvesting on the basis that if I do not, such appeal rights as MyEnvironment may have may be rendered nugatory in respect of the further logging of Gun Barrel.

Letter dated 27 January 2012 from Baker McKenzie to Bleyer Lawyers

[1] The overarching purpose is to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute. Civil Procedure Act 2010, s 7.

[2] [1998] HCA 11; (1998) 193 CLR 72.

[3] (1998) 154 CLR 411.

[4] Ibid, [5]. See also Save the Ridge Inc v Commonwealth [2006] FCAFC 51; (2006) 230 ALR 411, [6]; Weinstein v Medical Practitioners Board of Victoria [2008] VSCA 193; (2008) 21 VR 29, 41.

[5] Cf Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority( No 2) [2005] VSCA 298; (2005) 13 VR 435, [25].