Procedure - Costs - General rule - Costs follow the event - Costs of issues - Exercise of the discretion - Main event - Undesirable to award costs on separate issues unless good reason to do so.

Burnie Port Corporation Pty Ltd v Bank of Western Australia Ltd [2003] TASSC 132; Hughes v Western Australian Cricket Association (Inc) [1986] FCA 382; (1986) ATPR 40-748; Cretazzo v Lombardi (1975) 13 SASR 4, followed.

Procedure - Costs - General rule - Costs follow the event - Co-defendants - Separate representation - Whether two sets of costs allowed.

Statham v Shephard (No 2) (1974) 23 FLR 244, followed.

R v Industrial Disputes Tribunal, ex parte American Express Co Inc [1954] 2 All ER 764, referred to.

First Defendant: Director of Public Prosecutions

Judgment Number: [2004] TASSC 101

1 The defendants have sought orders that the plaintiff pay their costs. The plaintiff has sought an order that the defendants pay its costs. Alternatively, counsel for the plaintiff submitted that I could make no order as to costs, or order that the plaintiff pay the costs of the first defendant but not the other defendants, or that I could make some sort of apportionment of costs. The power to award costs is conferred by the Supreme Court Civil Procedure Act 1932, s12(1). I have a discretion as to costs that is not the subject of any relevant legislative fetter, but that discretion must be exercised in accordance with principle, and the general rule is that costs follow the event. However that general rule is sometimes departed from when a litigant is successful in relation to one issue but unsuccessful in relation to another, or where it is inappropriate to order an unsuccessful litigant to pay more than one set of costs. The relevant authorities are referred to below.

2 This action concerned the lower part of the Pitt Water estuary. The plaintiff sued the first defendant ("the State") seeking (inter alia) declarations that a determination of the Board of Environmental Management and Pollution Control ("the Board") as to "protected environmental values" was ultra vires cl 10 of the State Policy on Water Quality Management 1997, ("the State Policy") and a declaration that the Marine Farming Development Plan Pitt Water June 2001 ("the Plan") was invalid. Five individuals who held a marine farming lease made an interlocutory application seeking an order that they be added as defendants to the action pursuant to the Supreme Court Rules 2000, r184. The plaintiff and the State consented, and they were joined accordingly. However the plaintiff's solicitors wrote warning the solicitors for the added defendants that the plaintiff took the view that the added defendants were not necessary contradictors in the proceedings, and that costs might be sought against them irrespective of the result of the proceedings. The action went to trial. On 21 May I made an order declaring the impugned determination to be ultra vires, but I held that the Plan was valid: Sorell Council v State of Tasmania [2004] TASSC 46.

3 At the trial, the plaintiff's argument that the Plan was invalid depended on the impugned determination being ultra vires. In their submissions as to costs, counsel for the defendants submitted that the invalidity of the impugned determination had no significance other than as a step in the plaintiff's unsuccessful argument that the Plan was invalid. I reject that submission. The invalidity of the determination will potentially be significant in relation to the exercise of discretionary statutory powers concerning Lower Pitt Water. A determination of the "protected environmental values" for an area of water pursuant to cl 10 of the State Policy amounts to an expression of policy as to the attributes and/or uses of the relevant body of water for which that body of water should be protected. According to the evidence before me at the trial, the result of the impugned determination being ultra vires is that a subsequent determination as to "protected environmental values", made by a resolution of the Board on 31 January 2003 and a resolution of the plaintiff on 4 March 2003, applies in relation to the whole of Lower Pitt Water. That valid determination is somewhat differently worded from the determination that I declared to be ultra vires. Lower Pitt Water is within the plaintiff's municipal area, and within the area covered by the Sorell Planning Scheme 1993, but there is no provision in that Scheme that prohibits or regulates any activity in Lower Pitt Water. In the event of the Scheme being amended so as to make some provision relevant to Lower Pitt Water inconsistent with the valid determination, that determination would prevail. However there has been no suggestion that the Scheme might be amended so as to include any provision relevant to Lower Pitt Water. More significantly, the valid determination is something that decision-makers, or decision-making bodies, exercising statutory power may, or sometimes should, take into account. In particular, it might be appropriate to take the valid determination into account when discretionary statutory powers are exercised in relation to Lower Pitt Water pursuant to the Marine Farming Planning Act 1995. The valid determination, as I understand it, suggests that Lower Pitt Water should be protected because of its use for swimming, diving, water skiing, boating, and fishing, as well as its aesthetic quality. However, it is not binding except when it is inconsistent with a planning scheme or a similar instrument.

4 Whilst the declaration that the impugned determination was ultra vires involved a small victory for the plaintiff, its principal purpose in bringing the action was to have the Plan declared invalid, and in that respect the action failed. It was therefore the defendants, and not the plaintiff, who were substantially successful in these proceedings. Counsel for the defendants argued that, in this case, the application of the general rule that costs should follow the event would require an order that the plaintiff pay the defendants' costs, and that there was no reason to depart from that general rule.

5 In Burnie Port Corporation Pty Ltd v Bank of Western Australia Ltd [2003] TASSC 132 at par27, Underwood J adopted the following passage from Rtichie's Supreme Court Procedure [52A.11.2]:

"The general approach taken by the courts in these situations is that it will ordinarily be appropriate to award the costs of proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed - unless a particular issue or group of issues is clearly dominant or separable: Waters v P C Henderson (Aust) Pty Ltd (CA(NSW), 6 July 1994, unreported) (which approved the proposition stated in this note) ...".

6 In Hughes v Western Australian Cricket Association (Inc) [1986] FCA 382; (1986) ATPR 40-748 at 48,136 Toohey J summarised the effect of the English and Australian authorities as to the discretion concerning the apportionment of costs as follows:

"1 Ordinarily, costs follow the event and a successful litigant receives his costs in the absence of special circumstances justifying some other order. Ritter v Godfrey [1920] 2 KB 47.

2 Where a litigant has succeeded only upon a portion of his claim, the circumstances may make it reasonable that he bear the expense of litigating that portion upon which he has failed. Forster v Farquhar [1893] 1 QB 564.

3 A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other party's costs of them. In this sense, 'issue' does not mean a precise issue in the technical pleadings sense but any disputed question of fact or law. Cretazzo v Lombardi (1975) 13 SASR 4 at 12."

7 In Cretazzo v Lombardi (supra) at 16, Jacobs J said the following:

"But trials occurs daily in which the party, who in the end is wholly or substantially successful, nevertheless fails along the way on particular issues of fact or law. The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case. There are, of course, many factors affecting the exercise of the discretion as to costs in each case, including in particular, the severability of the issues, and no two cases are alike. I wish merely to lend no encouragement to any suggestion that a party against whom the judgment goes ought nevertheless to anticipate a favourable exercise of the judicial discretion as to costs in respect of issues upon which he may have succeeded, based merely on his success in those particular issues."

8 At the trial, not very much time was spent on the question whether the invalidity of the impugned determination would result in the invalidity of the Plan. The importance of that question was out of all proportion to the time spent on the brief arguments relating to it. A lot of time was spent during the trial on submissions that declaratory relief should be refused because the plaintiff lacked the requisite standing to seek it, and because of delay, acquiescence, and an alleged intention of the plaintiff to bring a second action seeking substantive relief against leaseholders. All of those submissions failed. Some of those matters were pleaded only on behalf of the added defendants, and not on behalf of the State. If the Plan had been invalid, I might have had to consider the question of delay in the light of the added defendants' interests being adversely affected by its invalidity. However I very much doubt that a defence of delay could have succeeded given that the Plan, as a legislative instrument, would have been void ab initio, rather than voidable at the discretion of the Court. See South Australia v Commonwealth [1942] HCA 14; (1942) 65 CLR 373 at 408; R v Turner (No 4) [2001] TASSC 51; (2001) 10 Tas R 81 at 102.

9 However, having regard to the authorities I have referred to, I do not think this is an appropriate case for the costs of separate issues, or groups of issues, to be dealt with in different ways. The plaintiff's victory in relation to the impugned determination was so small a victory, and its loss in relation to the validity of the Plan so great a loss, that the defendants should be regarded as successful in the proceedings. The unsuccessful defences, considered as a whole, were not so unmeritorious as to warrant a departure from the general rule, in my view.

10 At the trial, the State was represented by the Director of Public Prosecutions, Mr Ellis SC, and the added defendants were separately represented by two junior counsel. Mr O'Farrell submitted on behalf of the plaintiff that there was no need for the State and the added defendants to be separately represented, and that the plaintiff should therefore not have to bear two sets of costs. In Statham v Shephard (No 2) (1974) 23 FLR 244, Woodward J reviewed a number of authorities in which it was ordered or argued that an unsuccessful party should bear only one set of costs. At 246 - 247 his Honour said the following:

"The principle which I deduce from these authorities, and which I believe I should follow in spite of the two cases earlier cited, is that the court will not normally allow two sets of costs to defendants where there is no possible conflict of interest between them in the presentation of their cases. I would add to this basic proposition three provisos. In the first place, if a conflict of interest appears possible but unlikely, the defendants should make any necessary inquiries from the plaintiff as to the way in which his case is to be put if this would resolve the possibility of conflict between defendants. (See In re Lyell [1941] VicLawRp 49; [1941] VLR 207.)

Secondly, there could be circumstances in which, although the defendants were united in their opposition to the plaintiff, their relationship to each other might be such that they would be acting reasonably in remaining at arm's length during the general course of litigation.

Thirdly, even if defendants are acting reasonably in maintaining separate representation for some time or for some purposes, they may still be deprived of part of their costs if they act unreasonably by duplicating costs on any particular matter or at any particular time."

11 Mr Ellis SC submitted that, when considering whether the plaintiff should be ordered to pay two sets of costs, there were a number of factors that should be taken into account that related to the State being one of the defendants. As the Director of Public Prosecutions, he does not have the right to appear for private citizens unless the Attorney-General directs or requests him to do so: Director of Public Prosecutions Act 1973, s12(1)(e). The State has a responsibility to act as a model litigant, and might therefore not pursue matters seen to be only faintly arguable. One cannot say that the course taken by the State in civil litigation will always be beyond the influence of political considerations.

12 To some extent, those considerations are inconsistent with the views of Lord Goddard CJ, Cassels and Slade JJ expressed in R v Industrial Disputes Tribunal, ex parte American Express Co Inc [1954] 2 All ER 764. In that case, a number of applicants sought prohibition directed to the Industrial Disputes Tribunal, prohibiting that tribunal from further proceeding on a reference made to it by a Minister. The Minister and a trade union opposed the motion, and were separately represented. Lord Goddard CJ said the following:

"The Court does not like having to give two sets of costs in these cases. It seems to us that if the Minister is satisfied that the trade union is going to be represented and argue the case, then the Minister ought not to be represented, or if the trade union is satisfied that the Minister is going to argue the case, as he generally has done, then the trade union need not be represented. It is desirable to say that the opinion of the Court is that in future in matters of this sort not more than one set of costs will be granted. The Minister may in some cases wish to be represented, even if he appears as amicus curiae, but I do not think we ought to put on employers the burden of paying two sets of costs."

13 Mr Spence, for the added defendants, submitted that it was now too late for the plaintiff to submit that it should not have to bear two sets of costs, since it had not opposed the joinder of his clients. There is no merit in that submission at all. Even if the plaintiff had not written to Mr Spence's firm warning that it might, in relation to the question of costs, take the point that his clients were not necessary contradictors, I would still have a discretion not to order the plaintiff to pay two sets of costs when exercising the general discretion conferred by the Supreme Court Civil Procedure Act, s12(1).

14 The added defendants certainly had the right to be joined as defendants and the right to be represented at the trial, since any decision as to the invalidity of the Plan could have had an adverse impact on their economic interests. However all of the reported cases in which it has been ordered that an unsuccessful party pay no more than one set of costs have involved the separate representation of two or more successful parties who had the legal right to be parties and to be separately represented. That is the only situation in which a question can arise as to whether an unsuccessful party should bear no more than one set of costs.

15 There was no need for both the State and the added defendants to be represented at the trial. There was no conflict between them. There is no suggestion that any political influences affected the stance taken by the State, nor that there was any risk of that sort of thing. Having regard to the relevant authorities, I think it follows that it would be inappropriate for the plaintiff to be required to pay all the costs of all defendants.

16 Mr Ellis SC submitted that, if only one set of costs was to be paid by the plaintiff, it should be the State's costs. However, apparently by arrangement between the legal representatives of the defendants, a lot of the work that would ordinarily have been undertaken by the State was undertaken by the legal representatives of the added defendants. The added defendants' solicitors prepared the requisite number of copies of a court book containing 1,047 pages of documentary evidence. By arrangement, Mr Ellis SC asked me to hear Mr Spence's submissions before his, Mr Spence made lengthy submissions, and Mr Ellis SC adopted all of them, adding little. I am not aware of any basis for saying that the State is more deserving of an order for costs than the added defendants, nor vice versa. In the circumstances, I think the most appropriate course is to make an order whereby the plaintiff must pay half the costs of the State and half the costs of the added defendants.

17 I order that the plaintiff pay half of the defendants' costs of and incidental to the action.