Woodlands, B.M. & Anor v Permanent Trustee Company Ltd & Ors [1995] FCA 548

Federal Court of Australia|1995-07-27|Before: Wilcox J

IN THE FEDERAL COURT OF AUSTRALIA ) No. NG 835 of 1994 NEW SOUTH WALES DISTRICT REGISTRY ) ) GENERAL DIVISION ) BETWEEN: MICHAEL REGINALD BASS and EVELYN MAUDE BASS Applicants

Eighth Respondent CORAM: WILCOX J PLACE: SYDNEY DATE: 21 JULY 1995 MINUTES OF ORDER THE COURT ORDERS THAT: 1. Pursuant to Order 62A of the Federal Court rules, the maximum costs that may be recovered on a party and party basis as between the applicants and any one respondent who, in the opinion of a Judge, has a separate interest in the proceeding shall be ten dollars ($10) provided however that: (i) this order may be varied by a Judge in the light of the determination of the preliminary issues directed to be determined in advance of the trial; and (ii) this order does not have effect if it is determined by the Court that s.47 of the Legal Aid Commission Act 1979 (NSW) applies to the proceeding.

There be liberty to apply in respect of order 1 if matter NG660 of 1994 is discontinued.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA ) No. NG 928 of 1994 NEW SOUTH WALES DISTRICT REGISTRY ) ) GENERAL DIVISION ) BETWEEN: PAULA CONCA and MARCELO ALBERTO CONCA (as representative parties on their own behalf and on behalf of certain other interested persons) Applicants

Seventh Respondent KEN LONG (trading as Long & Company) Eighth Respondent CORAM: WILCOX J PLACE: SYDNEY DATE: 21 JULY 1995 MINUTES OF ORDER THE COURT ORDERS THAT: 1. Pursuant to Order 62A of the Federal Court rules, the maximum costs that may be recovered on a party and party basis as between the applicants and any one respondent who, in the opinion of a Judge, has a separate interest in the proceeding shall be ten dollars ($10) provided however that: (i) this order may be varied by a Judge in the light of the determination of the preliminary issues directed to be determined in advance of the trial; and (ii) this order does not have effect if it is determined by the Court that s.47 of the Legal Aid Commission Act 1979 (NSW) applies to the proceeding.

There be liberty to apply in respect of order 1 if matter NG660 of 1994 is discontinued. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA ) ) No. NG 660 of 1994 NEW SOUTH WALES DISTRICT REGISTRY ) ) GENERAL DIVISION ) BETWEEN: BESSIE MAVIS WOODLANDS and LILIAN MAY BALLARD (as representative parties on their own behalf and on behalf of certain other interested persons) Applicants AND: PERMANENT TRUSTEE COMPANY LIMITED First Respondent FANMAC LIMITED Second Respondent STATE OF NEW SOUTH WALES Third Respondent PERMANENT CUSTODIANS LIMITED Fourth Respondent FAIRDALE CO-OPERATIVE HOUSING SOCIETY Fifth Respondent and CO-OPERATIVE HOUSING SOCIETIES ASSOCIATION OF NEW SOUTH WALES Sixth Respondent NO. NG 835 of 1994 BETWEEN: MICHAEL REGINALD BASS and EVELYN MAUDE BASS Applicants

AND: PERMANENT TRUSTEE COMPANY LIMITED First Respondent FANMAC LIMITED Second Respondent STATE OF NEW SOUTH WALES Third Respondent PERMANENT CUSTODIANS LIMITED Fourth Respondent LIVERPOOL-INGLEBURN CO-OPERATIVE HOUSING SOCIETY Fifth Respondent MARKHAM, GEIKIE & RUMORE Sixth Respondent CO-OPERATIVE HOUSING SOCIETIES ASSOCIATION OF NEW SOUTH WALES Seventh Respondent THE ESTATE OF ANTHONY MARKHAM Eighth Respondent NO. NG 928 of 1994 BETWEEN: PAULA CONCA and MARCELO ALBERTO CONCA (as representative parties on their own behalf and on behalf of certain other interested persons) Applicants

AND: PERMANENT TRUSTEE COMPANY LIMITED First Respondent FANMAC LIMITED Second Respondent STATE OF NEW SOUTH WALES Third Respondent PERMANENT CUSTODIANS LIMITED Fourth Respondent MERRYLANDS CO-OPERATIVE HOUSING SOCIETY Fifth Respondent LIVERPOOL-INGLEBURN CO-OPERATIVE HOUSING SOCIETY Sixth Respondent CO-OPERATIVE HOUSING SOCIETIES ASSOCIATION OF NEW SOUTH WALES Seventh Respondent KEN LONG (trading as Long & Company) Eighth Respondent

WILCOX J: These reasons for judgment concern a Notice of Motion filed by the applicants in each of three related proceedings. The three proceedings each arise out of Home Fund loans provided under the auspices of the New South Wales government. The principal proceedings The first proceeding (NG660 of 1994) is brought by two applicants, Bessie Mavis Woodlands and Lilian May Ballard, on their own behalf and as representative parties pursuant to Part IVA of the Federal Court of Australia Act 1976. There are six respondents: Permanent Trustee Company Limited, FANMAC Limited, the State of New South Wales, Permanent Custodians Limited, Fairdale Co-operative Housing Society and Co-operative Housing Societies Association of New South Wales. The applicants' Further Amended Application dated 23 May 1995 identifies the group members on behalf of whom the representative action is brought as being all persons: (i) whose causes of action accrued after 4 March 1992 (the day before the day when Part IVA commenced to operate); (ii) who executed a mortgage as mortgagor with Permanent Trustee as trustee of funds raised by FANMAC for home lending or guaranteed a loan from Permanent Trustee as trustee of funds raised by FANMAC; and (iii) who are members of an organisation called "the United Borrowers Association Inc" ("UBA") and listed on one of three Schedules filed in Court. The Further Amended Application alleged contravention by various respondents of ss.52, 52A, 51AB and 74 of the Trade Practices Act 1974, and of ss.42 and 43 of the Fair Trading Act 1987 (NSW) and breach of fiduciary duty by the State of New South Wales. In addition to relief appropriate to those causes of action, the Further Amended Application sought orders under the Contracts Review Act 1980 (NSW). The applicants in the second proceeding (No. NG835 of 1994) are Michael Reginald Bass and Evelyn Maude Bass. This is not a representative proceeding. They sue only on their own behalf. As the first four respondents, they name the same entities as those named in NG660 of 1994. But in this case the fifth respondent is Liverpool-Ingleburn Co-operative Housing Society, the sixth respondent a firm of solicitors, Markham, Geikie and Rumore, the seventh respondent, Co-operative Housing Societies Association of New South Wales Limited, and the eighth respondent the estate of Anthony Markham. In relation to respondents 1 to 5 inclusive and 7, Mr and Mrs Bass rely on similar statutory causes of action as Ms Woodlands and Ms Ballard and breach of fiduciary duty. Their claim against the sixth and eighth respondents relies upon alleged breach of contract.

The third action is another representative action. It is brought by Paula Conca and Marcelo Alberto Conca on their own behalf and as representative parties on behalf of two separate groups. The first group consists of people who fall within categories (i) and (ii) stated above in relation to NG660 of 1994, but are not UBA members. The second group consists of people who fall within category (ii), but whose causes of action accrued on or before 4 March 1992. The representative proceeding on behalf of these applicants is not founded on Part IVA of the Federal Court of Australia Act. It is apparently based on the recent decision of the High Court of Australia in Carnie v Esanda Finance Corporation Ltd (1995) 127 ALR 76. This proceeding also names the same first four respondents and Liverpool-Ingleburn Co-operative Housing Society (sixth respondent) and Co-operative Housing Societies Association of New South Wales (seventh respondent). However, two new respondents are here joined, Merrylands Co-operative Housing Society (fifth respondent) and Ken Long, trading as Long and Company (eighth respondent). The applicants in this proceeding rely on the same statutory causes of action as in the other proceedings and also breach of fiduciary duty by the State government. They add a claim of breach of contract against Mr Long. Although the three proceedings were commenced on different dates, they were brought together for the purposes of directions hearings. I was informed that the applicants in the representative proceedings believed the total number of group members represented in actions NG660 of 1994 and NG928 of 1994 would exceed 50,000. The problems experienced by HomeFund members have received considerable media publicity and resulted in the enactment of special legislation: see Homefund Restructuring Act 1993 (NSW); Homefund Commissioner Act 1993 (NSW). Apparently the various applicants do not believe that this legislation will provide them with relief commensurate to that obtainable on the causes of action pleaded in these proceedings. The preliminary issues At directions hearings I discussed with counsel the most efficient way of handling the proceedings. Counsel told me many of the group members are elderly. Bearing in mind that HomeFund was a scheme created by the New South Wales government to provide home finance for persons who would not satisfy the criteria of ordinary lending institutions, and many of whom were Housing Department tenants, it is reasonable to assume that few (if any) of the group members are affluent. Each of the three sets of applicants has been granted legal aid under the Legal Aid Commission Act 1979 (NSW) in relation to which a means test generally applies. Evidence filed in support of the present Notices of Motion shows that none of them has any significant assets other than the equity in their homes the subject of the relevant mortgages. In the case of Mr and Mrs Bass and Mr and Mrs Conca, those equities are either non-existent or extremely small. Particularly because of the circumstances of the affected people, it seemed more than usually important that the litigation be finalised at the earliest possible time and as inexpensively as possible. At the same time, the proceedings raised significant questions of law, common to all three cases; in particular, the application of the Trade Practices Act to the State of New South Wales, the third respondent, and to entities said to be acting on behalf of the State in providing the funds (FANMAC, the second respondent and a company said to be owned partly by the State and partly by various institutions) or effecting the transactions (Permanent Trustee and Permanent Custodians, the first and fourth respondents, and apparently, the various Co-operative Societies). Counsel for the State government contended that the principles applied by the High Court in Bradken Consolidated Limited v Broken Hill Proprietary Company Limited (1979) 145 CLR 107 excluded the application of the Trade Practices Act claims to any of these respondents. If that was correct, they said, the only maintainable causes of action would be causes of action based on State legislation or the general law; in which situation they said, the matters should be remitted to a State court for determination. During an interval between directions hearings, the solicitors acting for some respondents raised the question whether s.47 of the Legal Aid Commission Act applied to the proceedings, so as to protect the applicants from liability for the payment of any costs that might be ordered against them if they were unsuccessful. Section 47 relevantly provides: "47(1) Where a court or tribunal makes an order as to costs against a legally assisted person: (a) except as provided by subsections (2), (3), (3A), (4) and (4A), the Commission shall pay the whole of those costs; and (b) except as provided by subsections (3), (3A), (4) and (4A), the legally assisted person shall not be liable for the payment of the whole or any part of those costs. (2) The Commission shall not pay an amount in excess of $5,000 (or such other amount as the Commission may from time to time determine): (a) except as provided by paragraph (b), in respect of any one proceeding; or (b) in respect of each party in any one proceeding, being a party who has, in the opinion of the Commission, a separate interest in the proceeding. (3) The Commission shall not be liable to pay any costs incurred by or on behalf of a person in respect of a period during which that person was not a legally assisted person (even though those costs were ordered to be paid at a time when that person was a legally assisted person) and that person shall be liable for the payment of those costs. ... (8) Any amount paid by the Commission under this section shall be deemed to have been paid by the legally assisted person on whose behalf it is paid."

The figure of $5,000, mentioned in subs.(2), has been redetermined from time to time. It currently stands at $12,500. In the result, on 1 June 1995 I directed that six preliminary questions be heard separately from, and before, any other question in the proceedings. I need not set those questions out. It is sufficient to say that they raise issues about the application of the Trade Practices Act and the Fair Trading Act to various respondents, the availability of a claim for breach of fiduciary duty against the State of New South Wales and the application of s.47 of the Legal Aid Commission Act. The parties have gathered together the documents necessary for the determination of these questions. Following further discussion with counsel and consultation with the Chief Justice, I referred the preliminary questions to a Full Court. The Full Court hearing is to commence on 7 August. The present Notice of Motion On 28 June 1995 the applicants in each proceeding filed a Notice of Motion seeking the following order: "1. That the Court specify that the maximum amount of costs that may be recovered on a party and party basis in relation to the decision of the questions identified in these proceedings pursuant to order 29 for separate determination be $10, or such other amount as the Court considers appropriate."

The Notices of Motion came before me on 19 July, they being all heard together. Counsel for the applicants explained that the proposed order was based on Order 62A of the Federal Court rules. That Order provides: "(1)The Court may: (a) by order made at a directions hearing; and (b) of its own motion or on the application of a party; specify the maximum costs that may be recovered on a party and party basis. (2)A maximum amount specified in an order under rule 1 shall not include an amount that a party is ordered to pay because the party: (a) has failed to comply with an order or with any of these Rules; or (b) has sought leave to amend its pleadings or particulars; or (c) has sought an extension of time for complying with an order or with any of these Rules; or (d) has otherwise caused another party to incur costs that were not necessary for the economic and efficient: (i) progress of the proceedings to trial; or (ii)hearing of the action. (3) An order under rule 1 may include such directions as the Court considers necessary to effect the economic and efficient: (a) progress of the proceedings to trial; or (b) hearing of the action. (4) If, in the Court's opinion, there are special reasons, and it is in the interests of justice to do so, the Court may vary the specification of maximum recoverable costs ordered under rule 1." In Sacks v Permanent Trustee Australia Limited (1993) 45 FCR 509, Beazley J referred to the origin of Order 62A. At 511 she quoted a letter from the then Chief Justice of the Court to the then President of the Law Council of Australia speaking of concern within the Court, and the wider community and legal profession, "that the cost of litigation, particularly for persons of ordinary means, places access to the civil courts beyond their reach and thus effectively denies them justice". He explained the then proposed Order as being intended to mitigate the "deterrent to the assertion or defence of rights in civil litigation" represented by fear of exposure to "the legal costs to which an unsuccessful party may be subjected". The Chief Justice predicted that the rule "would be applied principally to commercial litigation at the lower end of the scale in terms of complexity and the amount in dispute". But he added "it could be applied in other cases as appropriate". On 19 June counsel for the present applicants argued that it was appropriate to apply the rule in these cases. They conceded that it would be an unexpected use of Order 62A to fix a maximum recovery of only ten dollars. They agreed this would be tantamount to making a "no costs" order, subject to the qualification provided by rule (1). But they contended that such an order does not conflict with the spirit of the Order, which was designed to remove or mitigate the deterrent provided by exposure to the usual costs order. They said that, in the present cases, exposure of the applicants to the usual order would represent a significant deterrent. There would be no difficulty if s.47 of the Legal Aid Commission Act applies to the cases; in that event, s.47(1)(b) would exonerate the applicants from any personal liability for the respondents' costs. However, the application of s.47 has been thrown into doubt. As a result the applicants had been forced to reconsider their position. Counsel pointed out that, although the parties had agreed to have the application of s.47 determined as one of the preliminary questions, substantial costs would be incurred by the respondents even in relation to the preliminary questions. If the preliminary questions were answered adversely to the applicants, their claims might be doomed and they may be left liable for the respondents' costs. These would far exceed their net assets. There are numerous respondents. Those concerned with the preliminary question, probably reduce to four separate interests: the State of New South Wales, FANMAC, the two Permanent companies and the various Co-operative societies. The first three interests were currently intended to be represented at the hearing of the preliminary questions by both senior and junior counsel, the fourth by junior counsel alone. Counsel for the applicants said that, unless their clients could limit their exposure, they would probably be forced to abandon the proceedings; the consequences of failure, even at the preliminary questions stage, would be financially catastrophic. All the respondents opposed the proposed orders. They put various submissions, including that Order 62A was not intended to cover cases like this. They pointed out that the problem had arisen only because the applicants had chosen to bring their claims in this Court. They could have brought claims, at least individual claims, in the Supreme Court or some other State court. Had they done so, there would have been no doubt that s.47 applied. Counsel also raised the position of members of UBA. They commented that there was no evidence that the members were unable to provide the funds necessary to meet any adverse costs orders. Counsel also complained of the fact that, at that time, there was no evidence as to the applicants' means; although I should add that all counsel associated themselves with a concession by counsel for FANMAC that none of the applicants had the financial capacity to satisfy an order for costs. I felt there was substance in counsel's complaints of insufficiency of evidence. So I adjourned the hearing of the Notices of Motion for two days, directing that affidavits be filed in the meantime. Affidavits were filed. They confirmed the applicants' parlous financial position. They also provided some information regarding UBA. It appears that each UBA member was asked to pay a membership fee of $20 and a levy of $200. All paid the membership fee. Not all of them paid the levy. A total of $76,412.45 was raised from membership fees, levies and donations. However, all but $144.58 has been expended. A total of $62,887 was paid to UBA's solicitors, the solicitors acting for the applicants in matter NG660 of 1994. The balance has been applied to UBA administrative and fund raising expenses. Out of the sum of $62,887, the solicitors have paid legal expenses incurred by UBA and the applicants before the grant of legal assistance on 26 September 1994 ($37,233), disbursements since the grant of legal assistance of $9,353.63 (the grant was subject to a condition that the assisted persons bear $10,000 of the disbursements) and $16,301.46 legal expenses in connection with a negligence claim against UBA's former solicitors. I know nothing about the negligence claim. However, it is apparent that, even if these expenses had not been incurred, UBA would not have sufficient funds to indemnify the applicants against any adverse costs order. After this evidence was given counsel addressed further. I made orders pursuant to Order 62A, as set out at the end of these reasons and stated that I would publish written reasons for taking that course as soon as possible. Those reasons now follow. The problem The problem that has arisen in this case occasions no surprise to me. It is a problem inherent in representative proceedings. In a nutshell, the problem is that a representative party is exposed to the risk of an order to pay the costs of a respondent or respondents (the amount of which will usually be increased by the very fact that the proceeding is a representative one), without gaining any personal benefit from the representative role. So there is little or no incentive for a person to act as a representative party. Unless the person's potential costs are covered by someone else, there is a positive disincentive to taking that course. The Australian Law Reform Commission devoted a whole chapter of the 1988 report that formed the basis of Part IVA of the Federal Court of Australia Act to the subject of costs and funding. See "Grouped Proceedings in the Federal Court" (ALRC 46) chapter 8. The Commission recommended against imposing a costs liability on group members (para. 261). The Parliament accepted this recommendation: see the new subs.(IA) inserted into s.43 of the Federal Court of Australia Act at the time of enactment of Part IVA. The Commission considered, but rejected, various options for departing in representative proceedings from the usual party-party costs rule: a one-way costs rule (paras. 263-264), a no-costs rule (paras. 265-267) and a modified no-costs rule (paras. 268-269). Parliament accepted the Commission's view about these matters. At paras. 272 to 300 the Commission discussed the possibility of special fee agreements, including agreements involving contingency fees. It ultimately recommended that there be statutory provision for approval of fee agreements, but not agreements providing for the remuneration to be ascertained by reference to the amount recovered: see cl.33 of the Commission's draft Bill in Appendix A of the report. However, the Commission recognised that this would not be enough. It said at para. 301: "Although provision for court approved fee agreements will go some way to alleviating the costs disincentives involved in grouped proceedings, there may still be cases where a public funding solution is needed, in particular, to assist a principal applicant to meet the respondent's costs if the case is unsuccessful." After examination of the then structure of legal aid in Australia, and elsewhere, the Commission recommended the establishment of a special fund to provide for the costs of parties involved in grouped proceedings: see para. 309. The idea was that the fund would not only receive moneys appropriated by Parliament; it could receive interest on money held as a result of an aggregate group proceeding assessment, and not otherwise allocated, and any unclaimed residue of an aggregate award. It would, therefore "be self-financing to some extent": see para. 312. The Law Reform Commission envisaged, not only that the fund would cover an approved principal applicant's (representative party's) expenses, but also meet any party-party costs that would otherwise be ordered against the principal applicant. It would operate in much the same way as s.47 of the Legal Aid Commission Act is intended to operate. It follows that, if such a fund had been established, it would have been a means of resolving the present problem. However, the Government did not adopt this recommendation. No fund was established. The only step taken by Parliament towards meeting the problem identified by the Commission was to insert in the Federal Court of Australia Act a provision (s.33ZJ) empowering the Court to allow a representative party to take reasonably-incurred unrecovered costs out of awarded damages. This provision does not meet the problem of people being deterred from acting as a representative party at all, because of the possibility of the proceeding failing. The public interest element Counsel for the applicants asserted that there is a substantial public interest in the determination of these claims, which interest would be denied if their clients were forced to abandon them. They emphasised the number of people who obtained HomeFund loans. I do not know what proportion of these people are in the same position as the present applicants; but it seems reasonable to assume that the proportion is substantial. The UBA members regard themselves as being in the same position as Ms Woodlands and Ms Ballard, and there are something like a thousand of them. And the preliminary issues raise legal questions whose importance transcends these three cases. Although there is no settled rule to that effect, the existence of a public interest element has often been regarded as a reason for departing from the usual costs rule. One of the earliest statements to that effect was by Fox J, sitting in the Australian Capital Territory Supreme Court in Kent v Cavanagh (1973) 1 ACTR 43. Denying the successful defendant (a Commonwealth Minister) his costs, Fox J said at 55: "In the present case the plaintiffs have succeeded on one point and have brought to notice a serious defect in compliance with statutory procedures. But I am to some extent influenced by broader considerations. It seems to me undesirable that responsible citizens with a reasonable grievance who wish to challenge Government action should only be able to do so at risk of paying costs to the Government if they fail. They find themselves opposed to parties who are not personally at risk as to costs and have available to them almost unlimited public funds. The inhibiting effect of the risk of paying costs is excessive and not in the public interest. Once, not so long ago, litigation was more of a luxury than it now is and for the most part only wealthy people could engaged in it. To them was usually left any action necessary to vindicate rights of the public. This is not now regarded as an acceptable situation. The courts must be, in practice, and not simply in theory, available to all." In Arnold v Queensland (1987) 73 ALR 607 a Full Court of this Court declined to order an unsuccessful appellant, a person acting on behalf of an environmental group known as "Fund for Animals", to pay the respondent's costs. The nature of the litigation, involving as it did public interest elements, was one reason why this course was taken: see 621-622 and 635. Morling J followed that lead in ordering costs on an indemnity basis in Australian Federation of Consumer Organisations Inc v Tobacco Institute of Australia Ltd (1991) 100 ALR 568, a case where the successful applicant was litigating in the public interest, and also because the proceeding was in the nature of a test case. His Honour said at 571-572 that he did "not think it would be in the public interest for a litigant in the position of the applicant to be heavily out-of-pocket in consequence of the public-spirited action it has taken". On appeal - see Tobacco Institute of Australia Ltd v Australian Federated of Consumer Organisation (1993) 113 ALR 257 - a Full Court interfered with Morling J's costs order, but this was because the Full Court held that the applicant was not entitled to all the relief granted by Morling J: see per Sheppard J at 272 and Foster J at 275. Only Hill J, at 283, rejected the significance of a public interest element. Since its establishment in 1980, the Land and Environment Court of New South Wales has gradually moved away from the usual rules concerning costs (and undertakings as to damages) in litigation that involves a substantial public interest element. The cases were summarised by Stein J in Oshlack v Richmond River Shire Council (1994) 82 LGERA 236. His Honour's judgment in that case contains a valuable review of relevant literature, including reference to a comment made by Toohey J of the High Court in 1989:

"Relaxing the traditional requirements for standing may be of little significance unless other procedural reforms are made. Particularly is this so in the area of funding of environmental litigation and the awarding of costs. There is little point in opening the doors to the courts if litigants cannot afford to come in. The general rule in litigation that 'costs follow the event' is in point. The fear, if unsuccessful, of having to pay the costs of the other side (often a government instrumentality or wealthy private corporation), with devastating consequences to the individual or environmental group bringing the action, must inhibit the taking of cases to court. In any event, it will be a factor that looms large in any consideration to initiate litigation." That comment was made at an international environmental law conference. No doubt this explains its focus on environmental litigation. But, of course, it applies equally to other public interest litigation. Stein J concluded his review of the authorities, in Oshlack, with this statement, at 244: "It is with this backdrop that the Land and Environment Court has cautiously approached the discretion as to costs and the question of special circumstances warranting a departure from the 'usual rule'. The authorities mentioned have acknowledged the concept of public interest litigation and that the categorisation of proceedings as such may be a factor which contributes to a finding of special circumstances. However, cognisant of the competing rights of successful respondents being deprived of costs, the Court has confirmed that the categorisation of proceedings as public interest litigation of itself is not enough to constitute special circumstances, rather something more is required."

In considering whether there was "something more" in the case before him, Stein J referred to the arguability of the unsuccessful applicant's point and the fact that it raised "serious and significant issues resulting in important interpretation of new provisions relating to the protection of endangered fauna". He refused to order the applicant to pay the respondents' costs. I am aware of two first-instance decisions in this Court in which Judges have ordered costs against applicants who claimed to be upholding the public interest in bringing applications under the Administrative Decisions (Judicial Review) Act 1977. See Australian Conservation Foundation v Forestry Commission (1988) 81 ALR 166 at 170-171 (Burchett J) and Botany Municipal Council v Secretary, Department of the Arts, Sport, The Environment, Tourism and Territories (1992) 34 FCR 412 at 416-417 (Gummow J). Perhaps their Honours would have taken the same course even under different circumstances, but it is worth noting that, in the former case, Burchett J emphasised that the applicants were corporations, as distinct from individuals as in Kent v Cavanagh, and in the latter case the applicant discontinued the proceeding shortly before the trial. Conclusions In considering these applications, it seemed to me necessary to take account of two competing considerations. First, it would be undesirable to take a course that would force the applicants to abandon the proceedings before resolution, even, of the preliminary issues. Although I accepted that fear of exposure to costs acts as a deterrent to litigation to many people who feel they have a legitimate grievance (or defence), it would be particularly unfortunate if that factor caused the abandonment of litigation that made claims having the potential, if successful, to benefit many thousands of people, most of them likely to be of limited means. Whilst the public interest element in the cases should not necessarily be regarded as decisive, it was a factor of some significance. Moreover, without passing on their ultimate merits, the cases the applicants desired to advance appeared at least seriously arguable. On the other hand, it seemed wrong to take a course that would leave the respondents disadvantaged by the applicants' decision to sue in this Court rather than in a State court. The applicants' decision was well understandable. When they instituted the proceedings, the prevailing view was that representative proceedings could not be instituted in the Supreme Court of New South Wales in a case where each of the group members was relying on a separate contract; in such a case the group members did not share "the same interest": see Esanda Finance Corporation Ltd v Carnie (1992) 29 NSWLR 382. It was only when that view was overturned last February that it became possible to contemplate bringing the present proceedings in the Supreme Court. By then all three proceedings were underway in this Court. Even if representative proceedings could not have been brought in the Supreme Court, however, the various applicants could have brought individual cases in a State court. Individual claims would have vindicated their personal rights (if any) and provided precedents that might have helped other HomeFund borrowers. If they had taken that course, but failed, the respondents would have been able to recover their costs pursuant to s.47(2) of the Legal Aid Commission Act, up to a limit of $12,500 and avoiding duplication for parties who shared a common interest. By suing in this Court, in relation to which s.47 might not apply, this entitlement was put at risk. Was this fair to the respondents? Should they be potentially worse off because the applicants chose not to bring these proceedings rather than individual applications in a State court? Making every allowance for the factors favourable to the applicants that I have mentioned, it seemed to me that it would be unfair to put the respondents in a worse position than if the applicants had chosen to litigate their claims in the Supreme Court. Each of the respondents having a separate interest ought to be left entitled to recover costs of $12,500 if the proceedings failed. However, I saw no reason to preserve an entitlement in each of the three proceedings. If the proceedings had been brought in a State court, it is extremely likely that one matter would have been selected as a test case and determined, the other two matters being held in abeyance. In practice, the respondents would have incurred substantial costs in connection with only one case. Accordingly, they would not be disadvantaged if left with the capacity to obtain costs of $12,500 in only one case. After some discussion, counsel for the applicants obtained instructions and told me that UBA would probably be able to cover a potential costs liability of four times $12,500, if this liability was confined to one proceeding. The most appropriate proceeding was obviously NG660 of 1994, which was brought on behalf of UBA members. Accordingly, in that matter I made an order pursuant to Order 62A of the Federal Court rules that the maximum costs that may be recovered on a party and party basis as between the applicants and any one respondent who, in the opinion of a Judge, has a separate interest in the proceeding shall be $12,500. As this order was intended really only to cover the position until determination of the preliminary issues, I added a proviso that it may be varied by a Judge in the light of the determination of the preliminary issues. As I did not wish the order to affect the operation of s.47 of the Legal Aid Commission Act, if it applied, I added a further proviso that it did not have effect if the Court determined that s.47 applied to the proceeding.

I made similar orders in each of the other two matters, with the substitution in each case of ten dollars for $12,500. I granted liberty to apply in those cases in the event that action on NG660 was discontinued. I certify that this and the preceding twenty-five (25) pages are a true copy of the Reasons for Judgment of the Honourable Justice Wilcox. Associate: Dated: 27 July 1995

APPEARANCES Counsel for the Applicant: John Basten QC and Sylvia Winters Solicitors for the Applicant: Peter J Breen & Co; Public Interest Advocacy Centre Counsel for the 1st and 4th Respondants: C Birch Solicitors for the 1st and 4th Respondants: Church & Grace Counsel for the 2nd Respondent: T F Bathurst QC and I M Jackman Solicitors for the 2nd Respondent: Mallesons Stephens Jaques Counsel for the 3rd Respondent: A J Bannon Solicitors for the 3rd Respondent: NSW Crown Solicitors

Counsel for the 5th and 6th Respondents: T K Tobin QC and McGrath Solicitors for 5th and 6th Respondents: Church & Grace

Homefund Restructuring Act 1993(NSW)

Homefund Commissioner Act 1993(NSW)

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