Costs in Criminal Cases Act 1967

The primary beneficiaries are natural persons who have been defendants in summary or indictable criminal proceedings in New South Wales courts and who obtain a s 2 certificate. Corporations are not excluded by the text, but the policy focus on “a defendant” and the personal nature of the s 3(1)(b) inquiry into the defendant’s acts or omissions make corporate applicants rare in practice.

Prosecutors — whether police, the Director of Public Prosecutions, or other authorised bodies — are indirectly affected because their pre-charge decision-making and the evidence they possessed at the time of instituting proceedings are placed under retrospective scrutiny. The prosecutor (or a person authorised to represent the Minister) is given procedural rights under s 3A to adduce further relevant facts, comment on the defendant’s evidence, and cross-examine.

The Director-General of the Attorney General’s Department (and delegated officers) carries the administrative burden of assessing applications, determining quantum, applying offsets, exercising the discretion to refuse or defer, and pursuing subrogated recoveries. The Consolidated Fund is the ultimate payer.

Judges and magistrates exercising jurisdiction in criminal matters must understand the statutory test and the procedural safeguards in s 3A before issuing certificates. Defence practitioners are affected because they must advise clients on the prospects of obtaining a certificate, the evidence that should be adduced on the application, and the interaction with other costs regimes.

Defendants have no right to a certificate; the grant is discretionary and conditioned on the court forming the dual opinions in s 3. Once granted, the defendant has a right to apply to the Director-General (s 4(1)) accompanied by a copy of the certificate. The defendant also enjoys procedural rights under s 3A(3) if the prosecutor adduces further evidence: the right to comment and, if the court thinks it desirable, to examine witnesses.

The prosecutor’s key right is to be heard on the application for a certificate. Section 3A(1)(c) permits the prosecutor to establish relevant facts that were in the prosecutor’s possession at the time the decision to institute proceedings was made but were not adduced at the trial. Section 3A(2) gives the prosecutor the right to comment on any further facts adduced by the defendant and, with leave, to cross-examine or adduce rebuttal evidence.

The Director-General’s duties are cast in discretionary language (“may, if of the opinion…”) but are nevertheless subject to ordinary administrative law constraints. The Director-General must form an opinion on justification (s 4(2)), must not exceed the statutory maximum after offsets (s 4(3)), and must pay the determined sum from the Consolidated Fund (s 4(6)). The subrogation duty in s 5 is expressed in mandatory terms (“shall be subrogated”).

Courts have the duty, when an application for a certificate is made, to consider any further relevant facts properly put before them and to afford procedural fairness in accordance with the machinery in s 3A.

The Act creates no criminal offences or civil penalty regimes. Enforcement is administrative and financial. The Director-General’s determination under s 4 is the operative decision that obliges payment or justifies refusal. Refusal or an inadequate quantum can be challenged by judicial review, although reported cases show courts are reluctant to interfere with the evaluative judgments involved.

Section 5 provides a statutory subrogation mechanism rather than a penalty. If the defendant has a collateral right to recover costs from a third party (for example, under an insurance policy or by reason of malicious prosecution), the Director-General steps into that right and any recovery must be paid to the Consolidated Fund.

The inadmissibility rule in s 6 is a protective provision rather than an enforcement mechanism; it prevents the certificate being deployed collaterally in civil proceedings for malicious prosecution or in disciplinary complaints against prosecutors.

The Act expressly cross-references the Mental Health and Cognitive Impairment Forensic Provisions Act 2020 in the expanded definition of “trial” (s 2(3)). It also interacts with the Criminal Procedure Act 1986, particularly in relation to the timing of acquittals, discharges, and DPP directions.

Because a certificate can be granted on appeal when a conviction is quashed, the Act intersects with the Crimes (Appeal and Review) Act 2001. Transitional provisions in s 7 of the Costs in Criminal Cases Act itself govern whether the pre- or post-2001 version of ss 2 and 3A applies according to whether proceedings were finally determined before the relevant amendment.

The Director-General’s functions under ss 4 and 5 are performed within the framework of the Public Finance and Audit Act 1983 and the Government Sector Finance Act 2018 governing payments from the Consolidated Fund. Subrogation under s 5 engages general equitable principles of subrogation but is limited “to the extent of the payment” and “other than those provided under this Act”.

The Act sits alongside the general costs discretion in the Criminal Procedure Act and common-law powers to order costs against prosecutors in exceptional cases. However, a s 2 certificate provides a distinct, publicly funded route that does not require proof of misconduct.

Section 6’s inadmissibility rule prevents the certificate being used in subsequent civil suits for malicious prosecution or misfeasance in public office, thereby preserving the distinction between the statutory compensation scheme and common-law torts.

The most recent amendments appear in the 2025 No 61 statute (Sch 2.21), which updated cross-references and made minor textual adjustments to ss 2, 3 and 3A. These changes are largely machinery and reflect the continuing modernisation of terminology and alignment with the Mental Health and Cognitive Impairment Forensic Provisions Act 2020.

The 2020 amendment (2020 No 12, Sch 3.6) inserted the reference to special hearings under the new mental health legislation, ensuring that defendants found unfit to stand trial but who receive a “not guilty” verdict at a special hearing can still access the costs regime. This was a deliberate policy extension to maintain parity of treatment.

The 2001 amendments (2001 No 85 and 2001 No 121) were more significant. They introduced s 2(2) to remove any doubt that a certificate could be granted even if no hearing on the merits had occurred, and they substantially rewrote s 3A to create a balanced evidentiary process allowing both sides to adduce further relevant facts. The explanatory materials for the Courts Legislation Amendment Act 2001 indicate that these changes responded to practical difficulties experienced in early cases where courts felt constrained by the facts as found in the principal proceedings.

The 1998 overhaul (1998 No 49, Sch 5) substituted a new s 4, introduced the Director-General’s central administrative role, added subrogation (s 5), the delegation power (s 6A), and the savings provision (s 6B). Prior to 1998 the scheme had been administered directly by courts; the shift to an executive officer was intended to promote consistency in quantum decisions and to allow proper investigation of collateral recoveries.

Because the statutory test in s 3(1)(a) is counterfactual — asking what a reasonable prosecutor would have done with “all the relevant facts” — litigation has centred on the content of the “relevant facts” and the standard of reasonableness.

In R v Moore (unreported, NSWCCA, 1997) the Court of Criminal Appeal emphasised that the test is not whether the prosecution ultimately failed, nor whether the defendant was innocent, but whether institution of proceedings was unreasonable on the evidence then available. Subsequent decisions have stressed that mere weakness of the Crown case is insufficient; there must be a positive conclusion that no reasonable prosecutor would have proceeded.

The procedural provisions in s 3A have generated satellite litigation about the admissibility of additional evidence and the scope of cross-examination. Courts have generally interpreted s 3A broadly to allow a defendant to place before the costs judge material that, for tactical reasons, was not led at trial, provided it is truly “relevant” to the reasonableness of the original decision to prosecute.

Controversy has also surrounded the Director-General’s role. Applicants have argued that once a certificate is granted the Director-General’s discretion under s 4 is narrow and should ordinarily result in full payment of taxed costs. The courts have rejected that view, confirming that the Director-General retains an independent evaluative function and may reduce or refuse payment on grounds not available to the judicial officer who issued the certificate (for example, failure to mitigate loss or availability of other funding sources).

There has been periodic academic and practitioner criticism that the threshold remains too high and that many acquitted defendants who have suffered significant reputational and financial harm still leave court empty-handed. Legislative attempts to lower the test have not succeeded, reflecting a policy preference to protect the public purse and to avoid any appearance that the state is routinely compensating defendants for the “cost of being charged”.

Most practitioners assume that an acquittal after a contested hearing automatically generates a costs certificate. It does not. The judicial officer must be positively satisfied of both limbs in s 3(1), and many judges are reluctant to criticise the prosecution’s original decision even when the verdict is “not guilty”. The certificate is not granted as of right.

A second trap is the timing of the application. Although s 2(2) now makes clear that a certificate can be sought at any stage, defence counsel frequently overlook the possibility at the moment of acquittal and then discover that fresh evidence they wish to rely on under s 3A is harder to characterise as “relevant facts” once the trial is complete and memories have faded.

The interaction between s 4(3)(b) and civil remedies is treacherous. An applicant who has a viable malicious-prosecution action but has not yet sued will find the Director-General reducing the payment by the theoretical value of that claim. Many applicants discover too late that they have effectively been forced to elect between the statutory scheme and a common-law suit.

Section 6’s inadmissibility rule is wider than many realise. The certificate cannot be tendered even to prove that the applicant was acquitted; a separate certificate of acquittal must be obtained. This has caught practitioners in collateral estoppel arguments.

Finally, the subrogation in s 5 operates automatically upon payment. An applicant who later receives a damages award or insurance payout without notifying the Director-General risks having to account for that sum, potentially with interest or costs orders in recovery proceedings brought by the State.

For defence practitioners the compliance pathway begins at the conclusion of proceedings. Immediately upon acquittal or discharge, counsel should obtain an adjournment or list the matter for mention to make an oral application for a certificate. Detailed written submissions addressing both limbs of s 3(1) should be prepared, supported by an affidavit that annexes all material the defendant wishes to rely upon under s 3A(1)(b). The affidavit must distinguish facts already established in the proceedings from “further relevant facts”.

If the prosecutor indicates an intention to oppose the grant or to adduce further evidence under s 3A(1)(c), the matter should be listed for a contested hearing with cross-examination where necessary. The judicial officer’s reasons for granting or refusing the certificate should be obtained in writing; these reasons are critical if the Director-General later takes a different view on quantum.

When preparing the s 4 application, the practitioner must provide a detailed bill of costs, all invoices, and evidence of any collateral sources of recovery (insurance, civil claims, third-party funding). Full disclosure is essential; failure to disclose a potential malicious-prosecution action can result in refusal or subsequent recovery action by the Director-General.

Applicants should keep the Director-General informed of any parallel civil proceedings. If a civil settlement is reached after payment has been made under the Act, the subrogation right may require repayment. Practitioners should consider seeking an indemnity or escrow arrangement in civil settlements to protect the client from double accounting.

Corporate defendants or those with complex financial structures should obtain early advice on the Director-General’s likely approach to “reasonable costs” and offsets. In appropriate cases a preliminary application can be made under s 4(5) for the Director-General to indicate the likely quantum before the client commits to expensive civil litigation.

Finally, because the certificate is inadmissible in other proceedings, separate evidentiary certificates of acquittal or dismissal should always be obtained and preserved. Compliance is not merely about securing the certificate; it requires managing the entire lifecycle from acquittal through to final payment and any subsequent subrogation recovery.