Posted on April 22, 2016 by

Costs orders in public interest proceedings

A recent decision of the Land and Environment Court of New South Wales has reinforced the principles governing the exercise of the Court’s discretion not to make a costs order against an unsuccessful applicant where the Court is satisfied the proceedings were brought in the public interest.

The Facts

The Applicant, Ocean Shores Community Association, brought judicial review proceedings challenging the lawfulness of the process undertaken for the reclassification of land (‘Roundhouse site‘) owned by Byron Shire Council from community land to operational land. The Applicant’s proceedings were dismissed and both Respondents in the proceedings (the Council and the Minister) sought orders that the Applicant pay their costs.

Departing from the usual costs order – the Caroona test 

The Respondents as the successful parties would usually have a costs order in their favour in the absence of any disentitling conduct. Under r 42.1 of the Uniform Civil Procedure Rules 2005, costs generally are awarded to the successful party unless the court rules provide otherwise. Rule 4.2(1) of the Land and Environment Court Rules 2007 (NSW) is one such rule, providing:

The Court may decide not to make an order for the payment of costs against an unsuccessful application in any proceedings if it is satisfied that the proceedings have been brought in the public interest.

In deciding not to make a costs order against the Applicant, Pain J applied the principles governing the application of rule 4.2(1) identified by Preston CJ in Caroona Coal Action Group Inc v Coal Mines Australia Pty Ltd (No 3) [2010] NSWLEC 59.

In Caroona, Preston CJ identified a three-step approach in determining whether to depart from the usual costs rule at [13]:

  • First, can the litigation be characterised as having been brought in the public interest?
  • Secondly, if so, is there “something more” than the mere characterisation of the litigation as being brought in the public interest?
  • Thirdly, are there any countervailing circumstances, including relating to the conduct of the Applicant, which mean the usual rule should not be departed from?

Preston CJ identified five categories of circumstances constituting “something more” at [60]:

  • the litigation raises one or more novel issues of general importance;
  • the litigation has contributed in a material way to the proper understanding, development or administration of the law;
  • the litigation was brought to protect the environment, or some component of it, and the environment, or particular component of it, is of significant value and importance;
  • the litigation affects a significant section of the public; or
  • there was no financial gain to the applicant in bringing the proceedings.

Preston CJ also identified six countervailing considerations at [61]:

  • the applicant is seeking to vindicate rights of a commercial character and stands to benefit from the litigation;
  • where the applicant is an incorporated association, the private interests of members of the association would be affected, legally or financially, by the outcome of the litigation or the group is a “facade” or vehicle for persons wishing to protect their own commercial interests;
  • the applicant is supported financially by persons or bodies who would benefit from, or would have their legal or financial interests affected by, the outcome of the litigation;
  • the narrowness of the question of public interest raised, such as only involving a discrete point of interpretation without broad ramifications;
  • the applicant “unreasonably pursues or persists with points which have no merit” or issues that were not “eminently arguable”; and
  • there is disentitling conduct of the applicant, such as impropriety or unreasonableness in the conduct of the litigation.

It has been previously said that the categories of countervailing circumstances are not closed (Friends of Malua Bay Inc v Perkins (No 2) [2014] NSWLEC 172 per Craig J at [28]).

No order for costs to be made

Public interest

Pain J makes it clear that in order to characterise an application as having been brought in the public interest, there must be more than a mere assertion to that effect. The onus lies on the Applicant to establish that the matter is in the public interest.

Pain J was persuaded by the the evidence that the Applicant sought to preserve the Roundhouse site as community land for cultural and other purposes. There was evidence that the Applicant, through a related body, had assisted in the preparation of a community business plan for the use of the Roadhouse site, at the request of the Council. There was also evidence that the Council had deferred making any decision regarding the Roundhouse site to allow an on-site community open day to be organised by the Applicant.

An applicant is not required to establish that they exclusively act in the public interest. Pain J found in favour of the Applicant despite stating at that this was not a case ‘where the public interest [lay] exclusively in the Applicant’s domain‘, recognising that there was a competing public interest in allowing the reclassification of the Roundhouse site to fund infrastructure throughout the Council’s area for the benefit of residents.

“Something more”

The Applicant was able to make out “something more” than the mere characterisation of litigation bought in the public interest, as Pain J accepted:

  • that a large number of the surrounding residents were concerned about the retention of the Roundhouse site as community land (Caroona at [60(d)]);
  • that the Applicant stood to make no financial gain from the proceedings (Caroona at [60(e)]); and
  • the issue of the scope of the delegation power identified in the Applicant’s case had not been identified before (Caroona at [60(b)]).

Countervailing circumstances

Pain J concluded that there were no countervailing circumstances preventing her Honour from departing from the usual costs orders, finding against the Respondents who argued that the Applicant had delayed commencing the proceeding.

In weighing up the circumstances and considerations, Pain J held that each party should pay its costs of the proceedings.

Lessons for the future

The case, Ocean Shores Community Association Inc v Byron Shire Council (No 5) [2016] NSWLEC 8, serves to reinforce the principles the Court will consider when asked to make costs orders against unsuccessful litigants purporting to act in the public interest, confirming that applicants will need to do more than merely assert the public interest. The decision can be read in full on the NSW Caselaw website here.