FEDERAL COURT OF AUSTRALIA Mees v Kemp (No 2) [2004] FCA 549 PRACTICE AND PROCEDURE – costs – public interest litigation – applicant unsuccessful – discretion to award costs – how exercised Administrative Decisions (Judicial Review) Act 1977 (Cth) ss 11(1)(c), 13 Environment Protection and Biodiversity Conservation Act 1999 (Cth) ss 78, 487 and 488 Federal Court of Australia Act 1976 (Cth) s 43(2) Mees v Kemp [2004] FCA 366 referred to Ruddock v Vadarlis(No 2) (2001) 115 FCR 229 discussed Oshlack v Richmond River Council (1998) 193 CLR 72 discussed South-West Forest Defence Foundation Inc v Executive Director of Department of Conservation and Land Management (No 2) (1998) 154 ALR 411 referred to North Australian Aboriginal Legal Aid Service Inc v Bradley (No 2) [2002] FCA 564 referred to Buddhist Society of Western Australia (Inc) v Shire of Serpentine-Jarrahdale [1999] WASCA 55 discussed Hollier v Australian Maritime Safety Authority (No 2) [1998] FCA 975 referred to PAUL ANDREW MEES v DAVID KEMP (in his capacity as Minister for the Environment and Heritage) and SOUTHERN AND EASTERN INTEGRATED TRANSPORT AUTHORITY V456 of 2003 WEINBERG J 3 MAY 2004 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V456 OF 2003 BETWEEN: PAUL ANDREW MEES APPLICANT AND: DAVID KEMP (in his capacity as Minister for the Environment and Heritage) FIRST RESPONDENT SOUTHERN AND EASTERN INTEGRATED TRANSPORT AUTHORITY SECOND RESPONDENT JUDGE: WEINBERG J DATE OF ORDER: 3 MAY 2004 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The applicant pay fifty per cent of the first respondent's costs of and incidental to the substantive application, such costs be taxed in default of agreement. 2. There be no order as to costs in relation to the preparation of written contentions regarding costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V456 OF 2003 BETWEEN: PAUL ANDREW MEES APPLICANT AND: DAVID KEMP (in his capacity as Minister for the Environment and Heritage) FIRST RESPONDENT SOUTHERN AND EASTERN INTEGRATED TRANSPORT AUTHORITY SECOND RESPONDENT JUDGE: WEINBERG J DATE: 3 MAY 2004 PLACE: MELBOURNE REASONS FOR JUDGMENT Background 1 By application filed on 10 June 2003, the applicant, Dr Paul Mees, sought review under the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("the ADJR Act") of two decisions made by the first respondent, the Minister for the Environment and Heritage. Those decisions related to the construction by the Victorian Government of a freeway that will run from the Eastern Freeway at Mitcham to Frankston. 2 The applicant also sought an extension of time under s 11(1)(c) of the ADJR Act within which to lodge the application for an order of review in respect of the first of those two decisions. 3 On 14 July 2003, the first respondent filed an objection to competency relating to the challenge to the second decision. 4 On 31 March 2004, the Court held that the application for an order of review in respect of the first decision was out of time, and refused the application for an extension of time to commence the proceeding challenging that decision. The Court also held that the second decision was not a decision under the Environment Protection and Biodiversity Conservation Act 1999 (Cth) ("the Environment Protection Act"), and was therefore not a decision "under an enactment" within the meaning of that expression in the ADJR Act. See Mees v Kemp [2004] FCA 366. 5 When judgment in this matter was delivered, I reserved the question of costs as between the applicant and the first respondent. I gave directions for the filing of written contentions by those parties regarding that issue, and indicated that I would determine the matter of costs on the basis of those submissions. The applicant and the first respondent have filed written contentions. I now set out my conclusions regarding the matter of costs. The First respondent's submissions 6 The first respondent seeks his costs in this proceeding. He points to the principle that, ordinarily, costs will follow the event. He submits that in the absence of special circumstances, a successful litigant will receive his or her costs: Ruddock v Vadarlis(No 2) (2001) 115 FCR 229 at [11] per Black CJ and French J. He notes that the applicant was wholly unsuccessful in the substantive proceeding before the Court. Every aspect of the relief sought was refused. Accordingly, he submits, no special circumstances have been shown. 7 In developing these submissions, the first respondent contends that there was no aspect of his conduct that would warrant a departure from the usual order. This was not a case where, by the manner in which he had conducted the litigation, he had, for example, unreasonably prolonged the proceedings. He had made no "groundless" contentions, and could not be said to have acted other than entirely appropriately. Moreover, the proceedings could not be said to have been "close or difficult", or to have involved "no obvious element of fault on the part of the loser": see Ruddock v Vadarlis (No 2) at [13]. 8 The first respondent acknowledges that the proceeding could be characterised as constituting "public interest litigation", and therefore as attracting the principles articulated by the High Court in Oshlack v Richmond River Council (1998) 193 CLR 72. Nonetheless, he submits that nothing in Oshlack requires that whenever an individual or body brings proceedings asserting a defence of the public interest, and protection of the environment, a different costs regime will apply, exempting that individual or body from the ordinary rule with regard to costs. 9 In support of that proposition, the first respondent refers to South-West Forest Defence Foundation Inc v Executive Director of Department of Conservation and Land Management (No 2) (1998) 154 ALR 411 at [5] per Kirby J and North Australian Aboriginal Legal Aid Service Inc v Bradley (No 2) [2002] FCA 564 at [93] per Weinberg J. He submits that Oshlack made it clear that "something more" than merely characterising the proceeding as "public interest litigation" is necessary to justify a departure from the usual rule, and refers to the joint judgment of Gaudron and Gummow JJ at [49]. He submits that Oshlack makes it clear that the fact that litigation is brought in the public interest is relevant, but not decisive, on the question of costs. There would have to be additional factors present before a successful litigant could be denied his or her costs: see Buddhist Society of Western Australia (Inc) v Shire of Serpentine-Jarrahdale [1999] WASCA 55 at [11] per Kennedy, Wallwork and Murray JJ. 10 He proffers several examples of the "something more" that could justify departure from the usual rule. These include cases where the litigation raises and resolves significant issues as to the interpretation, and future administration, of statutory provisions: see Oshlack at [49] per Gaudron and Gummow JJ. He also includes cases raising questions involving the liberty of individuals unable to take action on their own behalf to determine their rights. 11 The first respondent submits that the present case had none of these features. Although the applicant did raise issues regarding the construction of the Environment Protection Act, it was unnecessary for the Court to determine those issues. The application was dismissed simply on the basis that the applicant failed to show why he should be granted an extension of time and, in relation to the second decision, because it was not a decision under an enactment. The applicAnt's submissions 12 The applicant submits that there should be no order as to costs. He notes that s 43(2) of the Federal Court of Australia Act 1976 (Cth) provides that the award of costs is in the discretion of the Court. He submits that although there is no general "public interest" exception to the rule that costs ordinarily follow the event, nor is there an absolute rule that a successful party is entitled to costs unless he has conducted the litigation in an inappropriate manner. He contends that the fact that the proceeding was instituted in order to secure a public benefit, rather than for private or personal gain, is a relevant consideration. He relies upon Oshlack at [49] per Gaudron and Gummow JJ, and [114]-[119] per Kirby J, as support for that proposition. 13 The applicant further submits that it is proper to take into account the existence of the enhanced standing provisions in ss 487 and 488 of the Environment Protection Act when determining whether costs should be awarded against an unsuccessful applicant because of the risk that such rights might otherwise be rendered an "empty gesture". He relies upon Oshlack at [48] per Gaudron and Gummow JJ and [114] per Kirby J in support of that contention. He also relies upon Hollier v Australian Maritime Safety Authority (No 2) [1998] FCA 975. He submits that, as in Oshlack, his concerns were the protection of environmentally significant areas. Many members of the community share these concerns. He stood to make no personal gain from the proceedings. 14 In addition, the applicant notes that although the Court had held that the first respondent's reasons dated 29 May 2002 complied with s 13 of the ADJR Act, the applicant gave unchallenged evidence that he had been misled by those reasons as to the matters at issue in this litigation. Had the first respondent referred specifically in his reasons to the advice given by Mr Early, as he might have done, this litigation could have been avoided, or at least the proceeding might have been instituted within time. 15 Finally, the applicant submits that he did everything that could reasonably have been expected of him to resolve the matter without initiating court proceedings. For example, he asked the first respondent, pursuant to s 78 of the Environment Protection Act, to reconsider the first decision. He also conducted the hearing before the Court competently and efficiently, thereby minimising any delay or inconvenience to the respondents. Conclusion 16 The considerations that bear upon whether the applicant should be required to pay the first respondent's costs are finely balanced. 17 The principles that govern the general discretion of the courts to award costs are set out in the joint judgment of Black CJ and French J in Ruddock v Vadarlis (No 2) at [11]: "… · Ordinarily costs follow the event and a successful litigant receives costs in the absence of special circumstances justifying some other order. · Where a litigant has succeeded only upon a portion of the claim, the circumstances may make it reasonable that the litigant bear the expense of litigating that portion upon which he or she has failed. · 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 parties' costs of them. In this sense "issue" does not mean a precise issue in the technical pleading sense but any disputed question of fact or law." 18 Their Honours went on to say at [13]: "It has been argued, in academic commentary, that the general compensatory principle rests upon two alternative rationales. The first is that the successful party is entitled to be compensated for its costs because it has been wronged at the hands of the unsuccessful party. Costs under this rationale function as a species of damages. But that characterisation is not always tenable. Where, for example, declaratory relief is sought because of genuine uncertainty about the interpretation of a document or a statute, it will not explain why the successful party should be reimbursed at the cost of its opponent where the legal issue is novel and has consequences extending beyond the particular litigation. The alternative rationale for the compensation principle is simply that the winner should not have to suffer financially for vindicating its rights. The criticism of this intuitively attractive approach is again that it does not necessarily follow that the obligation to compensate the winner should be imposed on the losing party. For the losing party may have had very good legal grounds for its position and have conducted itself in the litigation in an entirely reasonable way. Where the case is close or difficult and involves no obvious element of fault on the part of the loser the proposition that costs automatically follow the event may work unfairness. Moreover it may set up a significant barrier against parties of modest means even if the contemplated claim has substantial merit: See Tollefson, "When the 'Public Interest' Loses: The Liability of Public Interest Litigants for Adverse Costs Awards" (1995) 29 University of British Columbia Law Review 303 at pp 309-311; see also McCool, "Costs in Public Interest Litigation: A Comment on Professor Tollefson's Article" (1996) 30 University of British Columbia Law Review 309. These criticisms will not justify a global modification, in public interest cases, of the usual rule that costs follow the event. They do however indicate the desirability of avoiding calcification of the discretion with rigid rules governing its exercise." 19 At the same time, it is necessary to bear in mind the cautionary observations of the Full Court of the Supreme Court of Western Australia in Buddhist Society of Western Australia (Inc) v Shire of Serpentine-Jarrahdale at [11]: "In our opinion great care must be taken with the concept of public interest litigation that it does not become an umbrella for the exercise of discretion with respect to costs in an unprincipled, haphazard and unjudicial manner. As McHugh J, with whom Brennan CJ agreed, in dissenting in Oshlack put it at [72]: "If discretions concerning costs are to be exercised consistently and rationally, it is essential that the courts formulate principles and guidelines that can be applied with precision in most cases. If characterisation as 'public interest litigation' is a factor to be considered when making costs orders, courts must be able to define the term with precision. They must eschew any notion of the 'I know it when I see it' type of reasoning. If courts are to retain the confidence of litigants and the wider community, they must continually reaffirm and demonstrate that their decisions are based on objective reasons that are articulated and can be defended." In our view, the denial of costs to successful litigants upon the ground that the litigation bears a public interest character should continue to be the rarity which this Court supposed it would be in the South-West Forests Defence Foundation case." 20 There are, in the present case, factors that point both ways. It is true, as the first respondent submits, that the applicant was entirely unsuccessful in his challenge to the two decisions that were the subject of the application for review. It is also true that the challenge failed on grounds that did not require a ruling on any important question of principle, namely that it was brought out of time and, in relation to the second decision, that it was not a decision under an enactment. 21 Nonetheless, the applicant raised several difficult, and important, questions of construction regarding the operation of key provisions of the Environment Protection Act. He did so selflessly, in the context of an issue that has sharply divided the community, in order to promote and protect critical environmental values. He also conducted his case in a manner that was wholly commendable. 22 There is some substance in the applicant's contention that, although the first respondent's reasons satisfied the requirements of s 13 of the ADJR Act, they could have been more fully expressed, setting out precisely the matters that the Minister had taken into account and, more importantly, those that he had deliberately ignored. 23 The award of costs need not be an "all or nothing" proposition. Costs are discretionary, and although the discretion to award costs must be exercised judicially, reasonable minds can differ as to what would be appropriate in any given case. 24 In the present case, bearing in mind the various factors to which I have referred, justice will be done if the applicant is required to pay some, but not all, of the first respondent's costs. In my view, the applicant should be required to pay fifty per cent of the first respondent's costs, such costs to be taxed in default of agreement. 25 I propose to exclude from that order the costs involved in the preparation of the written contentions regarding costs, given that each party has had a measure of success on that issue. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Weinberg. Associate: Dated: 3 May 2004 Counsel for the Applicant: Applicant appeared in person Counsel for the First Respondent: Mr P J Hanks QC with Ms R Orr Solicitor for the First Respondent: Australian Government Solicitor Counsel for the Second Respondent: Mr M A Dreyfus QC with Dr K L Emerton Solicitor for the Second Respondent: Phillips Fox Date of Hearing: 17 February 2004 Date of Judgment: 3 May 2004