Does the costs indemnity rule apply in public interest litigation?
Yes. The mere fact a proceeding is in the public interest does not oust or fetter the Court’s general discretion as to costs. Therefore, all things being equal, in public interest litigation costs (usually) follow the event. Nevertheless, as in any other case, in public interest litigation it is open for the parties to argue that the general rule costs follow the event is displaced.
Why wouldn’t a Court make orders per the costs indemnity rule?
This is where things get interesting. In ordinary (self-interested) litigation, the costs indemnity rule can be displaced where there has been some kind of misconduct or inefficiency by the successful party (See: When don’t costs follow the event?). There is some guidance on the factors the Court may consider in deciding whether to apply the costs indemnity rule in a public interest case. These are:
🍀The extent to which each of the parties was successful in the proceeding
🍀If the plaintiff is an individual – whether she had any personal, private or financial stake in the litigation
🍀If the plaintiff is an organisation – whether the organisation’s objects have a public character and whether bringing the proceeding aligned with those objects
🍀Whether there is widespread public interest in the litigation itself or its outcome
🍀Whether the litigation was designed to effectuate important public policies
🍀Whether numerous people would have benefitted from the action if the plaintiff succeeded (through a clarification in the law or otherwise)
🍀Whether the plaintiff would have had sufficient economic incentive to bring the proceeding if the action lacked any general importance
The reason I say guidance, is the history of these factors resembles an "Uno" reverse card. They were most recently referred to with approval in Lewis v Chief Executive Department of Justice and Community Safety (No 2) [2014] ACTSC 196, by Refshauge J at [70]-[71]. As authority, Refshauge J cited the bible – that is Law of Costs (2nd Ed) by GE Dal Pont, at 264. Fast forward to Law of Costs (5th Ed), at 282 Dal Pont cites Refshauge J’s decision as authority for these factors, along with some cases from other common law jurisdictions.
Simultaneously, the Court's application of the costs indemnity rule in public interest litigation has been extremely varied. For example, in Construction Forestry Mining & Energy Union v Queensland Coal and Oil Shale Mining Industry (Superannuation) Ltd (2003) 132 FCR 516, Wilcox J held the mere fact the proceeding raised important and difficult questions of law affecting many people was not, in and of itself, sufficient to displace the general rule costs follow the event. Whereas, in Saga Holidays Ltd v Commissioner of Taxation [2006] FCA 128, Conti J made no order as to costs based on the same factors.
Takeaways
The mere fact that public interest litigation is public interest litigation does not somehow fetter the Court’s inherent discretion as to costs or give the plaintiff a “free kick” when it comes to the costs of the proceedings. Nevertheless, the factors identified in Lewis v Chief Executive Department of Justice and Community Safety (No 2) [2014] ACTSC 196, may inform the Court’s exercise of its costs discretion. As Marshall J helpfully explained in The Wilderness Society Inc v Turnbull, Minister for the Environment and Water Resources [2007] FCA 1863, at [30]:
“Each case must turn on its facts and the relevant considerations through which it may be found appropriate to depart from the usual order are not closed. The real issue is not what is considered to be in the public interest or whether public interest considerations are a recognised exception to the usual rule, but rather, whether it can be said that there are sufficient public interest related reasons connected with or leading up to the litigation that warrant a departure from or outweigh the important consideration that a wholly successful respondent would ordinarily be awarded its costs.”