In Lawyers for Forests Inc v Minister for the Environment, Heritage and the Arts (No 2) [2009] FCA 466, the Federal Court of Australia held that there is no public interest exception to avoid an unfavourable costs order. The ordinary rule applies in that an unsuccessful litigant will be ordered to pay the successful litigant’s costs of litigation.
On 8 May 2009, Tracey J of the Federal Court handed down a costs judgment in the matter. Earlier, the Court had dismissed an application by Lawyers for Forests Inc (“LFF’) to impugn a decision of the Minister to grant conditional approval for the Gunns pulp mill in Bell Bay, Tasmania. The Court gave LFF the opportunity to provide submissions as to why costs should not be in the usual order.
The ordinary rule is that costs should follow the event. There is no general public interest exception to the ordinary rule (Oshlack v Richmond Rover Council (1998) 193 CLR 72, Latoudis v Casey (1990) 170 CLR 534 at 542)).
LFF argued that the circumstances of the case warranted a departure from the ordinary costs rule because:
- LFF was seeking to enforce the objects of the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (“the Act”);
- the litigation was in the public interest;
- there were exceptional and special circumstances, including that the case concerned untested provisions of the Act;
- LFF is a non-profit organisation, carrying out activities useful to the community; and
- an adverse cost order might result in the winding up of LFF.
LFF argued that the issues raised in the application were “of significant public interest and concern,” and that one of the objects of the legislation is “to promote a co-operative approach to the protection and management of the environment involving governments, the community, land-holders and indigenous peoples” (s 3 (1)(d) of the Act). LFF also argued that the organisation did not stand to benefit financially from the litigation.
Tracey J found that there is no general public interest exception to the operation of the ordinary costs rule. His Honour found that the concept of ‘public interest’ is difficult to define. He said that a distinction should be made between the public interest and a matter of interest to the public. The relevant interest is to the public generally, not the individual or individuals. He also explained that there may be competing public interests - such as the lawfulness of determinations made by executive government, particularly where public funds are involved.
Justice Tracey noted that “[LFF] has determined that, in pursuit of its objects and, in what it perceives to be the public interest, that the Minister’s approval of construction of the pulp mill should be challenged. It has a democratic and legal right to do so. These considerations do not, however, weight strongly in favour of the making of the orders which it seeks.”
LFF submitted that their application was a test case which raised ‘legal questions of general importance to the administration of Australia’s primary environmental conservation legislation.’ His Honour rejected the submission that it was a test case as it did not raise novel issues and LFF relied on well established judicial review principles.
The Court followed Oshlack where the characterisation of a case as ‘public interest litigation’ did not of itself constitute special circumstances warranting a departure from the ordinary rule as to costs; ‘something more’ was needed. However, no costs order was awarded in Oshlack because of sufficient special circumstances, including an ‘arguable’ application and raising ‘significant issues’ as to the interpretation and future administration of environmental legislation. This matter was however distinguished from Oshlack, as LFF’s arguments, even pulled together lacked strength. His Honour said that ‘it is necessary for an unsuccessful party who wishes to obtain a more beneficial costs order to point to particular aspects of the litigation which warrant the orders sought.’
His Honour also found that LFF’s capacity to meet a costs order was a not a relevant consideration in determining whether an order should be made.