Career Employment Australia Ltd v Shepley (No 2)

Career Employment Australia Ltd, a not-for-profit entity, brought an action against Shepley, a former director, and others, regarding the composition of the board of directors. The entity has control over the allocation of public grant funds, which influenced the nature of the dispute. The former directors filed a cross-application seeking declaratory relief to the effect that they remained as directors, which was dismissed by the court. The applicant’s claims were granted, leading to a consideration of whether the litigation should be deemed 'public interest' litigation and whether the court should exercise its discretion to deviate from the general rule that costs follow the event.

The legal issues before the court included whether the litigation qualified as 'public interest' litigation and whether the court should exercise its discretion to deviate from the general rule that the successful party in litigation is entitled to costs from the losing party. The court considered the nature of the dispute, the public interest implications, and the principle that costs should follow the event. It was necessary to determine if the case had sufficient public interest elements to warrant a departure from the usual cost-bearing rule.

The court concluded that the litigation did not constitute 'public interest' litigation. It found that the dispute was primarily about internal governance and the allocation of roles within a not-for-profit entity, rather than a matter of broad public concern. The court also noted that the principles governing costs in civil proceedings apply equally to not-for-profit entities as they do to for-profit entities. Consequently, the court ruled that the successful party, Career Employment Australia Ltd, should be awarded costs from the respondents. The decision was based on the principle that costs should follow the event unless there are compelling reasons to depart from this rule.

The final order of the court was that the respondents are to pay the applicant’s costs of the proceeding. This decision reinforces the principle that, in the absence of special circumstances, the successful party in litigation is entitled to recover costs from the losing party.