Darebin City Council v Municipal Association of Victoria [No 2]
[2017] VSC 87
•28 FEBRUARY 2017
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
S CI 2017 00478
| DAREBIN CITY COUNCIL | First Plaintiff |
| COUNCILLOR CORAL ROSS | Second Plaintiff |
| v | |
| MUNICIPAL ASSOCIATION OF VICTORIA | Defendant |
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JUDGE: | RIORDAN J |
WHERE HELD: | MELBOURNE |
DATE OF HEARING: | ON THE PAPERS |
DATE OF JUDGMENT: | 28 FEBRUARY 2017 |
CASE MAY BE CITED AS: | DAREBIN CITY COUNCIL & ANOR V MUNICIPAL ASSOCIATION OF VICTORIA [NO 2] |
MEDIUM NEUTRAL CITATION: | [2017] VSC 87 |
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COSTS – Unsuccessful plaintiffs – Whether costs should follow the event – Principles to be applied in awarding costs in public interest litigation – Whether litigation in the public interest – No circumstances warranting departure from the usual order as to costs.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr J W K Burnside QC with Ms P Harris | Mr William O’Shea |
| For the Defendant | Mr M H O’Bryan QC with Mr N P De Young | Minter Ellison |
HIS HONOUR:
On 20 February 2017, this Court dismissed an originating motion brought by the plaintiffs seeking injunctions and a declaration,[1] which, if granted, would have validated the second plaintiff’s (‘Ross’) purported appointment as the first plaintiff’s (‘Darebin’) representative on the defendant (‘the Association’); and made Ross eligible to be a candidate for president of the Association.
[1]Darebin City Council v Municipal Association of Victoria [No 1] [2017] VSC 51.
After I gave judgment for the Association, the plaintiffs resisted an order for costs sought by the Association. Accordingly, I made orders for the filing of written submissions and said that I would determine the question of costs on the papers unless matters raised in the submissions required a further hearing on the question.
The parties subsequently filed written submissions and I have determined that the appropriate order on costs is that the plaintiffs pay the Association’s costs.
The substantive proceeding
The dispute between the parties raised a question of the construction of s 2(2) of the Municipal Association Act 1907. The plaintiffs asserted that the section authorised a council to appoint any person who was a councillor as the representative of that council,[2] while the Association asserted that only a member of a particular council could be appointed as that council’s representative.[3]
[2]Ibid [10].
[3]Ibid [20].
Although the section was ambiguous,[4] I concluded that the Association was correct in its submission concerning the legal meaning of the section.[5]
[4]Ibid [38]
[5]Ibid [42].
The plaintiffs’ submissions
On the question of costs, the plaintiffs submit that costs ought to fall where they lie as there was a genuine public interest in the determination of an ambiguous provision involving the third tier of representative government.
The plaintiffs accept that the Court has discretion in relation to making orders of costs. They rely on the following passage from Ruddock v Vadarlis [No 2]:
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.[6]
[6](2001) 115 FCR 229, 235 [13] (Black CJ and French J).
The plaintiffs further accept that the mere characterisation of proceedings as public interest litigation will not of itself warrant departure from the usual rule as to costs.
The plaintiffs compare the present case with the case before the Full Court of the Federal Court in Perrett v Commissioner for Superannuation.[7] In that case, although the appellant was unsuccessful, the Court did not make an order for costs as the appeal involved ‘the general importance of the clarification of the law for such an authority as the respondent’.[8]
[7](1991) 29 FCR 581.
[8]Ibid 594.
The plaintiffs submit that s 2(2) of the Act presents difficulties of interpretation, raised a novel point of law and had not been the subject of previous judicial consideration.
Finally, the plaintiffs submit that they were forced to proceed with the litigation as the Association would not accept the appointment of Ross made by Darebin and that they had no option other than to assert their rights by litigation. They assert that, had the Association accepted the appointment put forward by Darebin, having regard to the ambiguity in the legislation, the litigation would have been avoided.
The Association’s submissions
The Association submits that, in circumstances where the Association has been the successful party, the Court should order that the plaintiffs pay the Association’s costs of the proceeding on the standard basis. The Association bases its submissions in the well-established principle that costs usually follow the event; that is, the unsuccessful party is usually ordered to pay the successful party’s costs.
It argues that the characterisation of the proceeding by the plaintiffs as ‘public interest litigation’ is not enough of itself to justify a departure from the usual rule that costs follow the event. Further, it contends that a proceeding is not public interest litigation merely because it ‘sheds light on the interpretation of an important statutory provision’.[9]
[9]Challenger Property Asset Management Pty Ltd v Stonington City Council [No 2] [2012] VSC 67 [54]. See also Director of Public Prosecutions v Ali [No 2] (2009) 25 VR 656, 664–5 [43]–[44].
Rather than concentrating on the characterisation of the litigation as ‘public interest’, the Association submits that the Court must focus its inquiry instead on whether there are special circumstances that justify a departure from the usual rule; and argues that the Court should find that special circumstances are not present in the proceeding for the following reasons:
(a)The plaintiffs brought the proceeding in pursuit of private interests. The interest of Darebin was having Ross as its appointed representative to the Association; and the interest of Ross was in being appointed to the Association and to be eligible to run for the position of president of the Association.
(b)The plaintiffs’ case was brought without support from any other local council. It was not a case whereby there was widespread public interest in the litigation and its outcome. Nor is it a case whereby a successful outcome for the plaintiffs would have benefited numerous people, either through its clarification of the relevant provision or otherwise.
(c)Having received legal advice, the Association acted upon an interpretation of the relevant provision that was ultimately found to be correct and was then sued by the plaintiffs. The plaintiffs’ contention that the Association could have acted contrary to that legal advice and accepted Darebin’s nomination of Ross, thereby avoiding the litigation, must therefore be rejected.
(d)As the Association is funded by local councils, the plaintiffs’ proposed order as to costs would have the effect of imposing the Association’s costs of the proceeding on other local council members of the Association who played no role in the litigation and did not actively support the plaintiffs in bringing the action.
(e)The mere fact that the plaintiffs case was reasonably arguable is not in and of itself sufficient to warrant a departure from the general rule.
Judicial discretion to award costs
Costs follow the event
The court has an unfettered discretion, to be exercised judicially, to determine by whom and to what extent costs are to be paid.[10] In Milne v Attorney-General (Tas),[11] the High Court explained that ‘it is a general rule that a wholly successful [litigant] should receive his costs unless good reason is shown to the contrary’.[12] Therefore, the exercise of the court’s discretion to order costs is usually reflected in an order that the unsuccessful litigant pay the costs of the successful litigant; known as ‘costs follow the event’ or the costs indemnity rule (‘the usual rule’).[13]
[10]Supreme Court Act 1986 (Vic) s 24; Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 63.02.
[11](1956) 95 CLR 460.
[12]Ibid 477.
[13]Garnett v Bradley (1878) 3 App Cas 944, 950 (Lord Hatherley), 959 (Lord O’Hagan).
In most instances, the usual rule will reflect a just outcome because the party who the court ultimately finds has unjustifiably brought another party before the court should be required to recompense that other party in costs.
Costs in public interest litigation
The proper exercise of the court’s discretion in determining costs in accordance with the usual rule is not disrupted merely by the fact that litigation may be called ‘public interest litigation’. In Rundle v Tweed Shire Council [No 2], Bignold J said that special circumstances justifying departure from the usual rule do not exist ‘simply by virtue of the characterisation of the [proceeding] as ‘public interest litigation’.’[14]
[14]Rundle v Tweed Shire Council [No 2] (1989) 69 LGRA 21, 26.
The role of the court is to go beyond the characterisation of the litigation as public interest; and focus on the circumstances of the case and in particular the factors that may justify the court in departing from the usual rule.[15] While the courts have identified a myriad of factors that would justify such a departure, those factors which I consider relevant to the current proceeding include the following:
[15]Oshlack v Richmond River Council (1998) 193 CLR 72, 91 [49] (Gaudron and Gummow JJ).
(a)The extent to which the plaintiffs and the Association were successful in the action.[16]
(b)Whether Ross had any personal, private or financial gain to make from the litigation.[17]
(c)Whether there was widespread public interest in the litigation and its outcome.[18]
(d) Whether the action raised a novel question of law of general importance.[19]
(e)Whether the success of the plaintiffs’ action would have benefited numerous people.[20]
[16]Plumb v Penrith City Council (2003) 126 LGERA 109, 114–5 [28].
[17]Ibid.
[18]Darlinghurst Residents’ Association v Elarosa Investments Pty Ltd [No 3] (1992) 75 LGRA 214, 216–7; Minister for Planning v Walker [No 2] [2008] NSWCA 334 [8] (Hodgson JA with whom Campbell and Bell JJA agreed); Plumb v Penrith City Council (2003) 126 LGERA 109, 112 [11].
[19]Blue Wedges Inc v Minister for the Environment, Heritage and the Arts (2008) 165 FCR 211, 228 [73].
[20]Oshlack v Richmond River Council (1998) 193 CLR 72, 90–1 [48] (Gaudron and Gummow JJ).
I do not consider that the circumstances of this case warrant a departure from the usual order as to costs for the following reasons:
(a)While I do not doubt that Darebin considers that it was in its best interests to nominate Ross as its representative on the Association; and Ross believed that she was justified in seeking to establish her eligibility to be a candidate for president of the Association, I do not consider that it can be said that the plaintiffs did not have a real private interest in the litigation; or that the litigation would have benefited numerous people.
(b)Neither am I satisfied that, although ambiguous, the interpretation of s 2(2) was a matter of real public concern or a matter that municipalities had demonstrated a real interest in having resolved.
(c)Although there was a level of public interest in the action, I do not consider that interest to be referrable to a public concern for the outcome of the proceeding. As Lord Griffiths observed in Lion Laboratories Ltd v Evans, ‘there is a world of difference between what is in the public interest and what is of interest to the public’.[21]
(d)I do not accept the plaintiffs’ submission that the Association could or should have avoided the litigation by accepting the appointment put forward by the plaintiffs having regard to the ambiguity in the legislation. The Association had received advice of senior counsel to the effect that Darebin’s nomination of Ross was invalid and I consider it acted properly by refusing to accept it.
(e)The application of the usual order as to costs involves no finding of fault or of impropriety on the part of the plaintiffs in conducting this litigation — and I make no such finding. An order for costs is compensatory in nature. As McHugh J said in Latoudis v Casey:[22]
An order for costs indemnifies the successful party in litigious proceedings in respect of liability for professional fees and out-of-pocket expenses reasonably incurred in connexion with the litigation.[23] The rationale of the order is that it is just and reasonable that the party who has caused the other party to incur the costs of litigation should reimburse that party for the liability incurred. The order is not made to punish the unsuccessful party. Its function is compensatory. Thus, in civil proceedings an order may, and usually will, be made even though the unsuccessful party has nearly succeeded or has acted reasonably in commencing the proceedings. It may, and usually will, be made even though the action has failed through no fault of the unsuccessful party. In Cilli v Abbott,[24] Keely, Toohey and Fisher JJ pointed out that ‘the object of costs is not to penalize; it is to indemnify the successful party in regard to expense to which he has been put by reason of legal proceedings’.[25]
[21]Lion Laboratories Ltd v Evans [1985] QB 526, 553; cited with approval in Blue Wedges Inc v Minister for the Environment, Heritage and the Arts (2008) 165 FCR 211, 228 [73].
[22](1990) 170 CLR 534, 566–7 (citations in original).
[23]Kelly v Noumenon Pty Ltd (1988) 47 SASR 182, 184.
[24](1981) 53 FLR 108, 111.
[25]See also Anstee v Jennings [1935] VLR 144, 148.
In this case, the Association has been successful and in my opinion, the plaintiffs should be ordered to pay the Association’s costs.
Order
For the above reasons, I will order that the plaintiffs pay the defendant’s costs of and incidental to the proceeding.
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