Varnhagen v State of South Australia - [2022] SASCA 111

Supreme Court of South Australia
(Court of Appeal: Civil)
VARNHAGEN & ANOR v STATE OF SOUTH AUSTRALIA & ORS
[2022] SASCA 111
Judgment of the Honourable Justice Bleby (ex tempore)
19 October 2022
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - REGULATED COSTS: GROSS OR FIXED COSTS, LUMP SUM ORDERS OR CAPPING ORDERS AND LIKE MATTERS
APPEAL AND NEW TRIAL - PROCEDURE - SOUTH AUSTRALIA - POWERS OF COURT - COSTS
Application for costs capping order.
The applicants challenged the lawfulness of the Emergency Management (Healthcare Setting Workers Vaccination No 7) (COVID-19) Direction 2022 (SA) (‘Seventh Healthcare Setting Direction’) issued in response to the COVID-19 pandemic. This direction prohibited the applicants, both nurses, from attending at their places of employment, unless they were vaccinated against COVID-19. Neither applicant was vaccinated.
On 24 May 2022, whilst proceedings were underway, the declaration of major emergency was revoked, and the South Australian Public Health (COVID-19) Amendment Act 2022 (SA) (‘Amendment Act’) was enacted. The Amendment Act purported, via transitional provisions, to continue directions that had been issued under the Emergency Management Act 2004 (SA), including the direction complained of, and were ‘apparently in force’ as though they were made by the Governor under the South Australian Public Health Act 2011 (SA).
The respondents applied for the judicial review proceedings to be summarily dismissed on the ground that they ceased to have utility following the passing of the Amendment Act.
The applicants are now appealing against a decision of a single judge of this Court, concluding that cl 2(1) of the transitional provisions in the Amendment Act is valid.
The applicants seek an order that the maximum costs recoverable in respect of the appeal by either party be capped at $20,000.
Held, granting the application for costs capping:
1. The maximum costs recoverable in respect of the appeal by either party will be $20,000.
2. The costs of the application will be reserved.
Emergency Management (Healthcare Setting Workers Vaccination No 7) (COVID-19) Direction 2022 (SA); South Australian Public Health Act 2011 (SA) ss 90C, 90E; South Australian Public Health (COVID-19) Amendment Act 2022 (SA) cll 1, 2; Uniform Civil Rules 2020 (SA) rr 1.5, 194.2, referred to.
Bare v Small (2013) 4 VR 254; Corcoran v Virgin Blue Airlines Pty Ltd [2008] FCA 864; Draoui v Le & Ors [2020] SASC 115; H, AW v K, S (No 2) [2022] SASCA 88; Australian Dream Homes Pty Ltd v Stojanovski [2016] VSCA 38, considered.

VARNHAGEN & ANOR v STATE OF SOUTH AUSTRALIA & ORS
[2022] SASCA 111
Court of Appeal – Civil

BLEBY JA (ex tempore): This is an application pursuant to r 194.2 of the Uniform Civil Rules 2020 (SA), seeking that the maximum costs recoverable in respect of the appeal by either party be capped at $20,000. The application seeks a departure from the usual position that costs will follow the event. Having said that, the Court always retains a discretion with respect to costs.
The appeal challenges the decision of a judge of this Court concluding that cl 2(1) of the transitional provisions in the South Australian Public Health (COVID-19) Amendment Act 2022 (SA) (‘Amendment Act’) is valid. That clause provides, on the cessation of the last relevant emergency declaration, that a relevant direction continues in force as a direction under s 90C of the South Australian Public Health Act 2011 (SA) (as inserted by the Amendment Act), whether or not it is a direction of a kind that could be made under that section as in force after the commencement of this Act.
The grounds of appeal are set out in Part 2 of the Notice of Appeal. They challenge the constitutional validity of the clause. The applicants complain that the primary judge erred in holding that Schedule 2, cl 2(1) of the Amendment Act, read with the definition of ‘relevant direction’ in cl 1, was constitutionally valid, namely in that:
·the provisions, on their proper construction, had the effect of taking from the Supreme Court of South Australia power to grant relief in relation to the Emergency Management (Healthcare Setting Workers Vaccination No 7) (COVID-19) Direction 2022 (SA) (‘Seventh Healthcare Setting Direction’) on account of jurisdictional error and therefore were beyond State legislative power; and
·alternatively, the provisions, on their proper construction, constituted a direction from the Parliament of South Australia to the Supreme Court of South Australia to treat that which may be invalid (the Seventh Healthcare Setting Direction) as valid and thereby constituted an impermissible interference with the exercise of judicial power by that Court.
The first and second respondents have filed a Notice of Alternative Contention advancing the ground that in the event that the primary judge erred in concluding Schedule 2 of the Amendment Act are valid for the reasons given, the proceedings should be remitted to the primary judge to determine whether or not the Seventh Healthcare Setting Direction was validly made under the Emergency Management Act 2004 (SA). They argue this is because the transitional provisions:
·on proper construction, only operate upon a valid direction under the Emergency Management Act; and/or
·in accordance with the partial disapplication principle, have a partially valid operation in respect of relevant directions that were previously valid under the Emergency Management Act.
This application is brought on an urgent basis. The appeal has been listed in an expedited fashion. It is to be heard on 11 November 2022. It is probable that beyond 23 November 2022, the appeal proceedings would have no utility, because of the expiry of the challenged direction by operation of s 90E of the Amendment Act (which is also reflected in the Public Health Act).
The application is supported by two affidavits of Ms Loretta Polson dated 5 October 2022 and 11 October 2022. The essential factual matters raised in support of the application as set out by Ms Polson are, first, that the original proceedings were funded by public donations. The costs of those original proceedings were capped, by consent, at $50,000 in the event of an adverse costs order against either party. Ms Polson holds that sum on trust to meet an adverse costs order in respect of those proceedings. This matter has proceeded with Ms Polson not being paid for work since March of this year. Counsel have rendered heavily discounted invoices. Further fundraising has taken place.
The current position, as set out in Ms Polson's affidavit of 11 October 2022, is that Ms Polson currently holds on trust, excluding the sum of $50,000, the sum of $32,754.35. The deployment of those moneys is subject to receiving a further invoice from an expert witness in respect of their attendance at trial. It will also be necessary to draw from that sum a setting down fee and hearing fees for the appeal. Counsel for the applicants, including senior counsel, are prepared to act pro bono in the event of there being insufficient funds. Ms Polson will not render any further invoice in the event of insufficient funds.
The power to make an order of the kind sought is in the discretion of the Court. Again, it represents a departure from the ordinary position. In considering this application, I take into account the object of the Rules, stated in r 1.5 of the Uniform Civil Rules, being to facilitate the just, efficient, timely, cost-effective and proportionate resolution or determination of the issues in proceedings governed by the Rules.
The parties have raised several matters which they say respectively supports or detracts from the appropriateness of making an order in this case. In considering the matters raised, I have had particular regard to the decision of the Victorian Court of Appeal in the case of Bare v Small[1] and Corcoran v Virgin Blue Airlines Pty Ltd.[2] The following considerations to which I have regard to are all relevant. This is, as the authorities show, not an exhaustive list and in any case, the matters that move the Court in one direction or the other will be dependent on all the circumstances of a case.
[1] (2013) 4 VR 254.
[2] [2008] FCA 864.
Having regard to the matters raised in those cases, I address the following factors. First, the public importance of the issue raised. What is challenged is the constitutional validity of a provision of the Amending Act and, by reason at least of the Notice of Alternative Contention, proper construction of the provisions in question. Any genuine challenge to the validity and construction of State legislation carries necessarily a considerable degree of public importance.
Secondly, there is a public interest in this matter proceeding. This raises the significance of the underlying proceedings to the applicants, to the first and second respondents and to a section of the community. What is in issue is the validity of the transitional provision. It affects the ability of the applicants and others to engage in employment in their chosen profession, given their decision not to receive vaccinations against the SARS-CoV-2 virus which causes the respiratory virus COVID-19. There will be others in the community who have made the decision; there will be those who have made the decision to receive the vaccine against their wishes, in order to continue employment. I proceed on the basis that there is a proportion of the population to whom this underlying issue is important.
That question of the public interest in the matter proceeding cannot be divorced, however, from the timing that attends on these proceedings. The consequences of this appeal, determined or not, are likely to be otiose by 23 November 2022. The best-case scenario for the applicants on a successful result may provide them with a few days of practical benefit. However, they have nonetheless proceeded expeditiously, and the Court should be alive to its responsibility to maintain public confidence in the system of administration of justice where the parties have acted expeditiously and appropriately.
The next consideration is the merits of the matter. The applicants were unsuccessful at first instance, however, their claim is neither frivolous nor vexatious. It is sufficient to have regard to the careful consideration and disposition by the primary judge of the issues to show that the matters raised now on appeal, both in the Notice of Appeal and the Notice of Alternative Contention, are arguable.
Next, there is the fact that no damages are sought. This relates to what might be described as a broader consideration of the extent to which the applicants are pursuing a private interest in maintaining this appeal. I consider, and as counsel for both parties properly conceded, that this question of private interest is a relevant consideration but is not determinative. Either way, I would not hold it to be so. Unquestionably, the applicants are pursuing a private interest; they are also pursuing, as I have indicated, a matter of public interest and a matter of some public importance. It is the case that the timing issue highlights the limits on the private interest that has been pursued necessarily.
Next, this is an appeal. The applicants have obtained a result at trial. The approach to costs on appeals is often different than it is at first instance. Generally speaking, there is a lesser imperative for costs protection on an appeal. This is demonstrated by the reasoning laid out in a number of the security for costs cases.[3]
[3] See Draoui v Le & Ors [2020] SASC 115 at [29]; H, AW v K, S(No 2) [2022] SASCA 88 at [6]-[8]; Australian Dream Homes Pty Ltd v Stojanovski [2016] VSCA 38 at [40].
On the other hand, subject to the role of the High Court of Australia, it is the role of intermediate Courts of Appeal to determine finally the construction of validity of State legislation. This feeds back into the public interest in the appeal being determined.
The next consideration is what the outcome here would be if an order was not made. There is no evidence before me and I proceed on the basis that nothing before me indicates any likely outcome, that is, whether the appeal would be discontinued or not.
The next consideration is the proportionality of the proposed cap. What is sought is a mutual cap of $20,000. In my experience and in my view, while the prospect of costs on an appeal on a party/party basis being exactly $20,000 might not be said to be all that high, it is not an unreasonable amount to prognosticate in respect of an appeal which raises purely two or three questions of law. This is especially the case where all those issues have been agitated at length in the primary proceedings. Much of the required preparation has necessarily already been done. I regard the sum of $20,000 as not at all disproportionate to the size of the task at hand.
Together with that is the applicants’ concession that there should be a reciprocal arrangement, such that they could not recover more than $20,000 in costs in the event that they are successful.
The next consideration is the position of the representatives of the applicants. Counsel have indicated that they are acting pro bono. Senior and junior counsel for the applicants are experienced and expert in the issues raised. It is to their credit and an exemplification of the strength of the South Australian public law bar that they are prepared to do this on a pro bono basis.
The strongest factor speaking against making an order is the issue of timing. However, this is not a stay application. This is a costs capping application in circumstances where the amount of the cap sought is, in my view, reasonably proportionate to the size of the task and where counsel, including senior counsel for the applicants, are prepared to act pro bono. Having regard, generally speaking, to the public importance and public interest in this matter, the issues raised by the first and second respondents, including the issue of timing, are not such as to outweigh the factors that support making a capping order.
I will, therefore, make an order on the application that the maximum costs recoverable in respect of the appeal by either party will be $20,000. I will order that the costs of the application be reserved.