"But", complains the litigant, "I was acting in the public interest against the Government. Why should I need to pay their legal costs just because I lost?"
The litigant's question touches upon an important issue of law: when should a litigant acting in the public interest be exempted from the ordinary rules regarding costs and undertakings as to damages. In Oshlack v Richmond River Council (1998) 193 CLR 72, the High Court made clear that the answer depends on the:
- particular facts of the case;
- nature of the specific litigation being brought;
- ramifications of the decision for the broader community; and
- extent to which the litigation also accords with the private interests of the litigant.
Importantly, as has been repeatedly stated by the Courts, the mere pursuit of the public interest does not grant "a free kick in litigation".
Properly understanding these principles can significantly affect, and potentially even determine, whether commencing litigation is viable. This article discusses two recent Full Federal Court (FFC) decisions which clarify and apply the law regarding what can be termed as the "public interest exception" to the usual costs order. It also considers the application of those principles to the requirement for the giving of an undertaking as to damages as a "pre-condition" to the grant of an injunction.
Deviating from the usual costs order where costs follow the event
Ordinarily, costs follow the event, which means that the losing party is required to compensate the successful party for some or all of its legal costs. The Full Court of the Federal Court applied the principles established in Oshlack in two recent "public interest" environmental cases - being Bob Brown Foundation Inc v Commonwealth of Australia (No 2)  FCAFC 20 (Bob Brown) and VicForests v Friends of Leadbeater's Possum Inc (No 2)  FCAFC 92 (VicForests).
In Bob Brown, the applicant alleged that the respondent's forestry operations had or would have a significant impact on protected species, in contravention of the Environment Protection and Biodiversity Conservation Act 1999 (Cth). Despite the applicant being unsuccessful, the FFC concluded that there should be no costs order because the:
- applicant was motivated to ensure compliance with environmental legislation and not personal gain; and
- issues raised were both arguable and of general importance to the Tasmanian forestry industry.
In VicForests, the appellant was successful in proving that their conduct did not contravene the same Act discussed above. Despite this, the FFC only ordered that the respondent pay 50% of the appellant's costs on appeal in circumstances where (amongst other things) there was no dispute that the respondent had standing and had established at a factual level that the appellant had endangered the Greater Glider and Leadbeater's Possum species.
Undertaking as to damages
Almost as a matter of course, a Court will decline to grant an interlocutory injunction unless an applicant gives the "usual undertaking as to damages", being an undertaking to submit to an order for the payment of compensation to any person affected by the operation of the interlocutory order (see, eg. Uniform Civil Procedure Rules 2005 (NSW) r 25.8). A separate yet related issue pertains to whether there is also a public interest exception to the requirement to provide an undertaking as to damages if you are a public interest litigant making an application for an interlocutory order.
In short, there are cases which suggest that the requirement to provide such undertakings is of lesser importance in proceedings which involve public interest issues. These cases were considered in Environment East Gippsland Inc v VicForests (No 2)  VSC 421. Again, the Court has found that its discretion to waive the requirement to give an undertaking is to be assessed on a case by case basis. However, proceedings involving a public interest which is coextensive with a private interest, would be unlikely to warrant an exercise of the Court's discretion to "waive" the requirement for an undertaking.
Key takeaways for litigants
The above cases demonstrate that public interest considerations may protect a litigant against costs orders and the requirement to provide an undertaking as to damages. Importantly, however, these consequences are not automatic and are determined based on the facts of the case.