Cost caps and the public interest

The use of costs cap orders is becoming a particularly
useful tool to bring public interest litigation, writes PIAC solicitor Gemma

Federal Court’s support
for a cost cap
in Julia Haraksin’s disability discrimination complaint
against the bus company Murrays Australia Ltd has national ramifications for
public interest litigation.

Ms Haraksin had
applied for a $15,000 cost cap as an upper limit to the legal costs she would
incur if she failed in her disability discrimination against Murrays.

Murrays opposed
the cost cap application.

Justice Nicholas delivered his ruling on
the application on 20 October 2010. He said ‘the interests of justice’ favoured
making an order of the kind sought by Ms Haraksin, except that it should be for
$25,000 rather than $15,000.

am satisfied that there is a public interest element in this case. And I am
also satisfied that the case is brought by the applicant in good faith,’
Justice Nicholas said.

Two months
earlier, the Federal Court made a costs cap order in a separate disability
discrimination case
against two taxi networks and the NSW Department of
Transport and Infrastructure. In that case, the respondents consented to a
costs cap of $15,000

A costs cap order
is one way that a public interest litigant can limit their exposure to an
adverse costs order.  It is
particularly useful in discrimination cases because individuals who bring
complaints in the Federal Court alleging discrimination face an order to pay
the other party’s costs if they are unsuccessful. This presents a significant
financial risk and dissuades many people from bringing complaints to the
Federal Court.

The first time an
order of this kind was made by the Federal Court in a human rights case was in
2008. In that case, Corcoran v
Virgin Blue
, PIAC successfully argued that the costs should be capped,
in part because the case raised important public interest issues.

Australian courts
have ordered that a cost cap should apply to all parties in the proceedings
equally. This means if the applicant is successful in their claim, the amount
of costs they can recover is also capped.

However, the
English Court of Appeal has recognised that in some circumstances public
interest litigants should be able to recover their full legal costs if
successful, even if the costs they might be ordered to pay if unsuccessful are

A recent decision
of the New South Wales Court of Appeal, the first decision of a higher court
that has considered costs caps, suggested that the question of whether a cost
cap should apply to both sides remains open for argument.  In that case the Blue Mountains
Conservation Society and the Environmental Defenders Office successfully
obtained a cost cap
in its case against Delta Electricity.  

The use of costs
cap orders is becoming a useful tool to bring public interest litigation. A
current NSW Law Reform Commission inquiry is considering the issue of costs,
including in public
interest litigation

For more information, contact Gemma Namey, PIAC Solicitor. 


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