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 Namey. 

The 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.

‘I 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 limited. 

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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