'Costs' in legal language means the costs incurred by a person in taking part in a case, such as, e.g., lawyers' fees and court fees.
Traditionally, a court will order that the unsuccessful party must pay the costs of the successful party. For example, if A sues B, and B wins, A will probably have to pay B's costs. Another way of saying this is to say 'costs follow the event', i.e. if you are successful, you are likely to have your costs paid by the other party; if you are unsuccessful, you will probably have to pay costs.
Unfortunately, the Australian legal system can be extremely expensive. In particular, wealthy parties, like government departments or large companies, are able to afford lawyers who charge hundreds of dollars an hour. As such, an unsuccessful party can find themselves faced with an enormous legal bill. This creates a strong deterrent against ordinary people pursuing legal action, particular against a well-resourced defendant.
Although the ordinary rule is that a successful party will have their costs paid by the unsuccessful party, this is not always what happens. Courts have the power to decide who, if anyone, will pay costs in a case and in what amount. In some cases, they will order that neither party pays the other's costs. This is known as a 'no costs' order. The court must, however, have good reasons for not following the ordinary rule.
One recognised reason for not following the ordinary rule is where the case was brought in the public interest. In Oshlack v Richmond River Council, the High Court accepted that a judge of the NSW Land and Environment Court could make a 'no costs' order in proceedings which were brought in the public interest.
In Environmental Law in Australia (6th ed., 2006), Bates identifies a number of questions that courts may ask to decide whether to make a 'no costs' order. These include:
The above discussion relates to costs in court proceedings. A different rule applies in the Victorian Civil and Administrative Tribunal (VCAT). In VCAT, the ordinary rule is that each party will have to pay their own costs (i.e. a 'no costs' order): s 109(1), VCAT Act. VCAT can still make a costs order against a party, but the party against whom the order is made must have behaved badly in some way (e.g. delayed the case unnecessarily): ss 109(2), (3), VCAT Act.
Some courts have moved away from the traditional approach and are looking at ways to make it easier for people to bring public interest cases without taking the risk of having a costs order made against them.
Order 62A of the Federal Court Rules lets the court make an order 'capping' the amount of costs that may be recovered in a case. For example, in Corcoran v Virgin Blue Airlines Pty Ltd, Justice Bennett made an order capping costs at $15,000 for one plaintiff and $40,000 for another. The advantage of an order under 62A is that it lets people how much will be awarded against them if they are unsuccessful and to make an informed decision about whether to continue the case.
Section 49 of the Judicial Review Act 1991 (Qld) lets a person involved in judicial review proceedings apply for to the Queensland Supreme Court either:
In England and Wales, the courts have developed 'protective costs orders' (PCOs). These are orders, made at the beginning of proceedings, that in some way protect a person from the ordinary rule, either by capping costs or not allowing costs against a public interest litigant or some combination of both.
PCOs are made in cases where there is a public interest in the case going ahead and where a person is likely to stop the case if there is a risk they will have to pay costs. In one recent case, R (Buglife - The Invetebrate Conservation Trust) v Thurrock Thames Gateway Development Corporation, the Court of Appeal of England and Wales said PCOs were one way of ensuring access to environmental justice.