Award of Costs

If you are a party to proceedings in the Environment Court defendants may seek security for costs if they consider that you as the appellant will not be in a position to pay costs if an award is made.

If you are unsuccessful in your appeal, you may be liable to an award of costs against you.

Security for costs

The Environment Court previously had the power to order an appellant to provide security for costs. This power was removed on 1 August 2003 and then reinstated on 1 October 2009.

Defendants may seek security for costs if they consider that the appellant will not be in a position to pay costs if an award is made. An application for costs is normally made before the substantive appeal is heard and the Court has a broad and unfettered discretion. When hearing an application the Court will consider the issues in two stages: the threshold test and the exercise of the discretion.

The threshold test requires the applicant to establish that the assets of the appellant would be insufficient to pay any order for costs in favour of the applicant which the Court may make. This is a factual matter that must be established by credible testimony. Once it is established that the assets of the appellant are insufficient to pay any order of costs the Court will then consider whether its discretion should be exercised.

The following criteria have been established by the Court to assist it when deciding whether to exercise its discretion:

•  Even when the threshold test is met the Court has a residual discretion as to whether or not it is appropriate to make an order for security for costs
• There is no presumption either way for or against an order for security
• Discretion is to be exercised in all the circumstances of the case
• Security is not to deprive a party from its right to bring or defend a claim
• A financially poor party is not to have advantages through inability to pay costs by putting unfair pressure on a solvent party
• Regard is to be had to the public interest aspect of the litigation brought by an appellant who is acting responsibly as a watchdog in the public interest
• Whether there are grounds for thinking the defendant is using the application oppressively
• The merits of the appellant's case and whether the action has reasonable prospect of success
• The likelihood of the Court ordering an unsuccessful appellant to pay costs
• Overall balance is to be maintained in the interests of justice
  

Purpose of awards of costs

The purpose of awarding costs is to compensate a party for unnecessary costs incurred as a result of the actions of other parties. Such actions include lodging proceedings which have little merit or pursuing a case in a manner which results in other parties incurring unnecessary expense. Costs are not routinely awarded, only under special circumstances. Costs are more rarely awarded against parties representing the public interest and, if awarded in these cases, have historically been usually much lower.

Where a matter has been directly referred to the Environment Court on request of the applicant, or through a call-in by the Minister, there is a presumption that the applicant will pay the costs of the process and that costs will not be ordered against other parties. When deciding the amount of any costs order, the Court must have regard to the fact that the proceedings are at first instance (section 285(5)).

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Factors to be considered in awarding costs

The Environment Court is more likely to award costs against a party where:

• The proceedings are vexatious or the party acts in bad faith
• The arguments put forward lack substance
• There is abuse of the Court process in order to delay or obstruct another party
• Procedural requirements, such as pre-circulation of evidence, have not been met
• The case is poorly presented
• The party fails to explore the possibility of settlement
• The party takes a technical or unmeritorious point of defence
• Irrelevant evidence is presented
• The extent of cross-examination is inappropriate
• The scope of the issues could have been narrowed
• A party abandons proceedings without adequate notice 

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How the Court calculates awards of costs

 There is no fixed scale of costs.  The Court has discretion to award costs on the basis of what is fair and reasonable in the circumstances.  In cases where there has been bad faith the court is likely to award the highest costs.   In other cases the figure does not normally exceed half the actual expenses incurred.  In fixing the amount of the award the Court may have regard to whether the party in question is a recipient of legal aid, or is a group acting in the public interest.  If awarded against public interest groups, they have been much lower as a general rule. 

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How to minimise the risk of costs being awarded?

In order to minimise the risk of an award of costs against you, you should consider the following:

• Before launching proceedings in the Environment Court, where possible, seek professional advice to ensure that they have sufficient legal merit, i.e. that there is an arguable case
• Narrow your appeal to the substantive issues you wish to pursue. Take out minor issues or technical challenges which do not have a strong likelihood of succeeding
• Approach the other party early on to discuss your concerns and explore the potential for early settlement, or at least for narrowing the issues in dispute
• Where appropriate, make a request to the Environment Court for mediation
• Make sure that you meet all the procedural requirements
• Seek professional advice in preparing and presenting your case
• Make sure that you have substantive evidence to back up your case and that it is concise and to the point
• If you decide not to pursue your proceedings, withdraw them without delay, well before a hearing has been set down
  

Limiting personal liability

Personal liability for costs can be limited by forming an incorporated society. This may also add credibility to a party involved in proceedings. A charitable trust does not limit liability in the same way as an incorporated society, as trustees can be personally liable for actions they take in the trust's name.

If possible, you should establish an incorporated society before you lodge a submission with the local authority on a matter which is likely to go the Environment Court. If you lodge a submission in your own name at the council level it will often not be possible to substitute an incorporated society which is established later on at the Environment Court stage.

For more information about the substitution of incorporated societies during court proceedings click here

Landmark court decisions

For cases relating to awards of costs click here

Relevant legal provisions

For legal provisions relating to costs awards click here

Further information

For further information click here