Jarosz v State of New South Wales (No 2) [2019] NSWSC 861

Costs orders can be one of the most significant obstacles to the bringing of public interest litigation. JIIER Research Unit tries to identify and report on any cases that address in which circumstances proceedings will, and will not be, in the ‘public interest’  in order to inform First Nation litigants on when and where they might be liable for costs orders.

Jarosz v State of New South Wales (No 2) [2019] NSWSC 861

There are no grounds to depart from the general rule of costs where proceedings do not constitute public interest litigation, but rather, serve to provide significant benefits to the claimants if they are successful. 

The key issues in this case were whether the Court should depart from the usual rule that costs follow the event: r 42.1 Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) in relation to costs order made on an ordinary and indemnity basis. The facts arise out the plaintiffs’ claims that a specific road had become a “public road” in the mid-19thcentury at common law and as such, that road ought to be maintained by the State and Council, and their failure to maintain the road’s condition gave rise to a private nuisance. The plaintiffs sought declaratory relief, not damages. The plaintiffs failed at trial on both arguments. There was thereafter a dispute as to costs. The plaintiffs wanted each party to pay its own costs. The State wanted the plaintiffs to pay its costs on an ordinary basis, and the second defendant, Wollondilly Shire Council, wanted the plaintiffs to pay some or all of its costs on an indemnity basis.

The plaintiffs submitted that special circumstances existed to allow departure from the usual rule, relying on Oshlack v Richmond River Council (1998) 193 CLR 72 and making three arguments: (1) That its application was concerned with public rights, not merely private rights (2) That the proceedings served a public purpose, namely ending confusion that existed as to the road’s status, and (3) The State had rejected and/or not responded to settlement offers made.

The State contended the plaintiffs failed to establish special circumstances to enliven departure from r 42.1. They made two arguments. (1) The plaintiffs were private litigants who were not acting in the public interest because they were motivated by the desire to improve their property value and remove the need to negotiate access licenses to facilitate access to their properties and (2) The plaintiffs had been on notice that their claim from an early stage of the proceedings that its claims relied upon problematic evidence, and the plaintiffs persisted with the claim despite those deficiencies.

Moreover, the Council argued that the plaintiffs were put on notice that the State had care, control and responsibility for the maintenance of the relevant land, which was crown land, but chose to continue its claim against the Council, putting the Council through the expenses of court preparation, and this amounted to a relevant delinquency justifying costs on an indemnity basis.

The Court made the costs orders sought by the defendants. Darke J found as follows:

  • The proceedings were not in the public interest, but rather, served to provide signficiant benefits to the claimants, for example, in the form of improved access to the plaintiffs’ lots and the commensurate increase in property value. Consequently, there were no reasons to depart from the usual rule of costs in r 42.1 UCPR;
  • Where a plaintiff has been put on notice that it has made a claim against an improper defendant which is “almost certainly doomed to fail”, but persists with it, this may give rise to a relevant delinquency, and a court can order costs assessed on an indemnity basis after the plaintiff has been put on notice. Costs before that period should be assessed on an ordinary basis in the facts of this case;
  • The failure of a party to engage with settlement offers is not a basis for departing from the usual rule as to costs where such an offer is not more favourable than the result of the hearing.