Security for costs has arisen as an important issue following recent amendments to legislation and case law involving proceedings brought by public interest groups. In the present case, which was decided on 23 September 2013, Save Little Manly Beach Foreshore Incorporated (Applicant) brought judicial review proceedings against Manly Council (Council) to prevent Council from disposing of its land on the Little Manly Beach foreshore. The Applicant brought the case as a community group concerned with preserving the foreshore for public use and characterised its action as public interest litigation.
The proceedings were commenced on 19 July 2013 and hearing for the matter was set down on 24 and 25 September 2013. In response to the Applicant's refusal to provide security for costs for Council's estimated legal costs of $127,000, the respondent filed a Notice of Motion seeking an order for the Applicant to provide for security for costs under Uniform Civil Procedure Rules (UCPR) rule 42.21.
Justice Biscoe was satisfied that the Council had discharged its onus of proving that the Applicant would be unable to pay the Council's costs if ordered to do so as documents produced by the Applicant showed that it had only $2,536.00 in its bank account. However, Justice Biscoe dismissed the Council's motion on three bases:
- There are no exceptional circumstances under rule 59.11 of the UCPR
UCPR rule 59.11, which commenced on 15 March 2013, allows the Court to make orders for security for costs only in exceptional circumstances. Justice Biscoe found there were no exceptional circumstances in this case that would lead him to make a security for costs order.
- Proceedings have been brought in the public interest
Justice Biscoe also found that the proceedings had been brought by the Applicant in the public interest.
Justice Biscoe relied upon the principles in Caroona Coal Action Group Inc v Coal Mines Australia Pty Ltd (No 3)  NSWLEC 59 to characterise the proceedings as public interest litigation for the following reasons:
- The case had received significant media attention, a public meeting that was full to overflowing and a petition with some 1,000 signatures;
- Some members of the Applicant did not reside close to the subject land and accordingly, did not have direct person interest;
- Arguments raised by the Council in relation to the proposed interpretation of sections 54 and 729 of the Local Government Act 1993 (NSW) appeared to be novel and of general importance;
- The litigation was brought to protect a particular component of the environment;
- The litigation affected a significant section of the public which enjoys the land in its present state; and
- There was no financial gain to the Applicant in bringing the proceedings.
As a result, Justice Biscoe exercised his discretion under Land and Environment Court Rules 2007 (LECR) rule 4.2(2) and declined to make a security for costs order against the Applicant.
- The respondent's delay in bringing the security for costs application means that general discretion in UCPR rule 42.21(1) should be exercised in favour of the Applicant
Justice Biscoe also found that Council's delay in bringing the security for costs application was of particular significance to his decision, including that the plaintiff had expended substantial monies to date which would be wasted if the proceedings were brought to an end because the plaintiff could not provide security. The significance of such delay is heightened where the proceedings are likely to be stifled if security for costs is ordered because the Applicant is impecunious.
Justice Biscoe went on to state that, even if he were wrong on the public interest litigant point, he would exercise general discretion under UCPR rule 42.21(1) and decline to order security for costs.
Parties to proceedings which can be characterised as "public interest" litigation will need to consider whether exceptional circumstances exist that would favour an order for security for costs. As the present case has demonstrated, the amendments to the UCPR have narrowed when such an order may be made.
Although it will be necessary for those characterising litigation as "public interest" to meet the specific test in Caroona Coal, the greater challenge lies with the party seeking security for costs to demonstrate the circumstances which warrant an order. The meaning of "exceptional circumstances" is somewhat amorphous and as it has not been the subject of extensive judicial consideration, there is as yet no certainty in relation to what an "exceptional circumstance" may be. Parties should also be aware that any delay in bringing a security for costs motion will weigh against the party seeking such orders.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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