Paying for Losers

Catching up over the Christmas break on one or two interesting decisions over the last year, my attention was attracted by the decision in Radman v Open Plan [2020] VSC 318.

The underlying facts were not that unusual. Open Plan made a payment claim and subsequently obtained an adjudication determination against Radman. A few days after the determination was made, Radman applied to the Supreme Court of Victoria to have that determination quashed by order of certiorari. Shortly before the trial of that application, Open Plan conceded: the parties emailed the court asking for a consent order to be made, inter-alia quashing the determination and for Open Plan to pay Radman’s legal costs. Such an order was made.

But here comes the interesting bit. Open Plan, as the losing party, made an application for its own costs, and its liability to pay Radman’s costs, to be indemnified by the public purse.

It sounds like a bizarre application, but it succeeded under the terms of the Appeal Costs Act 1998 (Vic) which re-enacts with amendments the Appeal Costs Fund Act 1964 (Vic).

In 1981, the policy of the earlier Act was described as follows:

The consideration of policy which underlies s13(1) is that an error of law occurring in a court may ordinarily be attributed to a fault of the administration of justice rather than of the parties, so that the costs of having the error rectified ought ordinarily not to be borne by the unsuccessful respondent to the appeal but to be paid from a public fund established for that purpose. [footnotes omitted] [1]

One can think of more deserving cases for public help for ultimate losers, such as litigants who commence proceedings entirely in accordance with the law as at the date they commenced proceedings, only to have the law retrospecively changed against them, as was the case in Mann v Paterson. Anyway. There you go.

The moral is, at any rate in Victoria, that if you lose a case on appeal, you might have a chance of getting the public to pay legal costs.

This case appears to have pushed the boundaries of the legislation out in a number of respects:

  • clearly, an application for judicial review is not an appeal. Nevertheless, Justice Digby found that it was a proceeding in the nature of appeal, which was good enough for the legislation;
  • equally clearly, an adjudicator is not a court. Nevertheless, Justice Digby found that an adjudicator’s role is close enough to that of a court for the purpose of the legislation;
  • in this case, the appeal did not succeed in the sense of any decision having been made on the appeal; but was rather compromised. Nevertheless, Justice Digby considered the submissions that had been made, and made a finding that Radman had made a “cogent and persuasive case” in relation to jurisdictional error by the adjudicator[2], which was good enough for the legislation.

Having reached these conclusions, Justice Digby could identify no factors which would contradict the grant of the indemnity certificate provided for by the legislation, and was satisfied that the discretion should be exercised in favour of the costs being paid by the public.

Also interesting about the decision is that it was apparently made “on the papers”, without any hearing, and without any opportunity for the target of the order – the taxpayer – to be heard.

Some commentators have suggested[3] that the decision makes inroads into the High Court decision in Probuild v Shade Systems[4](whereby mere errors of law not involving jurisdictional error are not amenable of judicial review) because of a passing reference by the judge to “material errors of law”. But given that the context here was jurisdictional error, and Justice Digby did not mention the High Court decision in Proview V Shade Systems,[5] (let alone seek to destinguish it) I doubt whether there is any mileage in that suggestion.

South Australia once had some similar legislation, but that was repealed some time ago.  So here in South Australia, the public do not have to pay the legal costs of people who lose appeals.




[1] Pickford v Incorporated Nominal Defendant [1981] VR 583. See [31] of the judgment.

[2] See [97) of the judgment.

[3] See  e.g. Australian Construction Law Newsletter  issue #95 (November/December 2020) page 46.

[4] Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2018] HCA 4 (14 February 2018)

[5] Although he did, at [55] quote a passage from the court below.

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