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Costs protection bill could expose courts to ‘unmeritorious’ litigation, Law Council warns
A bill designed to protect vulnerable people from adverse costs orders could be used by applicants to pursue “unmeritorious and protracted” litigation, the Law Council submits.
Naomi Neilson
The Australian Human Rights Commission Amendment (Costs Protection) Bill 2023 could introduce an “equal access” model in which most applicants in anti-discrimination court proceedings would be protected from adverse costs orders when unsuccessful.
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It is intended to assist with severe financial consequences and may particularly assist in sexual harassment proceedings.
However, the Law Council of Australia (LCA) said the equal access mode would depart from the generally applicable common law presumption that “costs follow the event”.
“Its implementation in matters brought under federal discrimination law could interfere with the courts’ discretion to award costs in the interests of justice, as well as with the efficient management (including settlement) of such cases,” the Law Council said.
In its submission to the Senate legal and constitutional affairs legislation committee, the LCA added it is concerned the bill could “tilt the balance” in favour of the applicant by moving the financial risk and disincentive for unmeritorious claims to the respondent.
It predicts this could result in “large numbers of applicants bringing unmeritorious and protracted litigation without sufficient incentives to ensure efficiency within the justice system”, the submission read.
In addition to reducing incentives for dispute resolution and conciliation processes, LCA said implementing the bill could also expose third parties and litigation funders to costs applications.
“The Law Council is concerned that the Costs Protection Bill does not fully grapple with the rationale of a costs order generally following the event, which is to compensate the person in whose favour it is made without having a punitive effect,” the LCA submitted.
The LCA said an alternative approach of a “broad discretion mode” could replace the equal-access model, in which costs awards against either the unsuccessful applicant or respondent would only be made after the court considers considerations of “pertinent factors”.
