7/11/2022·3 mins to read

Plaintiffs in public interest litigation allowed to advance their case without the risk of having to pay the defendants’ costs

Last month in Gordon v Attorney-General, the High Court granted - potentially for the first time ever - a ‘protective costs order’ that permits two plaintiffs to pursue litigation without the risk of having a costs award made against them if they ultimately lose their case. The decision departs from the usual rule that the unsuccessful party in litigation will be required to pay a portion of the successful party’s costs. The Judge held that such a departure was warranted given that the case raises important public interest issues, which would not be pursued without protecting the plaintiffs from costs.

The proceedings have been brought by two academics who seek certain declarations relating to compulsory psychiatric treatment under the Mental Health (Compulsory Assessment and Treatment) Act 1992. They argue that aspects of the legislation is inconsistent with protections provided by the Bill of Rights Act 1990, including the right to refuse medical treatment and the right not to be arbitrarily detained. The case will be heard in February 2023.

Protective costs orders can be granted “in the extreme case that a public interest point which ought to be heard is likely not to be ventilated if a party without any personal stake is at risk of an undetermined exposure to costs”.

The Court held that the current proceedings are such an exceptional case. In doing so, it placed emphasis on four points:

  1. The claim has been brought for genuine public interest reasons. The plaintiffs do not stand to gain from the proceedings personally. Rather, they started the proceedings on behalf of people with significant mental health issues, who may not be in a position to bring a claim themselves.

  2. The plaintiffs had made clear that they were unwilling to proceed with the claim if there was a risk they would be required to pay the defendants’ costs if they were unsuccessful.

  3. The Human Rights Commission had successfully applied to ‘intervene’ in the proceedings. In doing so, it emphasised the importance of the underlying issues, and the rights at stake.

  4. While there are likely to be reforms in the near-future relating to compulsory psychiatric treatment, this could be a lengthy process, with a number of people being directly adversely affected in the meantime.

Accordingly, the Court granted the protective costs order, on the condition that the plaintiffs undertake not to seek costs from the defendants if they themselves are successful.

The Court’s decision is unusual not only because of the nature of a protective costs order, but also because two months ago the same Judge decided that the plaintiffs should not receive any such costs protection. The Judge opted to rescind the previous decision (pursuant to rule 7.49 of the High Court Rules) having received further evidence on the points set out above. As the Judge himself noted, “it is not likely to be a frequent occurrence that a Judge will find their decision was wrong so soon after it being issued”.

The decision to grant a protective costs order is an extreme step that will only be taken in exceptional circumstances. Any such order places potential defendants in the very difficult position of having to defend a claim without the prospect of receiving some portion of their costs back - even if they are ultimately successful.

Further, the courts already have significant discretion when deciding what costs awards to make following a judgment (if any). As part of this, they may consider issues such as the individual circumstances of the parties, the importance of access to justice, the need to discourage frivolous claims, and overall principles of fairness and justice.

In light of these considerations, the decision underscores the importance of access to justice as a fundamental right. As noted by the Court, “the ability of a plaintiff to bring proceedings that are in the public interest, about serious human rights issues, with competent counsel, for no personal benefit should not be determined by their ability to pay costs”. While rare, an order of this nature is a potential tool for individuals and entities seeking to bring public interest litigation - and a significant risk for those who may be required to respond to such claims.

This article was published in the New Zealand Herald on 7 November.  First of its kind: Academics granted right to challenge Mental Health Act for free - NZ Herald