Practice and Procedure
Application for maximum costs order: Public interest litigation
In Patrick v Secretary, Department of Climate Change, Energy, the Environment and Water [2025] FCA 754 (10 July 2025) (Stellios J), Rex Patrick (applicant) made an interlocutory application as part of an appeal, seeking a maximum costs order of $1 under r40.51 of the Federal Court Rules 2011 (Cth) (Rules). The decision being appealed concerned freedom of information (FOI) requests for documents related to the Snowy Hydro 2.0 Project.
Stellios J outlined the principles applicable to the exercise of discretion under r 40.51 (at [26]). His Honour considered there were multiple factors in favour of a maximum costs order being made. He readily found the litigation had a public interest dimension given that the applicant had no direct private interest in the outcome and that the litigation’s focus was on the proper construction of the Freedom of Information Act 1982 (Cth) (FOI Act), which would contribute to the proper functioning of responsible government (at [30]–[34]).
His Honour also observed as relevant the significant disparity in the impact of a usual costs order, because the applicant was a litigant in person who would be exposed personally to adverse costs, while the respondents would not be exposed to liability for costs (at [46]). Other relevant factors included the following:
- the respondents had an interest in resolving the proper construction of the FOI Act (at [37])
- the questions on appeal were confined and unlikely to involve time-consuming fact-finding processes (at [38])
- the applicant did not have a direct private interest in the outcome even though he may receive an indirect benefit (at [42]–[44])
- the application was made at the first opportunity in the appeal (at [45]).
A key factor supporting the order was the likelihood that the applicant would discontinue the appeal if faced with the usual costs rule. There was no direct pecuniary outcome for the applicant in the appeal, which might otherwise justify taking on risk, and the applicant had a modest income ($114,000) and assets (less than $1 million). The potential costs liability was “considerable” (at [52]), being approximately $45,000 for each respondent.
The respondents argued that the maximum costs order should not be made because the questions of law to be determined by the Court lacked merit (at [56]). While Stellios J observed there were difficulties the applicant would need to overcome, the questions on appeal had not been finalised.
While satisfied a maximum costs order was appropriate, the Court rejected the $1 cap as “tantamount to ordering that the amount should be $0” and “manifestly unjust” to the respondents (at [62]). Stellios J balanced the purpose of r40.51 of the Rules “to limit the exposure of a party to an adverse costs order” with the need for the applicant to be “at some material financial risk” (at [65).
Stating that “there should be some relation between the amount set under r40.51 of the Rules and the estimated party/party costs if an order were not made” (at [65]), the Court ordered that the maximum costs recoverable in the proceeding be $20,000 between the applicant and first two respondents collectively, and $20,000 between the applicant and third respondent. The costs of the interlocutory application were ordered to be costs in the proceeding.
Practice and Procedure
Appeal from bifurcated reasons on liability and penalty: Final or interlocutory judgment
In Serco Citizen Services Pty Ltd v Parsons [2025] FCAFC 83 (24 June 2025), the appellant (Serco) appealed from a liability judgment and a penalty judgment that were handed down one month apart regarding breach by Serco of s340(1) of the Fair Work Act 2009 (Cth).
Following the liability judgment, Serco filed an application for an extension of time and leave to appeal. After the penalty judgment, Serco filed a notice of appeal against both the liability judgment and the penalty judgment. An initial issue arose as to whether leave to appeal was required.
After reviewing the legal framework and case law on interlocutory and final judgments in the Federal Court (at [13]–[18]), the Full Court found that the liability judgment was interlocutory because it did not determine all the rights of the parties (at [19]) and leave to appeal was required. In contrast, the penalty judgment determined the remaining issue between the parties (at [20]), in respect of which no leave to appeal was required (at [23]).
Considering both s24(1E) of the Federal Court of Australia Act 1976 (Cth) and relevant case law, the Court observed that an interlocutory order that affects the final result can generally be challenged in an appeal against the final order (at [24]–[26]) and such an appeal against final judgment is as of right (at [27]). However, where an appeal is brought against several orders – some of which are final and some of which are interlocutory – leave is required (at [28]). Serco’s notice of appeal stated that it appealed from the whole of the liability and penalty judgments. The Court rejected Serco’s argument that the liability judgment effectively merged into the penalty judgment (at [30]).
The difficulty faced by Serco was caused by the content of its notice of appeal, which sought to separately challenge the liability judgment (an interlocutory judgment), not merely by way of contending that the penalty judgment was in error (at [30]). Accordingly, leave to appeal was required.
Although Serco did initially file an application for leave to appeal, it did not rely on this on appeal, describing it as redundant on the basis that leave to appeal was unnecessary (at [35]). Their Honours observed that Serco could have advanced its notice of appeal in such a way that leave to appeal was not necessary but did not do so. On this basis, they found the notice of appeal incompetent (at [36]).
Their Honours went on to consider whether leave to appeal would have been granted, after outlining the principles applicable to an application for leave to appeal from an interlocutory decision (at [38]–[39]). The Court found no grounds of appeal made out, and the primary judge’s decision was not attended with sufficient doubt to support a grant of leave to appeal.
The appeal was dismissed as incompetent, with no order as to costs.
Consumer law
Unfair terms: Consumer insurance contracts
The decision in Australian Securities and Investments Commission v Auto & General Insurance Co Ltd (A&G) [2025] FCAFC 76 (5 June 2025) centred on the interaction between two forms of consumer protection legislation: s12BG(1)(a) of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) and the Insurance Contracts Act 1984 (Cth) (IC Act). Following the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, these protections were extended to contracts of insurance.
A&G’s standard form home and contents insurance contracts contained a Notification Term that required insureds to tell A&G “if anything changes while you’re insured with us”, with potential consequences including refusal to pay claims, contract cancellation or non-renewal. All parties proceeded on the basis that the literal meaning of “anything changes” was absurd (at [108]).
The primary judge adopted principles of construction relevant to commercial contracts rather than what an ordinary consumer would have understood the Notification Term to mean (at [91]–[92]). The primary judge accepted A&G’s construction that the Notification Term required the insured to notify it of any change to information that the insured disclosed to A&G before entry into the contract (at [94]).
ASIC appealed on three grounds, being:
- errors in construction (ground 1)
- that the term caused a significant imbalance in the rights and obligations of the parties including because it was not transparent (ground 2)
- that the term was not reasonably necessary to protect A&G’s legitimate interests including because it was not transparent (ground 3).
ASIC argued that the lack of transparency with respect to the notification obligation rendered it unfair (at [16]).
On appeal, O’Bryan and Cheeseman JJ upheld ground 1, finding the primary judge erred in construing the Notification Term in accordance with principles relevant to commercial contracts and was wrong to conclude that the task of construction did not involve considering what an ordinary consumer would have understood the Notification Term to mean (at [103]). The preferable construction proposed by ASIC (and accepted on appeal) was that the term required notification only of changes material to the insured risk.
However, their Honours observed a logical inconsistency in ASIC’s arguments. Having found that the Notification Term on its proper construction contained a materiality criterion – based on what the ordinary consumer would have understood – it could not then be contended that the criterion was not known or not transparent to the ordinary consumer (at [17]).
O’Bryan and Cheeseman JJ observed that the primary judge had erroneously implied into the Notification Term the effect of a statutory good faith term (at [144]), but found that, when properly construed and considering transparency, the Notification Term still did not cause a significant imbalance in the parties’ rights and obligations (at [162]).
Similarly, once construed with a materiality criterion, the Court rejected the proposition that the term was not reasonably necessary to protect A&G’s legitimate interests (ground 3 rejected).
O’Bryan and Cheeseman JJ intimated that the result might have differed if ASIC had argued that the plain meaning of the Notification Term imposed an unreasonable burden on the insured (at [16], [109]).
Derrington J agreed with the construction of the Notification Term adopted by the primary judge (at [3]) and otherwise concurred with O’Bryan and Cheeseman JJ.
The appeal was dismissed, and ASIC was ordered to pay A&G’s costs.
