When the federal courts deal with a complaint of unlawful discrimination on grounds of age, disability, race or sex, costs generally follow the event, i.e. the successful party is awarded costs paid by the unsuccessful party. In the Respect@Work Inquiry, this was identified as a significant disincentive for applicants to pursue sexual harassment matters under the Sex Discrimination Act 1984. The risk of being ordered to pay the costs of other parties to the proceedings was seen as potentially deterring victim-survivors of sexual harassment and other forms of discrimination from commencing legal proceedings.

The Australian Human Rights Commission Act 1986 (Cth) has now been amended so that court proceedings starting after the amendments commence operation attract the following rules:

• If the applicant is successful in proceedings on one or more grounds, the court must order each respondent against whom the applicant is successful to pay the applicant’s costs assessed on either a standard basis (usually about 65% of actual costs) or indemnity basis (usually about 85% of actual costs). An exception applies to those costs where the court is satisfied that the applicant’s unreasonable act or omission caused the applicant to incur costs.
• The applicant must not be ordered to pay costs unless the court is satisfied:
  • the application was made vexatiously, i.e. their predominant motive or purpose was to harass or embarrass the other party or to gain a collateral advantage; or
  • the application was made without reasonable cause, i.e. on the facts of the case there were no substantial prospect of success (which won’t be the case if success depended upon the resolution of arguable points of law raised by the applicant); or
  • the applicant’s unreasonable act or omission caused the other party to incur the costs; or
  • the other party is a respondent who was successful in the proceedings and does not have a significant power advantage over the applicant, and the respondent does not have significant financial or other resources relative to the applicant (such as an individual or small business).

‘Unreasonable act or omission’ is intended to be a high threshold and reserved for rare cases. Ordinarily, it would not describe:

• mere refusal of a settlement offer;
• refusal to participate in a conciliation;
• the running of novel arguments;
• a self-represented litigant’s lack of legal expertise; or
• acts done because of disability.

For example, an applicant may reasonably refuse a settlement offer that includes an acceptable monetary component. This could be due to the circumstances of the offer. For example, the inclusion of a confidentiality clause, a lack of non-monetary remedies or a failure to accept that the respondent unlawfully discriminated against the applicant. It may also not be unreasonable for an applicant to refuse a settlement offer in circumstances where the applicant is unable to assess whether the offer is reasonable or appropriate. For example, this could be due to insufficient jurisprudence relevant to the matter, or a lack of legal representation or legal advice.