Australian Solvent Recyclers Pty Ltd v EPA of NSW

The " liberty to apply " in Order 3 was not exercised, and the applicant and I agree with the respondent that it serves no further purpose and should now be vacated.

The only " other orders " sought are partial costs orders in the event that I find such orders appropriate.

The focus of this judgment will, therefore, be the question of costs generally.

In their submissions on costs, Counsel for the parties referred to many paragraphs of my earlier judgment which I will not set out, as the judgment as a whole speaks for itself and should be reviewed in its entirety, rather than selectively quoted for an adversarial purpose (see par 23 hereof).

Likewise, the court has before it informal " transcripts " of the hearing, summaries of solicitors' diaries of the hearing, calculations of hearing time spent on various issues, and a detailed chronology of relevant events before, during and since the hearing ( Exhibit E1 ), to none of which is selective reference desirable. Such material may be of relevance to a Costs Assessor, but not to the Judge deciding the threshold question whether any order should be made as to costs.

These were, as I said in my judgment, " unusual " class 1 proceedings, commenced by way of appeal under the Waste Minimisation and Management Act 1995, against " the conditions… " imposed by the respondent on licence number 005661, issued by the respondent to the applicant on 2 March 1999, but dated 26 February 1999, in respect of the applicant's " hazardous waste facility " at St Marys.

As noted in my judgment of 1 February 2000: 8. ASR accepts solvent wastes, including, amongst other things, batches of failed paint and gunwash. A "pot still" is used to process such dirty or contaminated solvents, and where possible, the solvent component is saved and sometimes reused. The other primary activity occurring on site is the use of "autoclaves" which treat waste in 44 gallon drums leaving a residue of inert substances. The residue is then either stored on site or disposed of elsewhere. 9. Central to this hearing was a third on-site process, namely the use of a bioremediation "pile", which is comprised of woodchips and green matter, (Exhibit A38), and selected nutrients, upon which contaminated waters are placed. 10. There was some reference during the hearing to proceedings before the Independent Commission Against Corruption ("ICAC"). 11. It appears that Mr Raymond Smith, who was formerly the EPA regulatory officer responsible for the ASR site, has been under investigation, but, although the final report of Commissioner Stowe QC had not been finalised, the Court heard oral evidence that there was no implication against ASR. 12. Mr McEwen SC, counsel for ASR, strongly refuted any suggestion of impropriety on behalf of his client in respect of the ICAC matter. 13. However, he asserted that the ICAC investigation provided some impetus for the EPA's review of ASR's licence, which, in turn, resulted in this appeal. Mr McEwen believes the ICAC investigation resulted in the EPA's not approaching the review of ASR's licence in its ordinary regulatory way. He accused the EPA of becoming suspicious, intransigent and uncooperative regarding ASR.

The appeal was lodged on 16 March 1999, and by Statement of Issues filed on 27 April 1999 the applicant confined the appeal to seven of the conditions imposed.

By the time of the commencement of the substantive hearing on 4 August 1999, the parties had agreed upon three of the conditions (Nos. 8, 10, and 17.3) in dispute.

When set down for hearing, it was expected the matter would take three days. In fact, the court sat on 14 days, and then entertained written submissions.

Early on the fifth day a fourth disputed condition (No. 7) was agreed, and late on that day so was a fifth (No. 9), subject to some debate about timeframes.

All five disputes so resolved to that stage concerned drum storage/stacking, and bunding issues.

Negotiations continued while the case was running, and the court adjourned the hearing from time to time to facilitate those negotiations.

On the seventh day a sixth dispute - concerning condition No.18 which dealt with financial assurance - was resolved, but a dispute arose/remained about how the assurance should be provided on the applicant's behalf.

The bulk of the hearing time concerned condition 1.1, and the context created for it by ASR's bioremediation process, together with the adjudication of the remaining disputes between the parties regarding the implementation of the " agreed " conditions of the licence.

The applicant complained that the EPA had a practice of consulting licence holders as to any proposed amendments to their licences, and providing drafts for consideration and negotiation. However, the 1999 licence had " quite dramatic " changes from the terms of the 1997 and 1998 licences, and, although the court received a lot of evidence of meetings, visits, and correspondence between the parties prior to the issue of the 1999 licence, no advance draft was provided.

On the subject site, the applicant put " selected fluids " on a " bioremediation pile ". The central dispute about condition 1.1 concerned the applicant's desire to, or to continue to, bring on site " contaminated soils capable of being bioremediated ", and " oily waters ", to be " bioremediated " by placement on the pile.

The 1997 licence precluded receipt of " contaminated soil " on site. The 1998 licence allowed it, provided the EPA gave written approval " prior to treatment and/or disposal ". On the other hand, " oily waters " had historically been received on site, possibly in breach of the EPA Licence.

The 1999 licence defined only what could be received on site, but not what could not, and in these terms: Limit Conditions 1. Except as may be provided by any other condition of this licence, only the following waste(s) may be accepted at the licensee's premises: 1.1 waste solvents, solvent based paints, water based solvents and water based paints.

None of the three licences (1997, 1998, 1999) purported to regulate any bioremediation processes employed on the site, and, in its evidence and submissions, the EPA equivocated about several matters regarding ASR's bioremediation process and pile (see, especially, pars 42 to 45 of my earlier judgment).

The applicant seems to be particularly concerned that so much hearing time was taken up with such matters, and drew attention (in Purdy's affidavit of 31 July 2000, par 6) to par 62 of my earlier judgment. In fairness to the parties, I should quote par 57 and the whole of par 62 (Mr Purdy having quoted only the first 4 ½ lines): 57. Much of the 14 days of hearing time, followed by a series of written submissions, was taken up with arguments which the court in some instances now sees as peripheral to the central question involved in this appeal.

62. The need for, and/or existence of, an approval for the pile is not really relevant to the court in this hearing, as these Class 1 proceedings seek only approval to bring on to the site certain contaminated materials. The court, therefore, does not have to go beyond that. However, any history of bioremediation on this site could be relevant to the court's task. Hence, some reference needs to be made to some of that evidence in order to put the key matters in context.

Much hearing time was certainly taken up in endeavouring to satisfy the court as to whether or not the pile actually " worked ", and I concluded that it did (par 97).

Further substantial time was taken up with the questions of what the pile actually " became " after its work was done, and how it should be disposed of. I dealt with those questions in my judgment (see pars 98ff), and commented: 109. I have come to the conclusion that these facts, whilst interesting, and relevant to the question of whether ASR's bioremediation pile procedures actually work, are not relevant to the real question before the Court. 110. The classification of any waste going off site is not a real issue in these proceedings. The question is, rather, whether the Court, stepping into the shoes of the relevant public authority, will allow the amendments to conditions which have been sought by the applicant, especially those limiting what can go on to the site. 111. The classification of the material which formed part of some earlier bioremediation pile is not of much relevance to that question. It is a question of fact, which must be decided according to the Technical Appendix 1 to the Waste Guidelines, and on a case-by-case basis. It is not my function to declare that some bioremediation pile, which could be materially changed, and/or is yet to come into existence, will fall within a certain classification of waste. 112. I accordingly come to no useful conclusion with respect to this question.

I reached the conclusion that the appeal should be upheld, and condition 1.1 amended as the applicant sought (pars 113-121). I then dealt with the outstanding disputes as to details in the " agreed " conditions that had been in dispute (pars 122-127). It now appears that, while judgment was reserved, the parties reached some further agreement about amending condition 18, but that agreement did not come to my notice before judgment was delivered, and I believe the parties implemented such agreement administratively.

It would be fair to say that, overall, and in quite simplistic terms, the applicant succeeded on all the issues of importance to it, but that its destinations were reached, in some cases, by a rather circuitous route.

This court has a wide discretion on questions of costs, but it has adopted and applied several practice directions regarding the exercise of that discretion.

Costs orders are compensatory and not punitive in character. They indemnify the party benefiting from the order for professional fees and out-of-pocket expenses reasonably incurred in connection with litigation. Latoudis v Casey (1990) 170 CLR 534.

While the court's discretion may be absolute and unfettered, it must be exercised judicially, upon facts connected with the litigation, and not by reference to irrelevant or extraneous considerations. Donald Campbell & Co Ltd v Pollak [1927] AC 732.

The facts connected with the litigation may bring to light conduct by the parties which may be regarded as unreasonable and may be further regarded as " disentitling " on the question of costs. Oshlack v Richmond River Council (1998) 193 CLR 72 (at 97-98 per McHugh J).

While these proceedings were indeed " unusual ", and dealt with extremely complex and technical matters not normally found in the planning, building and valuation cases that make up the vast bulk of the work in classes 1, 2 and 3 of this court's jurisdiction, the court will, in class 1 cases, award costs (either in general terms, or in specified or " partial " terms) only in " exceptional circumstances ".

Cases where the circumstances are either found or not found to be " exceptional " all turn on their own facts and circumstances. Rarely, if ever, will one previously decided case be found to be so precisely " on point " as to be determinative of another application. See discussion, e.g., by Pearlman J in Outdoor Australia Pty Ltd v Auburn Council (1996) 89 LGERA 365.

For the applicant , Mr McEwen SC, says that such exceptional circumstances are to be found in this case especially in the following: 1. The final result of this litigation was open to the EPA before the appeal was commenced. 2. The court's finding that the case was " unusual " (par 128) and the fact that it appears to be the first appeal of its kind. 3. The facts that the hearing ran on some 14 days instead of 3, and that, because of the complex subject matter and the stance(s) taken by the EPA, it ran more like a class 4 , or even a class 5, matter, e.g. much evidence was presented on affidavit. 4. The serious environmental and regulatory issues before the court were " coloured " by the background circumstances of the ICAC investigation. 5. The fact that when the hearing began, the applicant was unclear as to the EPA's position(s) in respect of the disputed conditions, and so agreed that the EPA " go first " so the applicant could respond. 6. The fact that the EPA put on no affidavit evidence regarding the bioremediation pile it knew to be on site, and produced witness Fuller, its only relevant expert, only after about 9 days of hearing, only to then disown his concessions supportive of the applicant. 7. The fact that Fuller had not been called in to review, before the licence issued, all the relevant information ASR had provided to the EPA. 8. The fact that the EPA persisted for some time in an accusation that ASR's key witness, Cable, had " concocted " evidence. 9. The fact that all of the administrative staff of ASR were diverted for about a month from profit-generating activities in order to attend court to address issues which the EPA had, in the past, normally negotiated with the company.

For the respondent , Ms Kelly argues that: (a) The EPA issued the licence and defended the appeal as a " reasonable regulator " discharging of its duties in respect of " a business based on storing and recycling highly inflammable and dangerous materials ", such as that conducted by the applicant or the operation at Wilberforce, where a mishap cost about $1M to " clean up " and had unfortunate environmental and community consequences. (b) The respondent was " continually " seeking information from the applicant which " was not forthcoming ", either before or after the 1999 licence was issued, and endeavoured to reach agreement on at least " some " conditions before the licence was issued. However, the applicant failed to take advantage of the delay between filing of the appeal, and, at least, the engagement of Mr McEwen and his instructing solicitors on or about 27 July 1999, to explore possible agreements on conditions it disputed. (c) The hearing was lengthened as both sides dealt with complex material " on the run ". All of it proved relevant to the court's central decision, that condition 1.1 be amended. If any costs order is appropriate, the respondent should be entitled to the costs occasioned by the failure to respond to requests for information made, pre-appeal, in February and March 1999. (d) Much of the applicant's evidence was filed late , despite having had the benefit of legal advice throughout the dispute, and it cannot now argue about the cost or time involved in the respondent's attempts to deal with that material at the scheduled hearing. (e) Once the information about the bioremediation processes was disclosed during the hearing, the respondent considered it and dealt with it appropriately - it was appropriate for the court to have all that information in order to determine the appeal on its merits. (f) There is no evidence of " disentitling " or " unreasonable " conduct by the respondent. 36. Further, in her written submissions, Ms Kelly analyses in detail all the evidence about matters relevant to the conditions disputed from time to time, and what the EPA " needed to know " in order to deal with the disputes. For example, she points out that there was no evidence that the applicant ever brought contaminated soil onto the site, as envisaged, but not approved, by the 1998 licence, and the respondent did not know the applicant wanted to do so until the Statement of Issues of April 1999 was served. (There is a dispute, on the evidence, as to whether the EPA knew, before the hearing, that the applicant was taking delivery of " oily waters").

The impact of the litigation on a party's business cannot sound in an order for costs, even though the court acknowledges the diversion of resources involved in a lengthy hearing. Director-General of Land & Water Conservation v Ramke [1999] NSWLEC 22 (at par 44).

Each party should pay its own costs of the conditions that were agreed, even those agreed after the hearing began . See Re Minister for Immigration & Ethnic Affairs; ex parte Lai Qin ( 1997) 186 CLR 622, but c.f. One-Tel Ltd & Ors v Deputy Commissioner of Taxation (2000) 171 ALR 227 (at 231 ff per Burchett J).

One must be careful of relying on the wisdom of hindsight in assessing the way litigation has been conducted. From time to time in a long hearing a Judge wonders where it is all leading, and, at the end, the correct bases for the decision may seem simpler to find than they were " in running ". That, however, does not make the circumstances of a case " exceptional ". See Coomealla Aboriginal Housing Co Ltd v Wentworth Shire Council (1999) 106 LGERA 266 (at 275-6).

What is clear with hindsight is that, at least prior to the hearing, there were between these parties, and, I venture to suggest, among various divisions of the EPA, appalling breakdowns or misunderstandings in communications, regarding, e.g., the bioremediation process, and/or pile or information regarding it, (see pars 69-82). Of itself, such a problem does not consititute " exceptional circumstances " for costs purposes. Foboco Pty Ltd v Kiama Municipal Council (10360 of 1997, 23 April 1998, Sheahan J).

As I have noted in earlier judgments, and above (see par 33 hereof), looking for similar fact situations in other costs judgments is rarely helpful, and as this is such an " unusual " type of class 1 matter, not really helpful at all in this case.

The applicant certainly succeeded in winning amendments to the licence, but the respondent says it was simply doing its duty in putting the applicant to strict proof.

This is not a case where the EPA was legally incorrect [ Murray Publishers Pty Ltd v Valuer-General (1994) 84 LGERA 13 (at 18)], or failed to discharge its duties [ Raiti v Leichhardt Municipal Council (1991) 72 LGRA 337], or made a serious or fundamental error of fact [ Kremer & Associates v North Sydney Municipal Council (1982) 47 LGRA 209 (at 220)].

Likewise, I cannot conclude on the evidence that it acted capriciously or without plausible justification [ Anibal 21 Pty Ltd v Waverley Council (1998) 98 LGERA 296], or in a " mischievous and obstructive " way [ Bryant v Lismore City Council , 4 July 1997, Talbot J]; nor that there was a deliberate attempt to frustrate the applicant or cause it delay or expense [ Ray Group Pty Ltd v Byron Shire Council (1998) 98 LGERA 378].

I have concluded that the interests of justice and fairness are best served by making no order that either party pay the other's costs in this matter.

The question of a partial order, requiring the court to separate out the various issues and their outcomes, in order to fashion an appropriate apportionment of the liability for costs, therefore, does not arise.

The order of the court will be that each party will bear all of its own costs, including those of the various interlocutory proceedings, such as the notice of motion to vacate the hearing date.

Each party will also be responsible for its own costs of the notices of motion in regard to costs, and the associated interlocutory proceedings. See my judgment in Thomson Landscape & Garden Supplies Pty Ltd & Hornsby Shire Council [2000] NSWLEC 59.

Order No. 3 made on 1 February 2000 is vacated, by consent.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

7. The fact that Fuller had not been called in to review, before the licence issued, all the relevant information ASR had provided to the EPA.

8. The fact that the EPA persisted for some time in an accusation that ASR's key witness, Cable, had "concocted" evidence.

9. The fact that all of the administrative staff of ASR were diverted for about a month from profit-generating activities in order to attend court to address issues which the EPA had, in the past, normally negotiated with the company.

(a) The EPA issued the licence and defended the appeal as a "reasonable regulator" discharging of its duties in respect of "a business based on storing and recycling highly inflammable and dangerous materials", such as that conducted by the applicant or the operation at Wilberforce, where a mishap cost about $1M to "clean up" and had unfortunate environmental and community consequences.

(b) The respondent was "continually" seeking information from the applicant which "was not forthcoming", either before or after the 1999 licence was issued, and endeavoured to reach agreement on at least "some" conditions before the licence was issued. However, the applicant failed to take advantage of the delay between filing of the appeal, and, at least, the engagement of Mr McEwen and his instructing solicitors on or about 27 July 1999, to explore possible agreements on conditions it disputed.

(c) The hearing was lengthened as both sides dealt with complex material "on the run". All of it proved relevant to the court's central decision, that condition 1.1 be amended. If any costs order is appropriate, the respondent should be entitled to the costs occasioned by the failure to respond to requests for information made, pre-appeal, in February and March 1999.

(d) Much of the applicant's evidence was filed late, despite having had the benefit of legal advice throughout the dispute, and it cannot now argue about the cost or time involved in the respondent's attempts to deal with that material at the scheduled hearing.

(e) Once the information about the bioremediation processes was disclosed during the hearing, the respondent considered it and dealt with it appropriately - it was appropriate for the court to have all that information in order to determine the appeal on its merits.

(f) There is no evidence of "disentitling" or "unreasonable" conduct by the respondent.

36. Further, in her written submissions, Ms Kelly analyses in detail all the evidence about matters relevant to the conditions disputed from time to time, and what the EPA "needed to know" in order to deal with the disputes. For example, she points out that there was no evidence that the applicant ever brought contaminated soil onto the site, as envisaged, but not approved, by the 1998 licence, and the respondent did not know the applicant wanted to do so until the Statement of Issues of April 1999 was served. (There is a dispute, on the evidence, as to whether the EPA knew, before the hearing, that the applicant was taking delivery of "oily waters").

37. The impact of the litigation on a party's business cannot sound in an order for costs, even though the court acknowledges the diversion of resources involved in a lengthy hearing. Director-General of Land & Water Conservation v Ramke [1999] NSWLEC 22 (at par 44).

38. Each party should pay its own costs of the conditions that were agreed, even those agreed after the hearing began_._ See Re Minister for Immigration & Ethnic Affairs; ex parte Lai Qin ([1997] HCA 6; 1997) 186 CLR 622, but c.f. One-Tel Ltd & Ors v Deputy Commissioner of Taxation [2000] FCA 270; (2000) 171 ALR 227 (at 231 ff per Burchett J).

39. One must be careful of relying on the wisdom of hindsight in assessing the way litigation has been conducted. From time to time in a long hearing a Judge wonders where it is all leading, and, at the end, the correct bases for the decision may seem simpler to find than they were "in running". That, however, does not make the circumstances of a case "exceptional". See Coomealla Aboriginal Housing Co Ltd v Wentworth Shire Council [1999] NSWLEC 211; (1999) 106 LGERA 266 (at 275-6).

40. What is clear with hindsight is that, at least prior to the hearing, there were between these parties, and, I venture to suggest, among various divisions of the EPA, appalling breakdowns or misunderstandings in communications, regarding, e.g., the bioremediation process, and/or pile or information regarding it, (see pars 69-82). Of itself, such a problem does not consititute "exceptional circumstances" for costs purposes. Foboco Pty Ltd v Kiama Municipal Council (10360 of 1997, 23 April 1998, Sheahan J).

41. As I have noted in earlier judgments, and above (see par 33 hereof), looking for similar fact situations in other costs judgments is rarely helpful, and as this is such an "unusual" type of class 1 matter, not really helpful at all in this case.

42. The applicant certainly succeeded in winning amendments to the licence, but the respondent says it was simply doing its duty in putting the applicant to strict proof.

43. This is not a case where the EPA was legally incorrect [Murray Publishers Pty Ltd v Valuer-General (1994) 84 LGERA 13 (at 18)], or failed to discharge its duties [Raiti v Leichhardt Municipal Council (1991) 72 LGRA 337], or made a serious or fundamental error of fact [Kremer & Associates v North Sydney Municipal Council (1982) 47 LGRA 209 (at 220)].

44. Likewise, I cannot conclude on the evidence that it acted capriciously or without plausible justification [Anibal 21 Pty Ltd v Waverley Council [1998] NSWLEC 33; (1998) 98 LGERA 296], or in a "mischievous and obstructive" way [Bryant v Lismore City Council, 4 July 1997, Talbot J]; nor that there was a deliberate attempt to frustrate the applicant or cause it delay or expense [Ray Group Pty Ltd v Byron Shire Council (1998) 98 LGERA 378].

45. I have concluded that the interests of justice and fairness are best served by making no order that either party pay the other's costs in this matter.

46. The question of a partial order, requiring the court to separate out the various issues and their outcomes, in order to fashion an appropriate apportionment of the liability for costs, therefore, does not arise.

47. The order of the court will be that each party will bear all of its own costs, including those of the various interlocutory proceedings, such as the notice of motion to vacate the hearing date.

48. Each party will also be responsible for its own costs of the notices of motion in regard to costs, and the associated interlocutory proceedings. See my judgment in Thomson Landscape & Garden Supplies Pty Ltd & Hornsby Shire Council [2000] NSWLEC 59.

49. Order No. 3 made on 1 February 2000 is vacated, by consent.