Botany Bay City Council v Minister for Local Government

Court of Appeal (NSW)|2016-05-26|Before: Bathurst CJ, Beazley P, Ward JA, Pain J

The Court of Appeal rejected Botany Bay City Council's request to avoid paying legal costs after losing its appeal against a council amalgamation decision. The Council argued the case was in the public interest and clarified the law, but the Court found the proceedings were primarily self-interested—aimed at getting the Council's own proposal considered rather than serving broader public purposes. The Court confirmed that while public interest can sometimes affect costs decisions, it doesn't create automatic exemptions, and appeals rarely qualify for special treatment. The Council was ordered to pay the other parties' costs.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

[This headnote is not to be read as part of the judgment] On 15 April 2016, the Court of Appeal gave judgment in an appeal concerned with the proposed amalgamation of Botany Bay and Rockdale City Councils: Botany Bay City Council v Minister for Local Government [2016] NSWCA 74. The Court dismissed the appeal with costs. However, upon the application of the appellant, Botany Bay City Council (the Council), the order as to costs was made subject to reconsideration upon the receipt of further written submissions by the parties. The Council submitted that there should be no order as to costs, and that there were reasons why the parties should bear their own costs. The Council contended that the proposed amalgamation was part of the broad scheme of council amalgamations in New South Wales, a matter of broad public importance. The Council argued that it was representing its ratepayers and constituents in its conduct of the proceedings, and had sought to enforce public law obligations on the part of those considering the proposed amalgamation. The Council also contended that the appeal had clarified the law to the benefit of the respondents. The respondents argued that, notwithstanding the broader context of council amalgamations in New South Wales, the arguments in the present case were circumstance specific and the Council had conducted the proceedings in its own interest. The respondents contended that the clarification of the law provided by the appeal should not disentitle them from the usual rule as to costs. The respondents also contended that, even if the first instance proceedings exhibited an element of "public interest", the same could not be said in respect of the appeal.

The Court (Bathurst CJ, Beazley P and Ward JA): (1) Subject to the rules and to any other Act, costs are in the discretion of the Court: Civil Procedure Act 2005 (NSW), s 98. If the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made: Uniform Civil Procedure Rules 2005 (NSW), r 42.1. [4] (2) The discretion as to costs must be exercised judicially, in accordance with established principle and factors directly connected with the litigation. [5] Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 at [65]. (3) There is no blanket exception from the usual rule as to costs for "public interest litigation". However, in some cases, the fact that litigation can properly be classed as "public interest litigation" may be a proper reason for making no order for costs. [6]-[7] Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 at [30]; Hastings Point Progress Association Inc v Tweed Shire Council (No 3) [2010] NSWCA 39 at [24], [27]; Minister for Planning v Walker (No 2) [2008] NSWCA 334 at [9]. (4) By the very nature of the adversarial common law tradition, the success of one party in proceedings will often, if not inevitably, entail a clarification of the law to some extent or in some respect. Except perhaps in respect of a "test case", clarification of the law will not tend strongly in favour of a departure from the usual rule as to costs. [16]-[17] Botany Bay City Council v Minister for Transport and Regional Development [1999] FCA 65 at [5]. (5) Considerations associated with the bringing of proceedings in the public interest may weigh less heavily in appeal proceedings than in first instance proceedings. However, in an appropriate case, the pursuit of proceedings through the appellate hierarchy may sufficiently be in the public interest as to warrant a departure from the usual rule as to costs. [18]-[21] Save the Ridge Inc v Commonwealth [2005] FCA 355 at [3]; Bat Advocacy NSW Inc v Minister for Environment Protection, Heritage and the Arts (No 2) [2011] FCAFC 84 at [23]; Kindimindi Investments Pty Ltd v Lane Cove Council [2007] NSWCA 38 at [52], [54].

Judgment

THE COURT: On 15 April 2016, the Court gave judgment in this appeal, dismissing the appeal with costs: Botany Bay City Council v Minister for Local Government [2016] NSWCA 74 (the principal judgment). However, upon the application of the appellant Council, the order as to costs was made subject to reconsideration upon the receipt of further written submissions by the parties.

The appellant's submissions

The appellant submitted that there should be no order as to costs and identified a number of factors in support of that submission. Broadly categorised, those factors can be distilled into the following contentions: 1. That the amalgamation proposal at the heart of this appeal was but one of a large number of local government amalgamation proposals being considered by the respondents, and thus a matter of broad public importance; 2. That the appellant sought to enforce public law obligations, in the sense that the appellant raised arguments as to mandatory relevant considerations in the respondents' decision-making process; 3. That the appellant, as an elected body, was representing its ratepayers and constituents in the conduct of these proceedings; 4. That the relevant provisions of the Local Government Act 1993 (NSW) have never been tested, such that this appeal has clarified the law and the respondents have each benefited from that clarification.

The respondents' submissions

The respondents contended that the appellant had not advanced reasons sufficient to justify the Court departing from the usual rule as to costs. In support of this view, the respondents advanced the following contentions: 1. That, notwithstanding the broader context of local government amalgamation proposals in New South Wales, the arguments in the present case were circumstance specific; 2. That the appellant's conduct of these proceedings entailed a degree of self-interest; 3. That the clarification of the law provided by these proceedings should not disentitle the respondents from the usual rule as to costs; 4. That even if it were accepted that the first instance proceedings exhibited an element of public interest, the same could not be said in respect of the appeal.

Consideration

Subject to the rules and to any other Act, costs are in the discretion of the Court: the Civil Procedure Act 2005 (NSW), s 98. Relevantly, the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 42.1 provides that: "… if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made."
Although there is a broad discretion in determining whether some "other order" should be made, that discretion "must be exercised judicially in accordance with established principle and factors directly connected with the litigation": Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 at [65]. With that in mind, the various contentions of the parties fall for consideration.

The "public interest" and the appellant's "self-interest"

It is uncontroversial that there is no blanket exception from the usual rule as to costs for so-called "public interest litigation". As Gaudron and Gummow JJ noted in Oshlack at [30]: "That is a 'nebulous concept' … unless given further content of a legally normative nature. It also tends … to distract attention from the legal issue which is at stake."
That said, since the decision in Oshlack, it has been recognised that "the fact that litigation can properly be classed as 'public interest litigation' may be a proper reason for making no order for costs": per Young JA in Hastings Point Progress Association Inc v Tweed Shire Council (No 3) [2010] NSWCA 39 at [24]. However, something more than the mere fact of an element of "public interest" will be required: Minister for Planning v Walker (No 2) [2008] NSWCA 334 per Hodgson JA at [9]; Hastings Point (No 3) at [27].
There is no doubt that the proposed amalgamation of local government areas in New South Wales is a matter of broad public interest. However, for the reasons we give below, we consider that costs should follow the event and there is no reason to make some other order.
In the principal judgment, at [7], the Court identified the central issue in the appeal as being whether the Council's submission (including the addendum) and its later formal proposal to the Delegate were mandatory relevant considerations in the Delegate's recommendation to the Minister. This in turn raised the question of the construction of the Local Government Act, s 263(1). The appellant raised a related natural justice issue.
The appellant asserts that, in bringing the proceedings, it sought to enforce public law "obligations to consider relevant factors as part of the amalgamation reporting process". Although that is not an inaccurate statement, this contention is framed at a high level of generality. The relief sought by the appellant was directed to requiring that the appellant's own amalgamation proposal be taken into account as part of the consideration of the Minister's amalgamation proposal. That relief was sought in the context where the appellant had in fact made submissions to the Delegate in which it advanced the substance of the formal proposal which it made a few weeks later, and had been informed that those submissions would be taken into account.
The appellant's contention that its own amalgamation proposal was a mandatory relevant consideration essentially turned upon the proper construction of the Local Government Act, s 263(1) and, in particular, the construction of the word "matter" in that section. However, it was not suggested that s 263 had been the subject of particular controversy in relation to Local Government boundaries, or that there were any other cases awaiting the outcome of the appeal.
When it is understood that the focus of the appellant's claim was that its proposal be taken into account, and that the appeal raised a point of statutory construction that was not previously or presently said to be contentious, it is difficult to see that these proceedings were of such public interest as to disentitle the successful respondents from their costs. Fundamentally, the appellant's contention was that its formal proposal be considered. However, as we have stated, the Delegate had informed the appellant that its submission, which contained the substance of its formal proposal, would be considered.
The appellant also contended that it was apparent from the results of a plebiscite that many of its electors and residents opposed the proposed amalgamation and that, by bringing the proceedings, the appellant "represented" those interests. However, in bringing the proceedings, the appellant was advocating for the consideration of its formal proposal, and whilst it was acting as a body politic, there was no evidence that the electors and residents supported the appellant's formal proposal. As the respondent noted, this situation "can in a sense be equated with that of a trustee suing for the benefit of its beneficiaries": Finn J in Botany Bay City Council v Minister for Transport and Regional Development [1999] FCA 65 at [5].
In the alternative, there is much to be said for the views expressed by Finn J in Botany Bay City Council v Minister for Transport and Regional Development [1999] FCA 65 at [5]: "… I do not consider that disputes between tiers of government ought stand outside the usual practice in relation to costs simply because the actions of government can be said to involve matters of public interest and because the suits themselves give rise to governmental accountability: government, after all, is constitutionally obliged to act in the public interest …"

Clarification of the law

The appellant placed some weight on the fact that the provisions of the Local Government Act considered in the appeal had never before been tested, and contended that "the State is no doubt much assisted by this clarification and judicial guidance".
In response to this argument, the respondents cited the following observations of Finn J in Botany Bay City Council v Minister for Transport and Regional Development at [5]: "… I do not regard the benefits, such as they are, as are said to arise from the clarification of the law, as being a factor that ought disentitle a successful party from an order because that clarification can be said to be beneficial to it. There is no 'double satisfaction' here to be guarded against …"
For the reasons we have stated above at [11]-[12], we do not place much, if any weight, on the perceived benefit to the respondents from the clarification of the law in this appeal. It was not suggested that these proceedings involved a 'test case' of any kind. In any event, by the very nature of our adversarial common law tradition, the success of one party in proceedings will often, if not inevitably, entail a clarification of the law to some extent or in some respect. In that light, it is hard to see how clarification of the law could amount to a factor tending strongly in favour of a departure from the usual rule as to costs.

First instance and appellate proceedings

The respondents contended that, even if it were accepted that the first instance proceedings exhibited an element of public interest, that would not subsist with respect to the appeal. In that regard, the respondents cited the observations of Gyles J, in the context of an application for security for costs, in Save the Ridge Inc v Commonwealth [2005] FCA 355 at [3]: "It seems to me that whatever arguments there may be concerning public interest litigation at first instance it will be rare that an unsuccessful applicant would be entitled to, in effect, a free appeal. There are in my view good reasons why at this point in litigation the public interest nature of the matter being pursued cannot outweigh the legitimate interests of the respondents so far as costs are concerned. I am therefore satisfied that an order for security ought be made." (emphasis added)
The respondents also referred to Bat Advocacy NSW Inc v Minister for Environment Protection, Heritage and the Arts (No 2) [2011] FCAFC 84 at [23], where the Full Court of the Federal Court of Australia observed: "… a factor to be given some weight, in our view, is that while the appeal was arguable (and well argued), it could not be thought to have strong prospects of success. There was a carefully reasoned judgment at first instance. The appeal, while listed and heard urgently, was dismissed instanter. It would be a significant burden on scarce public resources if every 'public interest' body were open to run unconvincing appeals free of any costs risk. As a matter of public policy, that course is to be discouraged." (emphasis added)
Even if the appellant's proceedings involved a public interest element, that would not, of itself, have been sufficient for the Court to make some 'other order' under UCPR, r 42.1. As Hodgson JA observed in Kindimindi Investments Pty Ltd v Lane Cove Council [2007] NSWCA 38: "[52] … considerations associated with the bringing of proceedings in the public interest may weigh less heavily in appeal proceedings than in first instance proceedings. … [54] This appeal, although it was supported by first instance decisions below, did relate to a rather technical challenge to what had been done at first instance."
We accept that, in an appropriate case, the pursuit of proceedings through the appellate hierarchy may sufficiently be in the public interest as to warrant a costs order other than that costs follow the event in accordance with UCPR, r 42.1. For the reasons we have given above, this is not such a case, nor was it such a case at first instance.
Accordingly, we reject the application that some other order be made and confirm the order made on 15 April 2016 that the appellant pay the respondents' costs.
The orders of the Court are:
The appellant's application that there be no order for costs with the intent that the parties bear their own costs of the proceedings be dismissed;
The appellant to pay the costs of the respondents on this application;
Confirm the Court's order of 15 April 2016 that the appellant pay the respondents' costs of the appeal.

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. Decision last updated: 26 May 2016

Relevantly, the Uniform Civil Procedure Rules 2005(NSW)

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Disposition:

The appellant's application for no order as to costs was dismissed. The appellant was ordered to pay the respondents' costs of the application, and the Court confirmed its earlier order that the appellant pay the respondents' costs of the appeal.

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