Bungendore Residents Group Incorporated v Palerang Council and Anor.

JUDGMENT CORAM: HIS HONOUR 1 The second Respondent, in pending class 4 proceedings, seeks an order for security of costs against the Applicant. 2 The class 4 proceedings challenge the validity of four development consents granted by the Palerang Council on 6 January 2005 to the second Respondent's four alternative residential subdivision development applications of land known as Nos 70-74 Trucking Yard Lane, Bungendore, yielding two slightly different 44 lot layouts and two slightly different 47 lot layouts. The latter layouts involve an additional lot (lot 21 in DP 1062506) to the other lots comprising the development site for all four alternative subdivisional layouts. Lot 21 is not owned by the second Respondent but it is in the process of purchasing it. 3 The class 4 proceedings were commenced on 6 April 2005. 4 According to the Points of Claim filed on 22 April 2005, there are various administrative law or legal grounds for challenging the validity of the development consents, but the principal grounds are the first Respondent's failure in its determination of the development applications to comply with specific requirements of the Yarrowlumla Local Environmental Plan 2002 (the LEP). 5 The first Respondent today filed in Court a submitting appearance. Accordingly, it falls to the second Respondent to actively participate in the proceedings, if as it does, it wishes to defend the proceedings. 6 The second Respondent's application for security is supported by an affidavit of its Solicitor estimating the second Respondent's costs of some $42,000. 7 In my judgment, this estimate is grossly excessive, given the nature of the proceedings and the likely course of preparing and presenting the case which is probably to be based upon documentary evidence and should take less than two days of hearing. If security is to be ordered, it will be in the sum of $15,000 which in my judgment would be an adequate and fair estimation. 8 The Applicant became incorporated pursuant to the Associations Incorporation Act 1984 on 5 April 2005 (one day before the originating proceedings were commenced in this Court). 9 The objects of the incorporated association are stated as follows: A non-for-profit organisation dedicated to protecting and enhancing the village character of Bungendore and assisting with the protection of the areas natural resources as well as to provide a community based forum to allow residents input into overall planning and development affecting Bungendore and the surrounding Shire. Preserving and maintaining the natural and built environment of Bungendore village and surrounding areas.

The principal activities of the Association will be:

Providing the community with information on events and other issues affecting the community that come to the Association's attention,
Fostering community participation in the public planning process, and
Any other such activities that will help to preserve, maintain or enhance the natural and built environment of Bungendore village and surrounding areas. 10 There was no substantial evidence advanced on behalf of the Applicant, (save for its recent incorporation) concerning either its membership or its assets. The only evidence is that set forth in the Applicant's Solicitor's affidavit sworn 4 May 2005 where he deposes to the following conversations with his client - On 6 May 2005, I had a telephone conversation with Ms Alix Burnett, who I know to be the Public Officer of the Bungendore Residents Group Incorporated ( BRG ), to the following effect: I said: Do you consider that BRG can pay or raise in a reasonable period of time security for costs in the order of the amount sought by the 2nd Respondent, ie $41,250. She said: No, I don't think it can. I said: Could you please ask each member of Bungendore Residents Group the following question: In the event that the Court orders the Bungendore Residents Group to pay security for costs and BRG can't pay those costs and therefore subsequently discontinues the proceedings, would you personally be willing to bring proceedings in the Land and Environment Court challenging the development consents granted to Navaroo Constructions for the subdivision at 74 Trucking Yard Lane (DCs 7, 8, 118 or 119)? She said: Yes I'll do that . On 9 May 2005, I had another telephone conversation with Ms Burnett, to the following effect: She said: I've asked all the members of the group if they would consider bringing the proceedings on their own if the group was forced to discontinue the proceedings, and they all said they wouldn't. 11 The Court has a wide discretion in respect of security for costs by virtue of the Land and Environment Court Act 1979, s 69(3) as interpreted by the Court of Appeal in Melville v Craig Nowlan & Associates (2002) 54 NSWLR 82. Section 69(3) provides as follows: The Court may order a party instituting proceedings in the Court to give security for the payment of costs that may be awarded against that party. 12 Following that decision, the principles that this Court has applied in exercising its discretion have generally been those stated by Beazley J in the Federal Court of Australia in K P Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189. These principles are collected and summarised by the Chief Judge of this Court in Hunter Ecologically Sustainable Employment Group Inc v Hez Pty Ltd and Ors (2003) 129 LGERA 344 in the following passage at 348: However, the court is required to apply conventional principles to applications for security and, accordingly, in many cases this court has adopted the formulation by Beazley J in KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 at 197-198. The considerations said to be relevant by her Honour may be conveniently summarised as: (1) whether the application for security has been brought promptly; (2) the strength and bona fides of the case in which security is sought; (3) whether the impecuniosity of the applicant results from the respondent's conduct the subject of the claim; (4) whether the application for security is oppressive in the sense of denying an impecunious citizen or organisation a right to litigate; (5) whether there are persons standing behind the plaintiff applicant who are likely to benefit and be willing to provide the security; (6) whether persons standing behind the plaintiff applicant have offered any personal undertaking to be liable for the costs and if so the form of any such undertaking; and (7) whether the applicant for security is in substance the plaintiff or the proceedings are defensive in nature. 13 In applying these principles to the current case, I am of the opinion that the balance of these factors justifies an order that the Applicant provide security in the sum of $15,000 in respect of the second Respondent's costs. That result achieves, in my view, justice between the parties on the known circumstances of the case. 14 Although much of the argument focussed on the nature and strength of the Applicant's case based upon the Points of Claim and Points of Defence, that have been filed I have been unable to reach a firm view on the strength of the Applicant's case. The case is conventionally pleaded as a challenge to the validity of development consents and is more particularly based upon some specific obligations imposed upon the consent authority by the LEP. My evaluation of the case is that it appears to be more than an arguable case, but it is not an overwhelming case. 15 In the absence of evidence from the Applicant, it is in my view more probable than not that one of the principal objectives for the incorporation of the Application under the Associations Incorporation Act 1984 was to limit its liability, including any liability for costs that might be incurred in the present proceedings. 16 This inevitable inference concerning the relationship between (i) the Applicant's incorporation; and (ii) the causal Applicant instituting these proceedings distinguishes the present case from some earlier decisions of this Court which have considered applications for security of costs made against applicants which were incorporated associations under the Associations Incorporation Act 1984. I refer in particular to the decisions of Stein J (as he then was) in Darlinghurst Residents' Association v Elarosa Pty Ltd (unreported 10 February 1992) and Caldera Environment Centre Incorporated v Tweed Shire Council (unreported 25 September 1992) and my decision in Citizens Airport Environment Association Inc v Maritime Services Board (unreported 9 October 1992) where in each case it was held and that an impecunious incorporated association plaintiff was not to be equated to impecunious company plaintiff for the purpose of the various rules concerning security for costs eg Part 53 Rule 2 of the Supreme Court Rules and s 1335 of the Corporations Law. 17 In the absence of evidence from the Applicant concerning its membership and its assets (including the decision of the Applicant not to provide this information in response to the second Respondent's Solicitor's written request for the same) and having regard to the relevant content of the Applicant's Solicitor's affidavit that I have earlier recited, I have concluded that the Applicant is not likely to possess assets which would equip it with the means of satisfying any costs order that may be made against it in the proceedings should the proceedings fail. Accordingly, the power conferred by the Land and Environment Court Act, s 69(3) is enlivened and in the exercise of discretion, I have concluded that it should be exercised in the manner and to the extent that I have earlier indicated. 18 For all the foregoing reasons, I make the following orders -

The Applicant shall provide within 28 days the Court with security in -a form acceptable to the Court in the sum of $15,000 in respect of the second Respondent's costs.
The costs of the hearing of the second Respondent's Notice of Motion seeking security for costs be costs in the cause.
Stand over for mention on 8 June 2005.
Liberty to restore on three days' notice.

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Judgment (12 paragraphs)

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