Evans and Anor. v Maclean Shire Council and Anor. [2005] NSWLEC 67 | Case summary

HIS HONOUR: A. INTRODUCTION 1 By their Notice of Motion filed 10 December 2004, the Applicants seek an order that the second Respondent pay their costs in these class 4 proceedings, including the costs of their present Motion which was opposed by the second Respondent. 2 The class 4 proceedings which were commenced on 1 December 2003 claimed a declaration that a development consent granted by the Maclean Shire Council (the first Respondent) on 21 July 2003 for the expansion of existing facilities on land known as the "Clarence Coast Resort" was void. They also claimed a declaration that the development, the subject of the impugned development consent, was relevantly "State significant development" in terms of State Environmental Planning Policy No 71 - Coastal Protection (SEPP71) and that the Minister for Planning was the relevant "consent authority" to determine the development application that had been made by the second Respondent. Additionally, an injunction was claimed restraining the second Respondent from carrying out development in reliance upon the impugned development consent. The sole basis advanced by the Applicants for impugning the development consent was that it was not granted by the relevant "consent authority". 3 On 1 March 2004, the first Respondent filed a submitting appearance save as to costs and the proceedings were defended by the second Respondent. 4 In my reserved judgment delivered on 9 September 2004 (Evans v Maclean Shire Council and Anor [2004] NSWLEC 512), I held that the Applicants had been successful on the single issue raised, namely whether the approved development was relevantly "State significant development" and since no question of discretion had been raised in the proceedings, I declared the relevant development consent to be null and void and restrained the second Respondent from carrying out development in reliance upon it. 5 In seeking an order for costs, the Applicants rely upon their success in the proceedings and the general well established rule in the exercise of the broad costs discretion conferred by the Land and Environment Court Act 1979, s 69 that ordinarily costs will follow the event and a successful litigant in class 4 proceedings has a reasonable expectation of receiving his/her costs in the absence of special circumstances or disentitling conduct on the part of the successful litigant. 6 It is submitted on behalf of the Applicants that there is an absence in the present case of special circumstances or disentitling conduct on the part of the successful party and that the Court would accordingly exercise its costs discretion by awarding the Applicants' their costs in the proceedings. 7 The second Respondent (through Primrose Levi Pty Ltd which was represented (without objection from the Applicants) by Mrs Levi, who together with her husband are the Directors of that company, which is the owner of the land containing the "Clarence Coast Resort") oppose the making of the costs Order claimed on the grounds that there are relevantly in the present case special circumstances which justify the withholding of a costs order in favour of the Applicants, notwithstanding their success in the proceedings. 8 Mrs Levi supported her case with her affidavit sworn on 14 February 2005 (which contains some material in the nature of submissions rather than evidence but in respect of which the Applicants' Counsel raised no objection on the basis that the material would be received as if it were a submission) and a detailed written submission which responded to the Applicants' Counsel's written outline of argument claiming costs which had been filed and served in the proceedings. 9 In deference to the detailed case presented by Mrs Levi on behalf of the second Respondent and recognising that she is not a lawyer who has represented their company "because we cannot afford further legal advice" (par 5 of her Affidavit) and has ventilated a clamant sense of unfairness at the outcome of the proceedings, I must closely examine and consider her case opposing the making of the costs order claimed by the Applicants in these proceedings. B. THE BASIS FOR THE SECOND RESPONDENT'S OPPOSITION TO THE MAKING OF A COSTS ORDER AGAINST IT 10 The second Respondent asserts the following facts constitute "special circumstances" which are relevant to the exercise of the Court's costs discretion in the present case - (i) the second Respondent was the hapless victim of the erroneous advice of Planning NSW that its development application did not require determination by the Minister in terms of SEPP No 71 and that it was suitable for determination by the Maclean Shire Council; (ii) the second Respondent was the hapless victim of the difficulties posed by the unsatisfactory manner in which the Maclean Local Environmental Plan 2001 (the LEP) had imposed apparently conflicting development controls in respect of the separate categories of development " caravan park " and " tourist facilities "; (iii) the Court's judgment at par 33 recognised that the question whether SEPP No 71 relevantly declared " State significant development " was complicated by virtue of the fact that it did not, itself, provide that the declared development may be carried out with development consent - that being a component of the statutory concept defined by the EP&A Act , s 76A(7)(a) ; (iv) the Applicant's " success " in the proceedings is properly to be understood as " a fluke " - this was because their arguments wholly failed - as to (a) the proper characterisation of the approved development; and (b) whether the development consent was legally sustainable on the basis of a relevant " existing use " entitlement under the EP&A Act - and because the judgment turned on " a matter which (the judge) himself raised and which neither side had considered and neither side had the opportunity to respond to "; (v) had the Applicants raised in their Points of Claim the point upon which the case was ultimately determined, the second Respondent may not have defended the case because it may have thereby obtained (without the necessity for a judicial determination) sufficient clarity and certainty upon which the relevant planning authorities could determine who (the Minister or the Council) was the relevant consent authority to determine the second Respondent's development application; (vi) instead of raising the point upon which the case was ultimately determined, the Applicants in their Points of Claim raised issues upon which they failed at the hearing (ie they failed to establish that the approved development was properly characterised by the first Respondent in granting development consent and was not otherwise legally sustainable by relevant " existing use " entitlements) and in raising these issues (in particular by denying the " existing use " entitlement claimed by the second Respondent) the Applicants caused costs to be incurred (both to themselves and to the second Respondent) which were unnecessarily incurred; (vii) although it is conceded that the point ultimately determined in the proceedings was a matter of general public planning importance which may have required elucidation (namely whether SEPP No 71 declaring State significant development applied in the case of relevant development being relevantly prohibited by an environmental planning instrument but being nonetheless permissible pursuant to " existing use " entitlements) that was not the thrust of the Applicants' case which was motivated entirely by " private interest " (namely the Applicants' sustained opposition to the expansion of the existing facilities at the second Respondent's " Clarence Coast Resort" ). Nor was it the thrust of the interest pressed by the Environmental Defender's Office acting for the Applicants (which was to promote the maximum operation of SEPP71 and not allow it to be circumscribed by relevant Departmental Guidelines); (viii) the second Respondent was inevitably " locked into " the proceedings because of the attitude adopted by Planning NSW, in respect of its separate development application (essentially replicating the development application the subject of the impugned development consent made by the second Respondent to the Minister for his consent) under SEPP71, during the pendency of the Court proceedings, which attitude was to maintain its opinion that the Minister was not the relevant consent authority, and in any event the Department would not finalise the matter until the Court proceedings were concluded; (ix) even if the second Respondent had not defended the case and the development consent was declared to be null and void and the Minister were thereupon to determine the second Respondent's replicating development application, there would be nothing to prevent the Applicants or any other person opposing the development from asserting, in separate legal proceedings that the Minister was not the relevant consent authority - hence the impasse between the parties and the planning authorities virtually dictated the necessity for a judicial determination of the disputed and uncertain issue concerning the identity of the " consent authority "; 11 A number of the key factors that I have enumerated are encapsulated in the following paragraphs of Ms Levi's affidavit which were received (with the Applicants' Counsel's acquiescence) as submissions in the case rather than as evidence: 42. Throughout the conduct of the relevant proceedings the applicants indicated several reasons why they believed that the council was the wrong consent authority. We agreed with elements of their argument and ultimately our position was that the development was prohibited under the Maclean Shire LEP 2001 and therefore the Council was the correct consent authority. The applicants asserted that the development was not a tourist facility under the Maclean Shire LEP and that it did not have existing use rights. 43. At no time, before or during the proceedings did the Applicants assert that because the development was a tourist facility and because the development did have Existing Use Rights, the development was permissible and therefore the Minister should have been the consent authority. 44. This assertion on which the case was decided was made by His Honour outside the court room after the case was heard. We did not have an opportunity to put forward a counter argument in relation to this. C. CONSIDERATION OF THE SECOND RESPONDENT'S CASE FOR RESISTING A COSTS ORDER IN FAVOUR OF THE SUCCESSFUL PARTY 12 The second Respondent's emphatically expressed sense of grievance that the outcome of the proceeding is to demonstrate that it has been a hapless victim of "poorly written legislation" and 'erroneous" bureaucratic advice is an understandable reaction and warrants consideration. It is clearly a most unsatisfactory feature of planning law and its efficiant administration if there is genuine doubt as to the identity of the "consent authority" charged with the function of determining a development application, this being such a fundamental matter as to require no doubt whatsoever. 13 But that the sense of grievance goes much further by carrying the implication (if not the suggestion) that the second Respondent has also been the hapless victim of the judgment delivered in this case (including Mrs Levi's perception of the judgment process) has caused me considerable concern, which I have now entirely and satisfactorily resolved but only after meticulously reviewing the whole case, including the precise form of the entire arguments respectively advanced by the parties on the disputed question of statutory construction concerning the true meaning of the EP&A Act, s 76A(7)(a). 14 My review of the arguments advanced in the case demonstrates the both parties were entirely alive to the disputed question of construction and that my decision as to the proper construction of s 76A(7)(a) was arrived at by a process that involved evaluating the competing arguments, while recognising that the Court's constitutional function of interpreting legislation, is a wider function than that of simply adjudicating upon which of the competing interpretations advanced by the parties to litigation represents the true meaning of the relevant legislation: see Saif Ali v Sydney Mitchell and Co (1980) AC 198 and Accident Towing and Advisory Committee v Combined Motor Industries Pty Ltd (1987) VR 529. 15 However, in the present case, the Court, by the process of statutory construction, arrived at the true meaning of the EP&A Act, s 76A(7)(a) by adopting the argument that had been advanced by the Applicants rather than the second Respondent's competing argument. My earlier judgment deals with the question of statutory construction at paragraphs 83 to 115 inclusive. Those paragraphs include a summary of the parties' competing arguments (see pars 85 to 89 inclusive and pars 99 to 101 inclusive for the second Respondent's argument and par 90 for the Applicants' argument). 16 It is clear that my reasons devote more attention to the content of the second Respondent's argument than they do to the Applicants' argument. This may reflect the greater content of the second Respondent's argument, but that fact does not diminish the effect of the Applicants' argument (as recorded at par 90 of my reasons) that the EP&A Act, s 76A(7)(a)(ii) "extends to a development consent that is granted pursuant to the relevant entitlements concerning existing uses that are conferred by the EP&A Regulation". In any event, it is both appropriate and conventional that judicial reasons rejecting a party's proffered construction fully deal with the argument supporting that construction. 17 In fact, the Applicants' argument at the hearing was somewhat more developed than the truncated form in which I recorded it at par 90 of my reasons. Again, in deference to the second Respondent's expressed sense of grievance, I propose to here refer to the full argument that was advanced on behalf of the Applicants on the disputed question of construction much of which was in the form of a written outline (and hence may not have been spoken during the brief hearing). Thus, the Applicants' written arguments had included as "their primary position" the following proposition: The proposed development is permissible with consent under the Maclean LEP and it matters not whether the proposed development is characterised as: (a) a caravan park style tourist facility (as per the Applicants' primary position); (b) a caravan park (as per the approach taken by Council); (c) a tourist facility with existing use rights (as per the Respondent's position); because each is permissible with development consent. 18 The Applicants' "fall back" positions if the second Respondent's characterisation of the approved development was held to be correct, included the following proposition: If existing use rights for a tourist facility exist over the four lots (as claimed by the Applicant), the proposed development is seeking to enlarge and expand the tourist facility. In such circumstances the Minister is the consent authority under SEPP71 because such expansion may be carried out with development consent within the meaning of that expression in s.76A(7)(a)(ii) EPA Act. Therefore the consent granted by the Council was void because the Minister was the consent authority. 19 A further development of the Applicants' argument appears in their following response to the second Respondent's argument that the approved development "was permissible" by virtue of the relevant "existing use" provisions of the EP&A Act and Regulation: 2. As to the Respondent's first submission (to the effect that the proposed development was permissible with consent pursuant to the " existing use " entitlements), the Applicants accept that the proposed development was permissible with consent, either for the reasons given by the Respondent in (i) above or because the proper construction of the Maclean LEP is that caravan park style tourist facilities are expressly permissible. The important ramification of the Respondent's first submission, for the purpose of present proceedings, is that SEPP71 is attracted where the proposed development is permissible via s 108 of the EPA Act (as described by the Respondent). 3. Putting that another way, s 76A(7)(a)(ii) EPA Act does not say development that is expressly permitted under an environment planning instrument . Rather, it provides for development that may be carried out with development consent . If the Respondent is correct and existing use rights exist, those existing use rights permit the proposed development to be carried out with development consent and the Minister is the consent authority. 20 Finally, the Applicants' responses to the second Respondent's reliance upon the EP&A Act, s 76C included the following: 1. To say that s 76C EPA Act recognises that Division 1 of Part 4 of the EPA Act is subject to other provisions of the Act, says nothing as to why the reference to development consent in s 76A(7) cannot include a reference to development consent of the type expressly identified in clause 42 of the Regulation and granted pursuant to s 80 EPA Act. 2. In any event, the prohibition in s.76B EPA Act is subject to two exceptions: (i) S.89(1) EPA Act - direction from the Minister (ii) Clause 42 of the EPA Regulation in relation to enlargement, expansion or intensification of an existing use 3. The Applicants' construction of s.76A(7)(a)(ii) does not harm the maintenance of the threefold classification in Part 4 EPA Act. It is clear that development consent under Part 4 EPA Act is required for enlargement, expansion and intensification of existing uses (clause 42 of the Regulation so provides) and that s.79C matters are matters for consideration in any such development application for expansion. 21 The thrust and bases of these aspects of the Applicants' argument are entirely consistent with the reasons for my rejection of the second Respondent's argument as recorded at par 102 of my reasons which state: Although I was initially attracted by the logical force of the second Respondent's argument, upon deeper reflection, I have found the argument to be fatally flawed in that (i) it entirely overlooks the legal effect of the EP&A Act, s 108(2) which deems the existing use provisions of the EP&A Regulation " to be incorporated in every environmental planning instrument " and (ii) it fails to demonstrate that a development consent granted pursuant to the existing use provisions of the EP&A Regulation is a different phenomenon or entity (factually or legally) from a development consent granted otherwise under the EP&A Act . 22 Although the Applicants' argument did not specifically refer to the EP&A Act, s 108(2) or to the two decisions of Cripps J applying that statutory provision that I cited at pars 108 and 109 of my reasons, the Applicants' argument clearly was relying upon the provisions of the EP&A Act, s 108. 23 The foregoing discussion conclusively demonstrates in my judgment that the Applicants' success in the proceedings was not a "fluke" based upon matters that had not been argued by the parties at the hearing as alleged by the second Respondent. On the contrary, the competing arguments fully addressed the question of the proper construction of the EP&A Act, s 76A(7)(a) and my construction of that provision was clearly based upon my rejection of the second Respondent's argument and my upholding of the Applicants' competing argument. 24 Notwithstanding the Applicants' success in the proceedings, it is important to appreciate it was exclusively founded upon its success on the disputed question of statutory interpretation concerning the EP&A Act, s 76A(7)(a) in its application to the relevant "existing use" entitlements conferred by the EP&A Act. Moreover, that success was attained, notwithstanding the failure of the Applicants' primary case, namely that the approved development was properly to be characterised as a "caravan park" in terms of the LEP (which was the characterisation adopted by the Council in granting the development consent) or as "a caravan park type tourist facility" (which was the Applicants' proffered characterisation of the development). 25 Not only in my reasons for judgment did I reject the Applicants' primary case, but (as was pointed out at par 73) even if I had accepted the Applicants' argument that the proper characterisation of the approved development was as a "caravan park" in terms of the LEP that argument was factually or legally incapable of sustaining the necessary concurrent conclusion that that development, so characterised, relevantly constituted development for the purpose of a "tourist facility" within the meaning of SEPP71. 26 Having at par 74 rejected the Applicant's primary case, the remainder of my reasons for judgment raised and considered the "existing use" entitlements conferred by the EP&A Act as providing the one remaining "possible basis for characterising the approved development, as development for the purpose of a tourist facility within the meaning of SEPP71" (vide par 75). 27 The crucial holdings at pars 80 and 106 respectively that those "existing use" entitlements relevantly sustained (legally and factually), the conclusions that the approved development was relevantly (i) for the purpose of a "tourist facility" within the meaning of SEPP71; and (ii) "development that may be carried out with development consent" within the meaning of s 76A(7)(a) involved the significant irony that in their pleading the Applicants had countered the second Respondent's reliance on "existing use" entitlements under the EP&A Act to sustain the development consent, by denying that any such entitlements existed and by asserting that any existing-use entitlement (if it was shown to exist) only applied to a part of the overall lands comprising the "Clarence Coast Resort" and on that account could not lawfully sustain the development consent. 28 However, at the hearing, this issue raised by the Applicants' pleading denying the availability of any relevant "existing use" entitlements was submerged by the Applicants' principal argument "that the Minister was the relevant consent authority no matter upon what factual and legal basis the development consent had been granted (including pursuant to existing use entitlements)": vide par 8 of the reasons for judgment. 29 Accordingly, the manner in which the Applicants presented their case at the hearing (and in particular by advancing their primary argument that fully embraced the possibility that the development consent was sustainable pursuant to the "existing use" entitlements conferred by the EP&A Act) represented a significant departure from their case as pleaded. It also represented a significant contraction of the case as pleaded, especially in virtue of the Applicants' reply to the second Respondent's Points of Defence which had raised the issues (i) that the approved development did not constitute "tourist facilities" within the meaning of SEPP71 because "tourist facilities" were prohibited development in terms of the LEP; and (ii) that the Council was the relevant consent authority because the approved development was approvable pursuant to the "existing use" entitlements conferred by the EP&A Act. 30 When the Applicants filed on 17 May 2004 their Reply to the second Respondent's Points of Defence they denied the availability to the second Respondent of any relevant "existing use" entitlement and asserted that any "existing use" entitlement that might be substantiated was limited to part only of the development site. 31 The consequences of this Reply to the Points of Defence was that the second Respondent incurred substantial costs in causing to be prepared extensive affidavit evidence pertaining to the second Respondent's "existing use" entitlement. 32 Not only were these costs wasted because the "existing use" entitlement question was not fully explored at the hearing (because the Applicants' argument advanced on the hearing fully embraced the possibility that the development consent granted by the Council was sustainable by virtue of that relevant existing use entitlements), but far more important still, is the fact that the Applicants' case would have failed but for my conclusion (at par 80 of the reasons) that the development consent was factually and legally sustainable by virtue of the availability of relevant "existing use" entitlements. 33 In view of foregoing analysis of the vital difference between the Applicants' case as pleaded and their case as presented at the hearing it is quite clear that the Applicants should not recover any costs incurred on what was both an unnecessary and false issue that had been raised by the Applicants' Reply to the second Respondent's Points of Defence. 34 Moreover, in the interests of time and cost efficiencies in litigation, the Applicants' argument that ultimately succeeded at the hearing should have been appreciated far earlier in the litigation and should have been pleaded in response to the second Respondent's pleading raising the "existing use" entitlement issue. 35 This is especially so given the very confined basis for the Applicants' claim that the development consent granted by the first Respondent to the second Respondent's development application was null and void, namely that it was the Minister, and not the Council, that was the relevant "consent authority" responsible for determining the second Respondent's development application. In that context, as the argument ultimately successfully advanced by the Applicants demonstrated, irrespective of what basis (factual and legal) that sustained the development consent, it had not been granted by the relevant consent authority and on that account alone, the development consent was null and void. 36 For all the foregoing reasons, any costs order to which the Applicants may be presumptively entitled by virtue of being the successful litigant must in fairness, exclude all costs that were unnecessarily incurred. 37 In addition to those unnecessarily incurred costs, there is need to exclude the costs of the Applicants' unsuccessful Motion filed on 2 July 2004 seeking "a determination of the characterisation of the development proposed by the second Respondent's development application, as a preliminary question of law before the commencement of the proceedings". On 14 July 2004, Talbot J dismissed the Motion (which had been opposed by the second Respondent) and reserved the question of costs. (It is to be noted that by the time this Motion was filed, all of the second Respondent's affidavits prepared in respect of the "existing use" issue had been filed and served.) Clearly, the Applicants are not entitled to the costs of that unsuccessful Motion. 38 It is now convenient to provide the following summary of my findings on the matters that the second Respondent submits constitute "special circumstances": (i) the second Respondent has been the hapless victim of bureaucratic error in determining who was the relevant " consent authority " to determine the second Respondent's development application. (ii) although the Applicants' argument on the disputed question of statutory construction (concerning the proper meaning of the EP&A Act , s 76A(7)(a) was successful the Applicants' primary case failed (concerning the proper characterisation of the approved development in terms of the LEP); (iii) by denying the availability of relevant existing use entitlements, the Applicants not only raised an unnecessary and false issue (thereby causing costs to be unnecessarily incurred) but raised an issue, which had it been successfully established, would have totally undermined the sole basis upon which the Applicants succeeded in the proceedings; (iv) had the Applicants more efficiently prepared and presented their case, they would have raised earlier in the proceedings the point which they raised at the hearing and upon which they were successful; and (v) the sole point upon which the Applicants succeeded in the proceedings had not been raised in the Applicants' Points of Claim - their initial response on the pleadings to the " existing use " entitlement raised by the second Respondent's Points of Defence was to deny the existence of any such entitlement, and their ultimate response (as argued at the hearing) was to accept the possibility that the approved development was development that might be carried out with development consent pursuant to the " existing use " entitlements conferred by the EP&A Act . But in the result, it was the " existing use " entitlement that plugged the obvious hole in the Applicants' case (that hole resulting from the rejection of the Applicants' proffered characterisation of the approved development) and but for the holding that the development consent was legally and factually sustainable by virtue of the " existing use " entitlements, the Applicants' case would have wholly failed. 39 It remains for me to apply established principles for the exercise of the Court's costs discretion to these findings. D. THE RELEVANT PRINCIPLES FOR THE EXERCISE OF THE COURT'S COSTS DISCRETION 40 It is not in dispute that the LEC Act, s 69 vests the Court with a very broad judicial discretion in relation to costs. The real issue in the present case is how that discretion should be exercised. 41 In Latoudis v Casey (1990) 170 CLR 534, McHugh J recited the following oft cited extract from the speech of Viscount Cave LC in Donald Campbell & Co v Pollak [1927] AC 732 at 811-812: A successful defendant in a non-jury case has no doubt, in the absence of special circumstances, a reasonable expectation of obtaining an order for the payment of his costs by the plaintiff; but he has no right to costs unless and until the Court awards them to him, and the Court has an absolute and unfettered discretion to award or not to award them. This discretion, like any other discretion, must of course be exercised judicially, and the judge ought not to exercise it against the successful party except for some reason connected with the case. 42 Earlier in the same case, McHugh J had said at 568: In civil proceedings, the relevant statute or rule often provides that costs follow the event unless the court thinks that some other order should be made. But even when the discretion is uncontrolled, civil courts act on the basis that a successful party has a reasonable expectation of obtaining an order for costs and that the discretion to refuse to award costs should not be exercised against the successful party except for a reason connected with the case. Thus, if a plaintiff sues on two causes of action and succeeds on one, he or she will obtain the general costs of the action and the costs of the cause of action on which he or she succeeded, but the defendant will receive the costs of the cause of action on which he or she was successful: Greeves v Freshwater (1938) 55 WN (NSW) 113. 43 Following Latoudis, Gleeson CJ, when presiding in the Court of Appeal in Ohn v Walton (1995) 36 NSWLR 77 expressed a similar opinion when he said at 79: The point of Latoudis v Casey is that the purpose of an order for costs is to indemnify or compensate the person in whose favour it is made, not to punish the person against whom it is made. When legislation confers a power to order costs it is, in the absence of any contrary indication, to be understood as conferring a power to be exercised for that purpose. Two things follow: 1. The usual rationale of making a costs order is that it is just and reasonable that the successful party should be reimbursed for costs incurred, in the absence of grounds connected with the charge or the conduct of the proceedings which make it unjust or unreasonable that there should be such reimbursement. 2. The test of whether an order for costs should be made against an unsuccessful plaintiff or complainant is not whether he or she has done anything to warrant punishment. It is whether, in the circumstances, the defendant or respondent should be compensated. 44 More recently, the High Court has examined the scope of the costs power conferred by s 69 of the LEC Act in Oshlack v Richmond River Council (1998) 193 CLR 72; 96 LGERA 173 in the context of an appeal in respect of the decision of the trial judge (Stein J when a judge of this Court) not to make a costs order in favour of the successful defendant on account of "public interest" considerations held to be present in the case. 45 Although the joint majority judgment of Gaudron and Gummow JJ declared at 88, 186 that: (T)here is no absolute rule with respect to the exercise of the power conferred by a power such as s 69 of the LEC Act that, in the absence of disentitling conduct, a successful party is to be compensated by the unsuccessful party. this statement, though powerfully vindicating the plenary nature of the discretion conferred by s 69 cannot be taken as denying the existence of relevant established principles for the exercise of that judicial discretion such as those enunciated by McHugh J in Latoudis in the passages that I have earlier quoted. That this is the case is expressly stated in the judgment of Kirby J (the other majority judge in Oshlack ) in the extended passage at 120-122 which includes the following statement at 122; 212-214: The compensatory principle is adequately reflected by the adoption of a general practice by which, ordinarily (including in a case brought by a party under the open standing rule and purportedly in the public interest) costs are ordered in favour of the successful party. 46 In my respectful opinion, the dissenting judgment of McHugh J in Oshlack includes at 97-98; 193-194 an illuminating exposition of the "usual order as to costs" made in favour of a successful party to litigation which applies to the exercise of judicial discretion required in the present case. 47 The second Respondent's submissions to the effect that the Applicants should be denied all or most of its costs (despite their success in the litigation) must, if they are to prevail, I think, be accommodated within the bounds of the established exceptions to the "usual costs order" made in favour of the successful litigant, namely that the applicant should be denied its costs because of some relevant "misconduct in the litigation". In Oshlack, McHugh J refers to these as "traditional exceptions" in the following passage at 97-98; 193-194: The traditional exceptions to the usual order as to costs focus on the conduct of the successful party which disentitles it to the beneficial exercise of the discretion. In Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd ([1951] 1 All ER 873 at 874.) Devlin J formulated the relevant principle as follows: No doubt, the ordinary rule is that, where a plaintiff has been successful, he ought not to be deprived of his costs, or, at any rate, made to pay the costs of the other side, unless he has been guilty of some sort of misconduct. Misconduct in this context means misconduct relating to the litigation (F King & Co v Gillard & Co [1905] 2 Ch 7; Donald Campbell & Co Ltd v Pollak [1927] AC 732 at 812.), or in the circumstances leading up to the litigation (Bostock v Ramsey Urban District Council [1900] 2 QB 616.). Thus, the court may properly depart from the usual order as to costs when the successful party by its lax conduct effectively invites the litigation (Jones v McKie [1964] 1 WLR 960; [1964] 2 All ER 842; Bostock [1900] 2 QB 616 at 622, 625, 627); unnecessarily protracts the proceedings (Forbes v Samuel [1913] 3 KB 706); succeeds on a point not argued before a lower court (Armstrong v Boulton [1990] VR 215 at 223.); prosecutes the matter solely for the purpose of increasing the costs recoverable or obtains relief which the unsuccessful party had already offered in settlement of the dispute (Jenkins v Hope [1896] 1 Ch 278) 48 The earlier judgment of McHugh JA in the Court of Appeal's unreported decision in Hedley v National Commercial Banking Group of Australia (31 October 1986) contains the following similar synopsis of the exceptions to the general rule under the Supreme Court Rules 1970 Pt 52 r 11 that costs follow the event. However, a departure from the general rule can only be made when the evidence justifies the exercise of the discretion against the successful party: see Donald Campbell & Co Ltd v Pollak at 811-812. The court cannot deprive a successful party of his costs on grounds unconnected with the cause of action (at 811-812, 813, 825). Thus a misrepresentation by a successful defendant unconnected with the case is not a ground for depriving him of costs: see F King & Co v Gillard & Co [1905] 2 Ch 7. Nor is it enough that the successful party should have acted with more courtesy and consideration: see Edmund v Martell (1907) 24 TLR 25. Before a successful party is deprived of his costs it will generally be necessary that he was guilty of conduct which improperly induces the losing party to think that he had a good cause of action or defence or which has occasioned unnecessary litigation or expense in the institution or conduct of the proceedings: see Ritter v Godfrey [1920] 2 KB 47 at 53, 60, 66; Sunday Times Newspaper Co Ltd v McIntosh (1933) 33 SR (NSW) 371 at 377; Redden v Chapman (1949) 50 SR (NSW) 24. In Ritter v Godfrey (at 60-61) Atkin LJ mentioned a third class of case where the court may deprive a party of his costs. He may lose his costs if he was guilty of a wrongful act in the course of the transaction of which the other party complains and that act amounts to a public wrong. In Donald Campbell & Co v Pollak, Lord Atkinson (at 822-823) gave his approval to this third category of exceptions. Viscount Cave LC, whose speech had the approval of Viscount Dunedin and Lord Phillimore, did not go so far. He said (at 812) an appellate court cannot interfere with the trial judge's discretion if he `has acted on facts connected with or leading up to the litigation'." 49 Hedley provides a good illustration of conduct by the successful party in the litigation which occasions unnecessary litigation or expense, where McHugh JA held (at p 8) that the failure to plead a statutory defence (which was unanswerable) had unnecessarily prolonged the litigation and caused both parties to incur expenses that could have been avoided. In consequence, his Honour held that to order the unsuccessful party to pay the successful party's costs "therefore would be as unjustified as it would be unfair". 50 In Vanmeld Pty Ltd v Fairfield City Council (unreported, Land and Environment Court, NSW, Bignold J, No 40032 of 1995, 27 September 1996) and Brietkopf v Wyong Council (unreported, Land and Environment Court, NSW, Bignold J, No 40129 of 1995, 27 September 1996), I rejected submissions relying upon Hedley that the successful parties in those cases had been guilty of relevant misconduct in the litigation. In Breitkopf the relevant conduct was declining to raise as a preliminary question of law, the defence based upon s 104A of the Environmental Planning and Assessment Act 1979 (NSW) and in Vanmeld, the relevant conduct was failing to initially include in its demurrer based upon s 35 of the EP&A Act the question of invalidity by virtue of alleged bad faith. 51 However, there was in those decisions, no questioning on the principles expressed in Hedley concerning circumstances (operating as an exception to the general rule of costs following the event) in which a successful party may be denied part or all of its costs on account of its misconduct in the litigation unnecessarily prolonging the hearing, and in consequence, unnecessarily incurring costs. 52 Other illustrations of this exceptional principle can be found in the decided cases. Thus, in Gold v Patman and Fothringham Ltd [1958] 2 All ER 497 where an appeal was brought against the trial judgment in favour of the defendants with only half their costs Hodson LJ said: This is a course which the Court does not often take, because, when a Defendant has an action brought against him, he is entitled to raise such defences as are available to him, but I think that in this case there was an opportunity for the Defendants to take a clear-cut point of law which depended on the construction of the document and on which this case has ultimately turned, and if that course had been taken, a very large expenditure of money would have been saved. On all the issues of fact which were raised by the Defendants by calling evidence to prove or disprove certain facts, the learned judge in the Court below found against them. 53 In Verna Trading Pty Ltd v New India Assurance Co Ltd [1991] 1 VR 129 Beach J in holding that the successful defendant had behaved unreasonably in not revealing the true basis upon which it intended to contest the plaintiff's claim to be indemnified, not only denied it an order for costs but ordered it to pay the plaintiff's costs up to the first day of the trial, when the true basis for the successful defence was revealed. The decision was affirmed on appeal to the Appeal Division of the Victorian Supreme Court where Kaye J (at 151-156) extensively considers the authorities including Pollak. 54 My judgment in Penrith City Council v Clarenden Group Services Pty Ltd (1998) 101 LGERA 141 provides another illustration of a limited costs order made in favour of the successful party on account of the manner in which the litigation was conducted by the successful party involving the incurring of substantial costs that were unnecessarily incurred. 55 In those class 4 proceedings, the council had been successful in obtaining a mandatory order requiring the respondent to comply with certain financial obligations that had been imposed by conditions of a development consent granted by the Council. In reserving the question of costs I had said in my judgment on the substantive case - The question of costs is reserved, for although the council has been successful in the proceedings, and on that account would normally expect a costs order in its favour, the question may need to be asked whether the result in the proceedings could not have been achieved far earlier, if for example, the council had demurred to the respondent's points of claim raising the defences of waiver and estoppel. 56 At the separate hearing on the question of costs, the council had argued that it was entitled to its "full costs" because it had been entirely successful in the litigation and because of the state of the respondent's pleadings which had included particulars of its defences of waiver and estoppel. 57 In my judgment in the substantive proceedings, I had held that the Respondent's defences of waiver and estoppel had failed, not for any reason based upon the extensive evidence adduced by the council, but "because they offended the fundamental principle of public policy that a court will not enforce or countenance an alleged agreement or estoppel because of its illegality". 58 In adjudicating upon the disputed costs question and in making only a limited costs order in favour of the successful party, I said at 150: However, the fundamental reason for holding the council to be responsible for prolonging the trial and for increasing the costs concerns its failure to demur to the respondent's defences of waiver and estoppel immediately once it had become clear, in the course of the cross-examination of Mr Campbell, that the alleged agreement was tainted by illegality. This was the exclusive reason for my judgment holding the defences to have failed and the council's affidavit evidence was entirely irrelevant to that conclusion, just as it was entirely irrelevant to the council's ultimate legal submissions made in the case concerning the defences of waiver and estoppel. E. CONCLUSIONS AND ORDERS 59 Applying to my relevant findings, the relevant principles for the exercise of the Court's costs discretion, I am of the clear opinion that the Applicants should not obtain an order for the payment of their full costs, but should obtain only a limited order recognising that they were the successful party but that the manner in which they had conducted the litigation had involved the incurring by both parties of unnecessary and wasted costs. In particular, had they raised in their pleadings, the only point upon which they ultimately succeeded in the litigation, considerable unnecessary costs would have been avoided. 60 Rather than propound a costs order by limiting recoverable costs to certain issues (as occurred with the limited costs order made in the Clarendon Group Services case), I think the more appropriate costs order to be made in the present case is one that awards the successful party, part only of their costs. 61 Having regard to my findings concerning the matters raised by the second Respondent constituting either "special circumstances" or "disentitling conduct" I am of the opinion that the appropriate costs order should be limited to 40 percent of the assessed costs. This also reflects the second Respondent's success on the Applicants' interlocutory Motion that was dismissed by Talbot J. 62 In view of the outcome of this present Motion, there should be no order as to costs on the hearing of the Motion. 63 Accordingly, I make the following orders - 1. The second Respondent shall pay 40 percent of the Applicants' costs in the proceedings (other than the costs of the hearing of the Applicants' Motion for costs) in the sum agreed, or failing agreement, as assessed. 2. There be no order for costs on the hearing of the Applicants' Notice of Motion seeking an order for costs.

Evans and Anor. v Maclean Shire Council and Anor.

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Judgment (11 paragraphs)

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Legislation Cited (1)

Cases Cited (5)