F & D Bonaccorso Pty Ltd v City of Canada Bay Council

FOURTH RESPONDENT: Omaya Investments Pty Ltd

FIFTH RESPONDENT: The Registrar-General

KEY ISSUES: Costs :- Apportionment of costs where there are multiple issues and successful applicant in Class 4 proceedings fails on issue which is clearly separable - Whether proceedings brought in the public interest and required consideration of a novel and important matter such that, in the circumstances, a respondent should be denied its apportionable costs of an issue on which it has been successful.

Civil Procedure Act 2005 (NSW), s 98 Courts Legislation Amendment Act 2007 (NSW) Land and Environment Court Act 1979 (NSW), ss 20, 69, 94 LEGISLATION CITED: Land and Environment Court Rules 2007 (NSW), rr 3.7(2), 4.2(1) Local Government Act 1993 (NSW), ss 45, 676 Migration Act 1958 (Cth) Real Property Act 1900 (NSW) Uniform Civil Procedure Rules 2005 (NSW), r 42.1

City of Canada Bay Council v Bonaccorso Pty Ltd (No 3) [2008] NSWCA 57 City of Canada Bay Council v F & D Bonaccorso Pty Ltd & Ors (2007) 156 LGERA 294 Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 Drake-Brockman v Minister for Planning (No 2) [2007] NSWLEC 777 Engadine Area Traffic Action Group Inc v Sutherland Shire Council (No 2) (2004) 136 LGERA 365 F & D Bonaccorso Pty Ltd v City of Canada Bay City Council [2007] NSWLEC 159 F & D Bonacorso Pty Ltd v City of Canada Bay Council (No 3) [2007] NSWLEC 569 CASES CITED: F & D Bonaccorso Pty Ltd v City of Canada Bay Council (No 4) [2007] NSWLEC 649 Hainbury Pty Ltd v Campbelltown City Council [2007] NSWLEC 713 Harvey v Minister Administering the Water Management Act 2000 (No 2) [2008] NSWLEC 213 James v Surf Road Nominees Pty Ltd [No 2] [2005] NSWCA 296 Kogarah Municipal Council v Golden Paradise Corporation [2005] NSWCA 230 Latoudis v Casey (1990) 170 CLR 534 Oshlack v Richmond River Council (1998) 193 CLR 72 Save the Ridge Inc v Commonwealth (2006) 230 ALR 411

DATES OF HEARING: 26 May, 6 June, 11 June, 13 June 2008 (written submissions)

APPLICANT: Mr J Doyle, barrister SOLICITORS Thomson Playford LEGAL REPRESENTATIVES: FIRST RESPONDENT: Mr S Free, barrister SOLICITORS Maddocks

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

F & D BONACCORSO PTY LTD v CITY OF CANADA BAY COUNCIL & ORS

JUDGMENT 1 HIS HONOUR: This matter concerns redetermination of costs on remission from the Court of Appeal: City of Canada Bay Council v Bonaccorso Pty Ltd (No 3) [2008] NSWCA 57. There are two main issues. First, apportionment of costs where there are multiple issues and the successful applicant has failed on an issue which is clearly separable. Secondly, whether the proceedings were brought in the public interest and required consideration of a novel matter, such that a respondent should be denied its apportionable costs of an issue on which it has been successful. Background 2 The proceedings at first instance involved three issues (leaving aside the issue of the validity of a 2002 development consent, which became redundant) - the validity of the 2003 development consent, the community land issue and the indefeasibility issue: F & D Bonaccorso Pty Ltd v City of Canada Bay City Council [2007] NSWLEC 159. The applicant (Bonaccorso) was successful before me in respect of each of those issues at first instance. I made declarations and orders giving effect to the decision in relation to each of the three issues. First, a declaration and an order setting aside the 2003 development consent. Secondly, a declaration that Chapman Reserve was community land. Thirdly, an order for rectification of the Register under the Real Property Act 1900 to show the respondent, Canada Bay Council, as the registered proprietor of the lots comprising Chapman Reserve. 3 In keeping with the principles governing costs in such proceedings (Latoudis v Casey (1990) 170 CLR 534 at 543, 566-568; Oshlack v Richmond River Council (1998) 193 CLR 72 per McHugh J at 97-98), costs followed the event. Hence, the costs order made by me on 6 September 2007 in respect of costs as between council and Bonaccorso followed from my findings in favour of Bonaccorso: F & D Bonacorso Pty Ltd v City of Canada Bay Council (No 3) [2007] NSWLEC 569. I relevantly ordered, by order 1, that the council pay Bonaccorso's costs of the proceedings in the Land and Environment Court as agreed or assessed (with the exception of the costs of injunctions obtained against the respondent developer). It is not necessary for present purposes to revisit the other orders made on that occasion. 4 Council appealed from my decision in the substantive proceedings, but only in relation to the community land issue and the indefeasibility issue. Council was successful in the appeal on the indefeasibility issue: City of Canada Bay Council v F & D Bonaccorso Pty Ltd & Ors (2007) 156 LGERA 294, [2007] NSWCA 351. The Court of Appeal rejected council's arguments as to the community land issue. The Court of Appeal agreed that Chapman Reserve was a public reserve and community property, that the council broke the law when it sold Chapman Reserve to a property developer and that the transfer was without power. However, the Court of Appeal accepted the arguments of council (and the respondents other than Bonaccorso) as to the question of indefeasibility and thus allowed the appeal. The Court of Appeal set aside the declarations and orders made by me going to the status of Chapman Reserve as "community land" and requiring rectification of the register to reverse the transfer of Chapman Reserve. The Court of Appeal at [98] considered it was appropriate to set aside the declaration as to the status of Chapman Reserve as "community land", despite the Court of Appeal's own findings on that issue, because it followed from its conclusions on indefeasibility that there was no utility in such a declaration being made. 5 The Court of Appeal granted the parties liberty to apply as to whether the Court of Appeal should make orders with respect to the costs of the proceedings in the Land and Environment Court. Both council and Bonaccorso made written submissions to the Court of Appeal in respect of the appropriate order for costs in respect of the proceedings at first instance, in substitution for the order as to costs made by me on 6 September 2007. On 10 April 2008, the Court of Appeal gave judgment, inter alia, in respect of the question of costs of the hearing at first instance: City of Canada Bay Council v F&D Bonaccorso Pty Ltd (No 3) [2008] NSWCA 57. The Court of Appeal held at [17] that the question of the costs of the proceedings in the Land and Environment Court should be remitted to that Court for redetermination. In the same decision, the Court of Appeal revised its earlier costs order as to the costs of the appeal, with the result that council is to pay Bonaccorso's costs of the appeal as they relate to the community land issue and Bonaccorso is to pay the remainder of council's costs of the appeal. 6 In light of the Court of Appeal's decision, my costs order 1 of 6 September 2007 cannot stand. That order was premised on Bonaccorso having been successful on each of the issues which it pursued in the proceedings at first instance. The Court of Appeal decision has reversed the result in respect of the indefeasibility issue. Apportionment 7 It is appropriate that council's success on the indefeasibility issue should be reflected in a revised order for costs in respect of the proceedings in the Land and Environment Court. In formulating such an order, it is necessary to take into account Bonaccorso's success on other issues. Bonaccorso's success in respect of the 2003 consent has not been disturbed by the decision of the Court of Appeal. Bonaccorso has retained its victory in respect of the community land issue, although its success at first instance in obtaining a declaration as to the status of Chapman Reserve has been reversed because the Court of Appeal set aside that declaration because it lacked utility having regard to council's success on appeal on the indefeasibility issue. The Court of Appeal found that the community land issue was a separate issue in respect of which council's appeal was unsuccessful and in respect of which Bonaccorso was entitled to a special order for its costs in the Court of Appeal. 8 An order apportioning the costs of the proceedings at first instance as between council and Bonaccorso is appropriate. The principles governing apportionment were considered by the Court of Appeal in James v Surf Road Nominees Pty Ltd [No 2] [2005] NSWCA 296 per curiam at [32]-[36], and were reviewed by me as follows in my earlier costs judgment in F & D Bonacorso Pty Ltd v City of Canada Bay Council (No 3) [2007] NSWLEC 569 at [15]-[17]: 15 Costs may be apportioned where there are multiple issues involved and the successful applicant fails on a particular issue or group of issues which is clearly dominant or separable. The apportionment principles are conveniently stated by the Court of Appeal in James v Surf Road Nominees Pty Ltd [No 2] [2005] NSWCA 296 at [32] - [36] (applied by the Court of Appeal in Roads and Traffic Authority (NSW) v McGregor (No 2) [2005] NSWCA 453 at [17]): 32. The effect of Pt 52A r.11 is that an unsuccessful party may be ordered to pay the entirety of the costs of the successful party, even though the successful party did not succeed on all issues. However, as is specified by the rule itself, the Court is entitled to make a different order. That may occur where there are multiple issues involved. This was the subject of comment in Waters v. P C Henderson (Aust) Pty. Limited (unreported CA(NSW) Kirby P, Mahoney and Priestley JJA, 6 July 1994) where Mahoney JA said: Where the proceedings involve multiple issues the application of the rule that costs follow the event may involve hardship where a party succeeds on some issues and yet fails on others. Particularly is this so where, for example, a defendant succeeds on issues that occupied the bulk of the time taken by the proceedings. Nevertheless, unless a particular issue or group of issues is clearly dominant or separable, it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed. 33. Similarly, Toohey J made the following observations in Hughes v Western Australian Cricket Association (1986) ATPR 40-748: 1. Ordinarily, costs follow the event and a successful litigant receives his costs in the absence of special circumstances justifying some other order. 2. Where a litigant has succeeded only upon a portion of his claim, the circumstances may make it reasonable that he bear the expense of litigating that portion upon which he has failed. 3. A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the party's costs of them. In this sense, issue does not mean a precise issue in the technical pleading sense but any disputed question of fact or of law. (references omitted) 34. Where a matter involves multiple issues and the question before the court is whether it should make some other order as to costs other than the order that costs follow the event, a distinction is commonly drawn between cases which involve clearly discrete issues for determination, and those in which all issues are inseparable, or at least sufficiently linked, with respect to the overall disposition of a particular matter. In Permanent Trustee Aust Ltd v FAI General Insurance Co Ltd (unreported, NSWSC, 3 June 1998), Hodgson CJ in Eq noted that the obvious examples of a matter involving discrete issues is one where a plaintiff makes separate claims for different relief, or a claim by a plaintiff and a cross-claim by a defendant. Another example is where a respondent is successful in having an appeal against an earlier decision dismissed, but for reasons other than those raised in the respondent's Notice of Contention. This is not to say that so-called discrete issues , for the purposes of apportioning costs, only exist in cases where there are separate claims made within a single matter. As Toohey J stated in the passage quoted at [33] above, it can relate to any disputed question of fact or law before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter. 35. In Madden v Connell [2001] NSWSC 1051, Hamilton J referred to there being a rule that where there are discrete issues and the time taken on each issue at the hearing can be identified or realistically estimated , an order for costs may be made against the party which fails on such issues, or alternatively, that party may be deprived of its costs for that portion of the matter. In the Court's opinion it is preferable not to speak in terms of rules . However, the underlying approach to the rule stated by his Honour may be an available approach to the exercise of the court's discretion as to costs in a particular case, depending upon all of the circumstances. 36. Where the court does exercise its discretion to apportion costs, the apportionment itself involves the exercise of discretion. As Gummow, French and Hill JJ recognised in Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261: Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion for the trial judge. Mathematical precision is illusory and the exercise of the discretion will often depend upon matters of impression and evaluation.

16 When considering apportionment of costs, a balance has to be maintained between not discouraging litigants from canvassing all material issues and not rewarding them for unreasonable conduct in the pursuit of issues. In GPT Re Ltd v Wollongong City Council (2006) 151 LGERA 174 at 178 [9] I said: [9] The three principles enunciated by Toohey J in Hughes were cited by the Full Federal Court in Dodds Family Investments Pty Ltd (formerly Solar Tint Pty Ltd) v Lane Industries Pty Ltd (1993) 26 IPR 261 at 271: The propositions enunciated in that case are subject to the further consideration that justice may not be served if parties are dissuaded by the risk of costs from canvassing all issues that might be material to the decision in the case: Cretazzo v Lombardi (1975) 13 SASR 4 at 12. In Trade Practices Commission v Nicholas Enterprises Pty Ltd (No 3) (1979) 42 FLR 213; 28 ALR 201, Fisher J regarded the discretion to apportion costs as one to be exercised only in the most exceptional circumstances. Nevertheless he accepted that where a considerable part of the trial is taken up in determining issues upon which a party fails, it is a proper exercise of the discretion to reduce the costs allowed to that party. Generally speaking, and notwithstanding the considerations referred to by Toohey J and the other authorities mentioned above, the demands of the community for greater economy and efficiency in the conduct of litigation may properly be reflected in a qualification of the presumption that a successful party is entitled to all its costs. 17 Similarly, in Stena Rederi Aktiebolag v Austal Ships Sales Pty Ltd [2007] FCA 1141 at [12] Tamberlin J commented that: When apportioning costs, however, a Court should be mindful not to discourage litigants from canvassing all material issues for fear of an adverse costs order…Equally, litigants should not be rewarded for the injudicious pursuit of issues without substance . 9 Having regard to these principles and the findings of the Court of Appeal in this matter regarding costs of the appeal, the indefeasibility issue ought properly to be treated as a discrete issue for costs purposes. A costs order which reflects Bonaccorso's failure on that issue and council's success on that issue is appropriate. That is subject to consideration of Bonaccorso's submissions that council should not have its costs of that issue because, it is said, Bonaccorso brought the proceedings in the public interest and/or it involved a novel and important point. No such submissions were put to the Court of Appeal, which explains why they were not addressed in the Court of Appeal's judgment. 10 Following the Court of Appeal's approach (and subject to the additional consideration to which I have referred), I could simply set aside order 1 made by me on 6 September 2007 and, in lieu, order council to pay Bonaccorso's costs except in relation to the indefeasibility issue and Bonaccorso to pay council's costs in relation to the indefeasibility issue. However, that would be likely to involve a costly and complicated costs process of assessment in order to determine the proper apportionment, which both parties seek to avoid. Consequently, as requested by the parties, I will apportion a percentage of each party's costs to the indefeasibility issue and address whether they should be set off. 11 Bonaccorso submits that:

(a) council should pay 100 percent of Bonaccorso's costs incurred prior to 5 September 2006, being the date that its Application was amended to address registration of the Chapman Reserve transfer of 22 August 2006 which gave rise to the indefeasibility issue; (b) the proportion of each party's costs relating to the indefeasibility issue should be assessed at 15 percent; (c) no costs should be awarded to council in relation to the indefeasibility issue because Bonaccorso brought these proceedings in the public interest; (d) therefore, the costs order should be that council pay 85 percent of Bonaccorso's costs incurred from 5 September 2006. 12 Council submits that:

(a) the proportion of each party's costs attributable to the indefeasibility issue should be assessed at 25 percent; (b) Bonaccorso's public interest argument should be rejected; (c) therefore, the costs order should be that council pay 50 percent of Bonaccorso's costs. Such an order would reflect Bonaccorso's success on the other issues, while offsetting those costs to which council is entitled as against Bonaccorso to reflect council's success on the indefeasibility issue; (d) that order should maintain the exclusion previously determined by me, namely that the costs payable by council do not include the costs of injunctions obtained by Bonaccorso against the developer. This exclusion was considered and determined by me: F & D Bonacorso Pty Ltd v City of Canada Bay Council (No 3) [2007] NSWLEC 569 at [43]. I agree that there is nothing arising from the Court of Appeal decision that would justify revisiting it. 13 Where the Court does exercise its discretion to apportion costs because of a mixed outcome in proceedings, the apportionment involves the exercise of discretion and turns on matters of impression and evaluation. This requires an identification or realistic estimate of the proportion of time and costs which were attributable to each issue. 14 A significant part of the costs incurred prior to the hearing, particularly as to evidence, related to the challenge to the 2003 consent and the community land issue. Following council's concession of the invalidity of the 2003 consent at the start of the hearing, the majority of the hearing time was consumed by the community land issue and the indefeasibility issue. Because of the evidentiary issues associated with the community land issue, a greater proportion of costs is attributable to the community land issue than is attributable to the indefeasibility issue. Nevertheless, written and oral submissions as to the indefeasibility issue gave rise to a significant portion of the costs incurred by council and Bonaccorso. Council submits that this is reflected in the extensive consideration given to the indefeasibility issue in my reasoning (F & D Bonaccorso Pty Ltd v City of Canada Bay City Council [2007] NSWLEC 159 at [35]-[102]). As to the relevance of a judge's reasoning to the time attributable to particular issues, see James at [37]. I do not entirely accept that submission. The extent of consideration of the indefeasibility issue in my reasons for judgment was somewhat greater, I think, than the extent of written and oral submissions on that issue. The indefeasibility issue also gave rise to procedural issues that occupied some time at the hearing, being the addition of the Registrar General as a party and the joinder/notification of the mortgagee of Chapman Reserve. 15 On Bonaccorso's own evidence, 28 August 2006 was the date that Bonaccorso's representatives became aware of the registration of the transfer which gave rise to the indefeasibility issue. Costs relating to the indefeasibility issue were incurred from that date, self-evidently in the preparation of the amended pleading filed on 5 September 2006. It is likely that preparation in relation to the indefeasibility issue commenced soon after, rather than immediately on, 28 August 2006. I therefore propose that Bonaccorso should have 100 percent of its costs prior to 1 September 2006 and that there should be an apportionment of costs thereafter.

16 Considerably more preparation time was likely to have been directed to factual issues rather than to the indefeasibility issue, which was largely an issue of law with limited evidence concerning title documents. Doing the best I can, I propose to adopt 20 percent as an estimate of the total time spent on the indefeasibility issue after that issue arose. Public Interest 17 Although Bonaccorso concedes that in light of the Court of Appeal's judgment it cannot obtain an order for the costs of the indefeasibility issue, Bonaccorso submits that there should be no order for the costs of the indefeasibility issue in favour of the council. The reason, Bonaccorso submits, is that there are special public interest considerations which, in the circumstances, would make it unjust for Bonaccorso to be ordered to compensate the council for its costs of defending the results of its proven statutory breaches. If the public interest submission were to be accepted, then (on my assessment) council should be ordered to pay 80 percent of Bonaccorso's costs from 1 September 2006. If the public interest submission were to be rejected, council should be ordered to pay 60 percent of Bonaccorso's costs from 1 September 2006. 18 Bonaccorso's public interest submissions are to the following effect:

(a) Although council succeeded on appeal the issue of indefeasibility, it failed in its application to reverse this Court's finding that Chapman Reserve was a public reserve and that the Council broke the law when it sold a valuable public park to a property developer. The Court of Appeal agreed that the relevant transfer was without power, and therefore both invalid and a breach of s 45 of the Local Government Act 1993 . Council's success arose only by its assertion of a third party's indefeasible title as a defence to protect its unlawful (and unremedied) sale in circumstances where the registered proprietor of that title had submitted to orders. The Council has retained the benefit of its transaction; (b) There is a public flavour to proceedings commenced by a land owner seeking orders to restrain and remedy an unlawful sale of a public park, which the evidence recorded was used by the tenants of its building and other local residents and ratepayers. The proceedings raised important questions for judicial determination concerning both the application of ss 45 and 676 of the Local Government Act 1993 and the interaction of the indefeasibility provisions of the Real Property Act 1900 with those sections and s 20 of the Land and Environment Court Act 1979 . Those questions had not previously been determined by a Court and indeed was identified as an unresolved matter in the Court of Appeal judgment of Kogarah Municipal Council v Golden Paradise Corporation [2005] NSWCA 230. 19 Bonaccorso further submits:

(a) in the present case there was a public interest served by the litigation, the public interest was wider than the relatively small number of people in the immediate vicinity of the development and the applicant sought to enforce public law obligations. These were factors (a), (b) and (c) identified in Engadine Area Traffic Action Group Inc v Sutherland Shire Council (No 2) (2004) 136 LGERA 365 at 371 [15] (see [22] below). The proceedings involved a council approval of a development involving 148 units, demolition of 5 listed heritage items, closure of a public road and conversion to private ownership of a valuable local park. The Strathfield Triangle and a small area of Concord West are the only areas of the large Canada Bay local government area that do not have a park within 15 minutes walking distance; (b) there is no evidence as to what the prime motivation of Bonaccorso was, or of any pecuniary interest that it had in the ownership of the park other than to ensure that the planning laws were applied objectively and that its tenants did not lose a valuable local recreation area. There were factors (d) and (e) identified in Engadine at 371 [15] (see [22] below). It is obvious that Bonaccorso's costs of pursuing the litigation were considerable; (c) furthermore, the answer to the questions identified in Engadine must be assessed beside the quite remarkable course of this litigation: (i) Bonaccorso spent three and a half years bringing the matters the subject of these proceedings to hearing, and was left alone with the considerable task of holding the council to account for its demonstrated breaches of the planning laws in relation to three separate development consents granted over 5 years (the 2002 and 2003 consents the subject of these proceedings, and the 2007 consent the subject of other proceedings in 2007) and the unlawful sale of a public park; (ii) Council defended the proceedings against one of its ratepayers for three and a half years before conceding the invalidity of the 2003 consent in an amended defence filed on the first day of the hearing (noting the 2002 consent was similarly surrendered 4 weeks before the hearing dates that had been listed on 4 and 5 August 2003); (iii) Bonaccorso's task of proving that Chapman Reserve was community land (against Council's defence which was found to be " unmeritorious " by the Court of Appeal) was frustrated by council's failure to produce a volume of crucial documents until day 2 of the hearing without explanation despite the earlier orders and notices to produce issued to council (see my original costs judgment, F & D Bonacorso Pty Ltd v City of Canada Bay Council (No 3) [2007] NSWLEC 569 at [37]). This is said to be of particular concern in circumstances where council was no doubt aware that it had sole possession of the relevant documents; (iv) the three development consents overturned purported to approve the demolition of 5 listed heritage items issued in breach of the Environmental Planning and Assessment Act and Council's own policies; (v) council only succeeded in defending the unlawful transfer of Chapman Reserve through reliance on a third party's indefeasible title. It could not defend its own breaches of the Act. 20 Council submits that:

(a) Bonaccorso has not demonstrated that the characteristic elements of public interest litigation (as described in Engadine ) are present, and some of those elements are decisively against Bonaccorso; (b) Bonaccorso bears the onus and cannot rely on the absence of evidence about such matters as supporting its claim for immunity from an adverse costs order on public interest grounds. In any event, the Court may infer that Bonaccorso had a pecuniary interest in the outcome of the proceedings, given that it owns land adjoining the development site which was the subject of the proceedings; (c) there is no evidence of " widespread and pressing interest in the outcome of this particular matter " ( Drake-Brockman v Minister for Planning (No 2) [2007] NSWLEC 777 at [11]); (d) Bonaccorso's general history of the course of the litigation does not assist it. To the extent that it is seeking to reopen issues about the conduct of the litigation which have already been heard and determined by me and not disturbed on appeal, its submissions should be rejected; (e) The fact that the proceedings raised difficult questions of law, the determination of which may have broader application, is not a sound basis for departing from the usual costs consequences.

21 The Courts Legislation Amendment Act 2007 and related amendments altered the provisions relating to costs in the Land and Environment Court with effect from 28 January 2008. In effect, they replaced s 69 of the Land and Environment Court Act 1979 with s 98 of the Civil Procedure Act 2005 and, in relation to Class 4 proceedings, r 42.1 of the Uniform Civil Procedure Rules 2005 and r 4.2 of the Land and Environment Court Rules 2007. Section 98(1)(a) provides that subject to the rules of court and any Act, "costs are in the discretion of the court". UCPR 42.1 provides: "Subject to this Part, 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 as to the whole or any part of the costs." The new LECR 4.2(1) provides that: "The Court may decide not to make an order for the payment of costs against an unsuccessful applicant in any proceedings if it is satisfied that the proceedings have been brought in the public interest". These provisions continue the basic position in Class 4 proceedings that costs are in the discretion of the court, the usual order is that costs follow the event, and one factor affecting the discretion is whether the proceedings have been brought in the public interest: Harvey v Minister Administering the Water Management Act 2000 (No 2) [2008] NSWLEC 213 (Jagot J).

22 The extent to which public interest factors are relevant to the determination of costs in Class 4 proceedings, such as the present proceedings, was addressed in Engadine (above). Lloyd J considered an application by a residents' action group for judicial determination of a council's responsibilities in relation to moneys held under s 94 of the Environmental Planning and Assessment Act 1979. His Honour summarised (at 371 [15]) several matters that may be considered in determining whether proceedings can be categorised as public interest litigation, as follows:

(a) the public interest served by the litigation; (b) whether that interest is confined to a relatively small number of people in the immediate vicinity of a development, or whether the interest is wider; (c) whether the applicant sought to enforce public law obligations; (d) whether the prime motivation of the litigation is to uphold the public interest and the rule of law; and (e) whether the applicant has no pecuniary interest in the outcome of the proceeding.

[18] In Council of Municipality of Botany v Secretary, Department of the Arts, Sport, the Environment, Tourism and Territories (1992) 34 FCR 412 at 416-417; 76 LGRA 213 at 217, Gummow J stated that the public interest nature of the litigation alone does not deprive the successful party of an order for costs. His Honour's reasoning was followed and adopted by Northrop, Burchett and Hill JJ in Friends of Hinchinbrook Society Inc v Minister for the Environment (No 5) (1998) 84 FCR 186 at 188; 99 LGERA 140 at 142. This principle has also been recognised by this Court on several occasions; for example, in Rundle (1989) 69 LGRA 21 at 27 and Oshlack per Stein J at first instance (at 241), approved by Gaudron and Gummow JJ in the High Court (at 91). [19] Thus, whilst the public interest nature of the litigation may be a relevant consideration on the question of costs, it is necessary that there be some additional or special circumstances before the Court may depart from the usual order as to costs by making no order.

Are there any additional or special circumstances in this instance? [20] Special circumstances may arise in public interest litigation where the proceedings require consideration of a novel matter involving the proper interpretation and application of the law. In finding special circumstances in Oshlack at first instance, Stein J noted that the applicant raised an arguable case that required resolution of significant issues concerning the interpretation and future administration of the law. Plumb v Penrith City Council (2003) 126 LGERA 109 raised novel matters requiring interpretation and application of the eight part test relating to threatened species. Although the applicant's challenge did not succeed, Pearlman J stated that the applicant's case was arguable and raised questions concerning the proper legal approach to be used in the determination of the issues in the case. Her Honour held that these were factors giving rise to special circumstances justifying a departure from the usual order for costs. Similarly, in Friends of Hay Street Inc v Hastings Council (1995) 87 LGERA 44, Pearlman J held there were special circumstances in that case. In reaching this conclusion her Honour took into account the fact that the applicant had raised important matters involving the interpretation of a significant statutory provision and requiring determination of a question that had ongoing implications for the council's fulfilment of its obligations. 24 His Honour found in that case that a combination of the public interest of the proceedings and the utility of exposing for judicial consideration significant and novel questions of public law were such as to justify a special costs order.

25 In Drake-Brockman (above), the applicant had nothing to gain from the proceedings personally and wished for nothing more than to vindicate his views of what the Environmental Planning and Assessment Act 1979 ought to have founded about climate change and ecologically sustainable development. Jagot J held that was insufficient to depart from the usual order that costs follow the event. Jagot J considered the limited circumstances in which it is appropriate for a court to depart from the usual order as to costs on the basis that proceedings have a public interest character. Her Honour held, at [8]: Considerations of fairness usually mean that a successful party in litigation should be compensated for the expenses it has incurred. This has been described as an important principle ( Oshlack 1998 193 CLR 72 at [67]). Courts have declined to make costs orders in certain matters where satisfied the proceedings have been brought in the public interest and where special or additional circumstances otherwise warrant a departure from the important principles of fairness embodied by the usual order as to costs. These decisions, some of which were relied upon by the applicant, also disclose the caution with which courts depart from the usual order as to costs… 26 The starting point in considering the question of costs in Class 4 proceedings (as in civil litigation generally in other courts) is that costs ordinarily follow the event: Oshlack v Richmond River Council (1998) 193 CLR 72 at 97 [67]; Save the Ridge Inc v Commonwealth [2006] FCAFC 51, (2006) 230 ALR 411 at [12] - [13]. Much litigation, in both public and private law, has a public interest going beyond the interests of the parties but that does not, of itself, provide a ground for departure from the usual rule as to costs.

27 In the present case, I accept that there was a public interest served by the litigation, the public interest was wider than the relatively small number of people in the immediate vicinity of the development, and the applicant in effect sought to enforce a public law obligation. On the other hand, Bonaccorso bears the onus and cannot rely, as it does, on absence of evidence to make out other elements of its public interest argument. There is no evidence which establishes that the prime motivation of the litigation was to uphold the public interest and the rule of law and that Bonaccorso had no pecuniary interest in the outcome of the proceedings. Bonaccorso's ownership of land adjoining the development site prima facie tends to weigh against the conclusion that it had no pecuniary interest in the outcome of the litigation. To the extent that Bonaccorso is inviting the Court to roam over the general history of the litigation to reopen issues already determined, I decline the invitation. I am not satisfied, on the evidence, that the public interest circumstances are sufficient to deprive council of its costs in relation to the indefeasibility issue on which it has been successful.

28 Bonaccorso also draws attention to Hainbury Pty Ltd v Campbelltown City Council [2007] NSWLEC 713 at [18] in support of the proposition that it should not have to pay council's costs in relation to the indefeasibility issue. Hainbury was a case in Class 1 of this Court's jurisdiction involving an appeal against a council's refusal of development consent. The respondent successfully moved that the proceedings be summarily dismissed on the ground that the Court had no jurisdiction to hear the matter. In an ex tempore judgment, Lloyd J held at [18] that in the special circumstances of the case there should be no order as to costs because the case raised a question which apparently had not been raised before, which was of some assistance to those involved in local government and appeals to this Court.

29 Hainbury is distinguishable. First, costs are not awarded in Class 1 proceedings unless the Court considers that a costs order is fair and reasonable in the circumstances: see now r 3.7(2) of the Land and Environment Court Rules 2007. In Class 4 proceedings, such as the present case, the usual rule is that costs follow the event. Secondly, Hainbury is not authority for any general principle that the Court should depart from the usual rule in Class 4 proceedings in respect of any issue that is contentious and has an element of novelty. Any such principle would be incompatible with the principle of fairness underlying the usual rule in Class 4 proceedings that costs follow the event: Oshlack at 97 [67]. Thirdly, in the present case, the indefeasibility issue was concerned with the application of settled principles to a novel, albeit difficult, situation. Clarification of Costs Order of 5 October 2007 30 Bonaccorso proposes and council does not object to a notation clarifying order 7 made by me on 5 October 2007 in related proceedings 40171 of 2007 concerning Bonaccorso's costs of its notice of motion filed on 6 July 2006 and amendments thereto relating to an interlocutory injunction: F & D Bonaccorso Pty Ltd v City of Canada Bay Council (No 4) [2007] NSWLEC 649. I will make that notation as indicated below. Orders 31 In the result, the council is to pay Bonaccorso's costs prior to September (excluding the interlocutory injunction costs against the developer) and 60 percent of Bonaccorso's costs from 1 September 2006. 32 The orders of the Court will be as follows:

1. Order 1 made on 6 September 2007 is set aside.
2. The first respondent is to pay the applicant's costs prior to 1 September 2006, excluding costs relating to an interlocutory injunction referred to in order 4 below.
3. The first respondent is to pay 60 percent of the applicant's costs from and including 1 September 2006.
4. The Court notes that order 7 made on 5 October 2007 in F & D Bonaccorso Pty Ltd v City of Canada Bay Council (No 4) [2007] NSWLEC 649 (being proceedings 40171 of 2007 of this Court) concerning the applicant's costs of its notice of motion filed on 6 July 2006 and amendments thereto relating to an interlocutory injunction, is a reference to costs incurred in these proceedings, and that order is not disturbed by these orders.

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