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.