Hastings Point Progress Association Inc v Tweed Shire Council [2010] NSWCA 39 | Case summary

Friday 19 March 2010 HASTINGS POINT PROGRESS ASSOCIATION INC v TWEED SHIRE COUNCIL (NO 3) Judgment 1 McCOLL JA: I agree with the reasons of Young JA and Basten JA and the orders proposed by Young JA. 2 BASTEN JA: I took a different view as to the outcome of the appeal and proposed a different costs order to that favoured by the majority: Hastings Point Progress Association Inc v Tweed Shire Council [2009] NSWCA 285. However, it is appropriate that I express a view as to costs, on the basis of the outcome resulting from the views of the majority. In Ruddock v Vadarlis (No 2) [2001] FCA 1865; 115 FCR 229, Black CJ, who had dissented as to the substantive outcome of the appeal, joined with French J in a majority judgment on the question of costs. 3 There are circumstances in which it may be appropriate to exercise the general discretion of the Court under s 98 of the Civil Procedure Act 2005 (NSW), otherwise than in accord with the general rule that costs follow the event: Uniform Civil Procedure Rules 2005 (NSW) ("the UCPR"), r 42.1. An example of such a circumstance is the conduct of unsuccessful public interest litigation, in relation to which it may be appropriate to make no order for costs. I gratefully adopt the analysis of the majority in Ruddock v Vadarlis (No 2) as to the appropriate principles. 4 The present case stands apart from Ruddock in several significant respects. First, it involves an appeal from an exercise in the Land and Environment Court of the open standing provision with respect to remedies to restrain a breach of the Environmental Planning and Assessment Act 1979 (NSW) ("the EP&A Act"), see s 123(1). It is, accordingly, not necessary for a party seeking such a remedy to have suffered any infringement of its rights as a consequence of the breach. 5 The Land and Environment Court, exercising its class 4 jurisdiction, conducted the proceedings below pursuant to the Civil Procedure Act. With respect to costs, the Land and Environment Court Act 1979 (NSW) no longer contains a specific provision. However, it is necessary to take into account not merely the UCPR, but also r 4.2 of the Land and Environment Court Rules 2007 (NSW), which prevail over r 42.1 of the UCPR "to the extent only of any inconsistency between them: Civil Procedure Act, s 11; UCPR r 1.7 and Sch 2. Rule 4.2, so far as relevant, provides: " 4.2 Proceedings brought in the public interest (1) 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." 6 As noted by Gaudron and Gummow JJ in Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 at [30] the category of "public interest litigation" is a "nebulous concept". However, their Honours accepted that it was appropriate that the concept be given "further content of a legally normative nature". Because r 4.2 adopts that concept, it is necessary to give it content and effect. The rule requires categorisation of the purpose for which the proceedings were brought. 7 Attempts to categorise such purposes too precisely may not assist in providing legally normative content to the concept. For example, protection of the environment may be a purpose which means different things to different people. It may involve protection of the natural environment, it may extend to an urban environment and it may include any factor which affects the amenity of persons within a location or area. On one view, in conformity with the purpose of s 123 of the EP&A Act, any attempt to ensure that the Act is not breached with impunity will constitute a public interest of a sufficient kind. 8 The concept of "public interest" is probably intended to distinguish between private and public interests, although in particular cases there may be no bright line to be drawn between the two. That is of no consequence: the extent to which public interests predominate over private interests, or are subservient to them, will be a factor which may properly be taken into account in the application of r 4.2. So long as a public interest is involved, the rule is engaged. 9 Nevertheless, in its terms the rule does not apply in this Court. Despite that, the principles explained in the joint judgment of Oshlack have operation in this Court. The circumstances and purposes of the litigation are relevant to the exercise of the Court's discretion and do not constitute extraneous circumstances. 10 As noted in the first judgment of this Court, the Council, properly, took no part in the proceedings: at [13]. It does not seek an order for costs and no order should be made in its favour. The question of costs arises as between the applicant and the second respondent, which was the applicant for development consent. 11 I would accept the fact that the proceedings were brought predominantly in the public interest. In this Court, that fact is one which may be weighed against the preferred outcome identified in r 42.1, namely that costs follow the event. There are three particular factors which militate in this case, against departure from that rule. First, the defendant is a commercial enterprise, and not the State or a governmental authority. Secondly, the question of public interest was not one having broad ramifications for the community at large, or even for the protection of the natural environment. It involved a relatively discrete point of interpretation involving the operation of a local environmental plan in the context of the EP&A Act. It may thus be contrasted with a case, such as Ruddock v Vadarlis, which involved issues of constitutional importance regarding the executive power of the Commonwealth, on the one hand, and issues of liberty of the individual, on the other. Thirdly, the matter was not entirely without consequence for the private interests of members of the Association. Most, if not all, were local residents and overdevelopment would affect the amenity of the area within which they lived and owned property. Although they were not personally applicants in the proceedings, nor liable for the debts of the incorporated Association, for this purpose one is entitled to look behind the legal structure of the applicant to identify whose interests, both legal and financial, may be affected in a practical sense. 12 For these reasons, I would agree that the applicant should be ordered to pay the second respondent's costs of the proceedings in this Court. 13 The applicant sought to exclude from such an order the costs of the motion, on the basis that it was necessary for it to have the opportunity to make submissions in relation to the costs of the appeal. However, the motion sought to reopen not only the costs orders, but the substantive orders. In the latter respect it was unsuccessful: Hastings Point Progress Association Inc v Tweed Shire Council (No 2) [2009] NSWCA 404. Although the Court's order dismissed the motion, it was in fact upheld in part. The applicant had sought to reserve the question of costs at the hearing of the appeal: CA Tcpt, 01/05/09, pp 24-25. The motion should not have been necessary in that respect. Notice having been given of an intention to make further submissions with respect to costs, the second respondent could have opposed that course at the hearing of the appeal, but did not. In the result, the further submissions were simply an extension of the appeal and there would have been no reason to treat them separately with respect to the question of their own costs. The separate costs of the motion with respect to the costs order, which should not have been necessary, could not have been significant, nor readily severable. As a practical matter, little purpose is served by seeking to exclude some aspect of those costs from the general order. 14 YOUNG JA: When judgment was delivered in this appeal we ordered that the appellant pay the respondents' costs of the appeal [2009] NSWCA 285. The appellant protested that we had not heard it on costs: we considered merit in that protest and permitted the matter of costs to be reopened and addressed by written submissions (see [2009] NSWCA 404). 15 The appellant was unsuccessful in its challenge to the validity of the second respondent's development application both in the Land and Environment Court and in this court. It submits, however, that there should be no order for costs on the appeal. 16 Section 98 if the Civil Procedure Act 2005 gives the Court complete discretion as to orders for costs subject to the Rules. 17 Part 42(1) of the Uniform Civil Procedure Rules provides that: "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." 18 The Rule speaks for itself. However, judicial exposition has noted that it means that a person seeking to displace its prima facie effect must show that there is something out of the ordinary in the case in order to justify the departure; see eg State of New South Wales v Gebethner [2009] NSWCA 237. 19 In addition, there is the provision in rule 4.2 of the Land and Environment Court Rules 2007 that, in Class 4 proceedings, the Court may decide not to make an order for the payment of costs against an unsuccessful applicant if it is satisfied that the proceedings have been brought in the public interest. That rule only applies to the Land and Environment Court and is almost completely irrelevant on appeal to the Supreme Court except insofar as it gives flavour to the pre-existing guidelines as to the exercise of discretion in these cases. 20 The appellant did not seek to rely on rule 4.2 in the appeal. 21 Apart from matters of construction of the subordinate legislation, there are sound reasons why the principles stated in the rule would not apply to appeals. Genuine public interest groups might be thought to be acting in the public interest in drawing the Land and Environment Court's attention to a disastrous and arguably invalid planning decision, but challenging the decision of an independent umpire who has heard full argument on the subject is another matter altogether. 22 Care must be taken in this area of the law of costs, when considering past authorities, to distinguish between cases under the former s 69 of the Land and Environment Court Act 1979, those under the general law as it existed before 2005 and those decided under the Civil Procedure Act 2005 and the UCPR: see Anderson v NSW Minister for Planning (No 2) [2008] NSWLEC 272; 163 LGERA 132. 23 The profession's awareness that modern courts might take a merciful attitude to those unsuccessfully bringing public interest suits flows from the High Court's decision in Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72. In that case, the High Court by a 3/2 majority (Gaudron, Gummow & Kirby JJ being in the majority, Brennan CJ and McHugh J dissenting) considered that the primary judge's order that there be no order as to costs in an unsuccessful claim by a private litigant that a development consent was invalid should stand. 24 Oshlack has been considered on over 40 occasions in reported cases. The actual decision depended on the terms of the cost provisions in the Land and Environment Court Act 1979, s 69(2) (legislation which contained no equivalent to UCPR Pt 42(1)) and only Kirby J considered the fact that the litigation might be classed as "public interest litigation" to be a relevant factor. However, despite this, in time it has come to be generally recognised that, in appropriate circumstances, the fact that litigation can properly be classed as "public interest litigation" may be a proper reason for making no order for costs despite the provisions of UCPR Pt 42(1). 25 The appellant cites the decision of Lloyd J in Engadine Area Traffic Action Group Inc v Sutherland Shire Council (No 2) [2004] NSWLEC 434; 136 LGERA 365, a case decided under s 69(2) as providing guidance in these cost applications. His Honour at [15] p 371 listed five key factors which were summarised by Hodgson JA (with whom Campbell & Bell JJA agreed) in Minister for Planning v Walker (No 2) [2008] NSWCA 334 at [6] 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 wide; (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; (e) Whether the applicant has no pecuniary interest in the outcome of the proceedings. 26 In Engadine, Lloyd J said at [19] that: "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 circumstance before the Court may depart from the usual order as to costs by making no order" 27 In Walker, this court at [9] accepted the submission that more than the fact, if it be the fact, that the litigation is public interest litigation is required to displace the ordinary rule as to costs. 28 The appellant puts: "6. It is respectfully submitted that in this case the following considerations are sufficient special circumstances that would warrant departure from the ordinary rule as to costs: a. The appellant's pursuit of the litigation was motivated by a desire to ensure obedience of the environmental and planning laws and had nothing to gain from the litigation. There was no interest in the nature of a private interest relating to the impact of the development, which was the subject of the application in the Court below, on any property owned by the members of the Association. b. The Association was established for the purposes of raising awareness of and preserving the environment of Hastings Point. In implementing that aim, the Association commenced not only the proceedings against the Respondent, but also another developer in Hastings Point. In those proceedings, heard together with the subject matter of this appeal in the Court below, the Association was entirely successful in having the development consent set aside. This was due to the Council's failure to consider the cumulative impact of the development. c. A significant number of members of the public, who are members of the Association, share the view that the Council should have considered the cumulative impact of this type of development on the environment including the ecosystem of the adjoining creek. d. The basis of challenge in this Court was clearly arguable and raised significant issues of statutory interpretation in relation to State Environmental Planning Policies and Local Environmental Plans which has ramifications for the future determination of development applications for senior's housing as well as other developments where a SEPP applies." 29 In support of its application to be relieved against costs, the appellant tendered an affidavit by Gary Thorpe sworn on 31 October 2009, but not filed until 18 December 2009, that is, after delivery of reasons for judgment and after the argument on the papers concerning reopening the orders for costs. No leave was ever sought or given to rely on this material. 30 The respondent objects to its use: alternatively it objects to the admissibility of about half the affidavit as being in an inadmissible form and seeks to tender the appellant's application for registration as an incorporated association if the affidavit is read. 31 The appellant should have sought leave to rely on the affidavit. However, as it has at all times been represented by lawyers and those lawyers had an obligation to ensure that the evidentiary material was in admissible form, no indulgence should be shown as to admissibility of inadmissible material to which objection has been taken. 32 Remembering the obligation of the Court under the UCPR to deal with cases efficiently, in my view we should read the affidavit, reject all the parts the subject of the objections which are contained in the second respondent's written submissions of 14 January 2010 other than objections on the ground of relevance and treat the application form as being in evidence. 33 It must be remembered that so-called public interest groups may fall into five categories. First, there are genuine groups of people whose sole interest is the protection of the environment. Secondly, there are groups whose real aim is to preserve their existing amenities and are happy for the proposed development to proceed in another area. Thirdly, there are groups which are a façade for a competitor who wishes to protect its own commercial interests. Fourthly, there are groups which have been formed for purposes of maintaining religious or ethical standards. Fifthly, there are groups which might contain representatives of all four categories or groups who have formed for some other purpose. 34 Clearly the third group cannot expect mercy on costs and the second group would have great difficulty. Thus, it is necessary for the court to look further than the name of the group and its professed aims. 35 The second respondent submits that the present is not litigation in the public interest, but, even if it was properly so categorised, the appellant has not demonstrated "something more" than the mere fact of public interest litigation so as to warrant departure from the ordinary rule as to costs. 36 Based on the portions of the Thorpe affidavit to which there were no specific objections, the appellant was incorporated under the Associations Incorporation Act 1984 in June 2007. However, the group itself is said to have been in existence since 1992. 37 The relevant decision of the Tweed Shire Council was made on 8 May 2007. Thus, it might be inferred that protection from personal liability for costs of the present litigation was a principal reason for the incorporation of the appellant. That purpose was legitimate as it could have been countered by an application for security for costs from those behind the incorporated association. 38 There are 21 members of the appellant all of whom are residents of Hastings Point. 39 The second respondent says that the litigation was aimed at preventing what was alleged to be "overdevelopment" so that the members of the appellant would benefit by preserving what they considered to be valuable to their lifestyle rather than any desire to ensure strict observance of planning laws. 40 The evidence is not inconsistent with the group being in the second category referred to above, but, remembering that Mr Thorpe's evidence has not been tested by cross-examination, it is more likely than not a group in the first category. 41 The nature of the group is significant, but it is only the first factor to examine. Was the litigation public interest litigation? 42 Most of the judgments in Oshlak make the point that this term is vague and unclear. However, the cases suggest that the court looks to see whether the plaintiff has a pecuniary interest in the subject matter, whether its members have a commercial interest, whether the prime motivation is to uphold the law and public obligations and whether a sufficiently wide section of the public is sought to be benefited by the proceedings. 43 The substantial dispute in the instant case was whether the applicable planning rules permitted the local council to approve a development greater than two storeys in height. The legal question involved was the effect of the clash between two streams of planning regulations. 44 The second respondent says that the legal question was merely the fulcrum to achieve the private desire of the members of the appellant. 45 The mere fact that the legislation allows for challenges to planning decisions to be made by a wide class of people is not in itself a reason for people, including special interest groups, to be excused from paying the costs of an unsuccessful challenge; see eg Oshlak at [105]-[106] per McHugh J and Lawyers for Forests Inc v Minister for Environment, Heritage and Arts (No 2) [2009] FCA 466 at [8] per Tracey J. 46 Although I have some doubt as to whether the appellant has established that the present is public interest litigation, I will assume that it is. However, the lack of substantial evidence on the point and the borderline nature of this finding is relevant when making the ultimate decision on the application. 47 In my view the appellant has not shown that there are the additional factors which would warrant departure from the general rule. 48 I agree with the submissions of the second respondent that the courts must be very careful to see that the concept of public interest litigation does not become an umbrella for the exercise of discretion as to costs on an unprincipled and haphazard and unjudicial manner to adopt the words of the Western Australia Full Court in Buddhist Society of Western Australia (Inc) v Shire of Serpentine-Jarrahdale [1999] WASCA 55. These words were approved by Weinberg J in Mees v Kemp (No 2) [2004] FCA 549 at [19] and by the Full Federal Court in Save the Ridge Inc v Commonwealth [2006] FCAFC 51 at [6]. 49 Indeed, in Oshlack, as part of his principle (6) at [134] p 123, Kirby J pointed out that the authorities made it clear "that litigants espousing the public interest are not thereby granted an indemnity for costs or a 'free kick' in litigation." 50 It must be remembered that once costs are incurred, they do not just vanish into the ether if a court declines to make an order that a party pay them. If a successful party does not obtain an order for costs, that party has to pay those costs itself. If a developer, that really means that the extra costs are passed on to purchasers of lots in the development, in some cases meaning that the lots are beyond the means of possible local purchasers. 51 The second respondent says that the only question on the appeal was the inconsistency or clash between two planning instruments and that the matter was really unarguable in the light of Coffs Harbour Environment Centre Inc v Minister for Planning (1994) 84 LGERA 324. 52 The first part of that submission has substance, however, the mere fact that this court was divided over the result of appeal is a sufficient answer to the second part of that submission. 53 The appellant says that a significant number of members of the public, who are its members, share its views. Whether this is so or not, it is clear that the members of the local Council and others do not share those views. 54 However, despite paying close attention to the appellant's submissions, I cannot see any significant feature of this appeal, an appeal which concerned a question of law and construction of planning instruments and legislation which would amount to "something more" to justify departure from the ordinary rule as to costs. 55 Thus, I am of the view that the present order for costs should stand. However, those costs must include the costs of this present application. The formal order is set out in the following paragraph. 56 The costs order made on 11 September 2009 should be varied so as to limit it to the costs of the active respondent, namely the second respondent. The Court should make the following orders:

Hastings Point Progress Association Inc v Tweed Shire Council

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