Hurstville City Council v Minister for Planning and Infrastructure

Consideration 8The Court has a broad discretion to award costs. It can "determine by whom, to whom and to what extent costs are to be paid" subject to the rules of the Court: Civil Procedure Act 2005 (the CP Act) s 98. Usually costs follow the event unless a court considers some other order should be made (the usual costs rule): Uniform Civil Procedure Rules 2005 (UCPR) Pt 42 r 42.1. However, there is no automatic rule that costs always follow the event in the absence of disentitling conduct: Oshlack v Richmond River Council [1998] HCA 11; (1998) 96 LGERA 173 at [40] - [41] per Gaudron and Gummow JJ cited with approval in Foots v Southern Cross Mine Management Pty Ltd [2007] HCA 56; (2007) 234 CLR 52 at [26] - [27] per Gleeson CJ, Gummow, Hayne and Crennan JJ and in Hillig v Darkinjung Pty Ltd (No 2) [2008] NSWCA 147 at [60] per McColl JA (Beazley and Giles JJA agreeing). The Court can decide not to award costs against an unsuccessful applicant in the proceedings if satisfied that the proceedings have been brought in the public interest: Land and Environment Court Rules 2007 (the Court Rules) r 4.2(1). This rule prevails over r 42.1 to the extent of any inconsistency between them: CP Act s 11, UCPR r 1.7 and Sch 2.

Minister's and Henlia's costs payable 9Relevant principles to apply when exercising the costs discretion in public interest litigation were identified by Preston J in Caroona Coal Action Group Inc v Coal Mines Australia Pty Ltd (No 3) [2010] NSWLEC 59; 173 LGERA 280 endorsed by the Court of Appeal in Delta Electricity v Blue Mountains Conservation Society Inc [2010] NSWCA 263; (2010) 176 LGERA 424 at [202] per Basten JA. Preston J in Caroona Coal (No 3) at [13] set out three steps to determine the exercise of the costs discretion where an unsuccessful litigant claims to act in the public interest as follows: (1)can the litigation be characterised as having been brought in the public interest, (at [38])? (2)is there "something more" than the mere characterisation of the litigation as being brought in the public interest, (at [59] - [60])? (3)are there any countervailing circumstances, including relating to the conduct of the applicant, justifying departure from the usual costs rule (at [61])? 10Preston J referred at [38] to five considerations identified by Lloyd J in Engadine Area Traffic Action Group Inc v Sutherland Shire Council (No 2) [2004] NSWLEC 434; (2004) 136 LGERA 365 at [15]: (a)the public interest served by the litigation (b)whether the applicant sought to enforce public law obligations (c)whether that interest is confined to a relatively small number of members from the group or association in the immediate vicinity of the development, concerned with their own private amenity; or whether the interest is wider, involving a significant number of members of the public and concern for a wider and significant geographic area (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 11The above considerations in Engadine have been referred to in several cases including Hastings Point Progress Association Inc v Tweed Shire Council (No 3) [2010] NSWCA 39; (2010) 172 LGERA 157 at [25] per Young JA. These considerations are focussed on enforcing public law: Caroona Coal (No 3) at [40]. They are non-exhaustive and other matters may be relevant: Caroona Coal (No 3) at [41]. The factors may be relevant to all three steps identified above: Caroona Coal (No 3) at [42]. It is not necessary to answer each of these considerations in a particular way in order to characterise litigation as being brought in the public interest: Caroona Coal (No 3) at [43]. 12Relying on Caroona Coal (No 3) the Council submits that the proceedings may be characterised as public interest litigation as there is significant public interest in ensuring that approvals granted under Pt 3A, which overrode local planning controls, were valid. It considers that there was also significant public interest relating to the operation of cl 8F of the Regulation and this question had not previously been considered judicially. 13The Council's submission did not mention r 4.2 of the Court Rules but must rely on it by inference. The Minister assumes that the Council's submission was made under that rule and submitted that it does not apply because the rule refers to the characterisation of "proceedings" in their entirety not to an individual ground raised in proceedings. In my view the Council did submit that the proceedings as a whole should be characterised as being in the public interest for the reasons identified in the previous paragraph. The modified costs order sought by the Council relates to part only of the proceedings, which does not necessarily undermine the general submission that the proceedings as a whole are in the public interest. I consider that r 4.2 is engaged. 14The Minister otherwise disagrees that the proceedings can be characterised as being in the public interest: (1)that the proceedings challenged a Pt 3A approval is insufficient of itself: see John Williams Neighbourhood Group Inc v Minister for Planning [2011] NSWLEC 100 (2)that proceedings were brought "to uphold and enforce public law obligations" or to remedy a potential breach of the law was insufficient of itself in Shellharbour (No 2) at [13], [17] (3)the operation of Regulation cl 8F does not warrant a finding that the proceedings were brought in the public interest because: (a)it was one of three grounds of challenge (b)it did not involve the determination of any novel issue of general importance and involved a narrow interpretation of one clause of the Regulation: see Shellharbour (No 2). (c)as Pt 3A has been repealed the continued significance of the litigation is limited (d)the issue did not concern the protection of the environment that was of value or importance (e)the proceedings were of local concern to the Hurstville area and the question of public interest was not one having broad ramifications for the community at large: Hastings at [11]. Even if the proceedings did involve some elements of a broader public interest nature, that does not justify a departure from the ordinary rule: John Williams Neighbourhood Group at [49] - [50] (f)the issue arose in the context of a very particular set of facts concerning a private landowner, not the Council 15Henlia submits that if there is a significant public interest in ensuring Pt 3A approvals are valid, every Pt 3A or Pt 4 challenge would be in the public interest. That there is a public interest relating to the operation of the Regulation cl 8F is also an insufficient basis. Firstly, the purpose of the provision, in giving a right of veto to a landowner over development on their land, involves a private interest. Secondly, the owners supported the development. Further, it is questionable whether the prime motivation of the Council was to uphold the public interest and the rule of law. 16In John Williams Neighbourhood Group, a judicial review challenge to a Pt 3A approval, Sheahan J declined to characterise the proceedings as public interest litigation, finding that the real aim of the group bringing the challenge was to preserve the amenity of the residential neighbourhood where its members reside. That circumstance does not arise here. Shellharbour (No 2) considered more analogous circumstances. In that case a council unsuccessfully challenged the validity of a concept plan approval granted by the Minister. In opposing the usual costs order the council alleged that the proceedings had been brought "to uphold and enforce public law obligations" and to ensure that the Minister's exercise of power under Pt 3A was lawful (at [12]). Craig J did not find "these matters to be persuasive" as all judicial review proceedings are brought to uphold and enforce public law obligations: at [13]. Relevantly, his Honour accepted that the council, "as a public body exercising planning functions under the EPA Act, [was] assumed to be acting in the public interest to protect the current planning regime as it applied" to the project site (at [22], [30]). That statement also applies to this matter. 17There are competing public interests in this case, however, as identified in Shellharbour (No 2) at [22]. In this case to draw on Shellharbour (No 2) at [22], the Minister, as the repository of planning powers under the EPA Act, was assumed to have acted in the public interest when his delegate the PAC determined the concept plan approval. By extension, he is likely to be acting in the public interest in defending his delegate's exercise of power. Craig J's caution at [23], which the Minister referred to, applies in this case: In circumstances such as the present, it will generally be inappropriate for the Court to determine which of the two "public interests" should prevail in order to determine the appropriate exercise of the costs discretion. ... That observation is made recognising factors which overlap with those factors to be considered when addressing the second of the three steps identified in Caroona. 18I can accept the Council's submission that there is public interest in resolving the operation of cl 8F of the Regulation in relation to approvals granted under the former Pt 3A, which had not previously been the subject of judicial consideration. I also accept that there is public interest in ensuring that approvals granted under Pt 3A are valid but the fact that local planning controls are overridden is not a matter I can give much weight given that two levels of government are opposing parties. I do not agree with Henlia's submission that the purpose of cl 8F, involving a private interest of an owner, and the fact that the owners supported the development, discounts the nature of that public interest. The operation of the Pt 3A approval process concerns the wider public and other local councils. I accept that, broadly, the Council sought to enforce public law obligations. The proceedings were not "confined to a relatively small number of members from the group or association in the immediate vicinity of the development, concerned with their own private amenity". The development will arguably affect the Hurstville CBD area given its large size and location. However, Pt 3A has been repealed, as the Respondents relied on. Clause 8F now only applies to transitional Pt 3A projects. Consequently, the scope of the public interest served by the proceedings is narrow. 19That brings me to Caroona (No 3) step two, whether there are special circumstances to justify departure from the usual costs rule. As recognised in Caroona (No 3) there will likely be some overlap with considerations relevant to step one. The parties' submissions identified a number of matters referred to in [59]. The Council identified the following circumstances as sufficient for such a finding: (1)the basis of challenge to the concept plan approval was arguable, and raised serious issues relating to the interpretation of cl 8F of the Regulation. (2)the concept plan related to a significant site in the Hurstville city centre and a concept approval which departed significantly from local planning controls would result in substantial traffic impacts in the city centre. There is a public interest in ensuring that the application was properly determined and the approval was valid. (3)the Council had nothing to gain financially or otherwise from the litigation and only sought to ensure that the EPA Act and the Regulation were properly administered. (4)the litigation raised important issues in respect of the operation of Pt 3A and the requirement for owner's consent which had not been previously given judicial consideration and have broader implications or more general import for local government authorities. (5)the litigation has contributed to a proper understanding in respect of owner's consent in the context of Pt 3A applications. (6)the litigation affects a significant section of the public, both in the Hurstville local government area and in other local government areas in which Pt 3A operates. 20The Minister denied that there were special circumstances because: (1)that the challenge was arguable should be rejected as it only means that the proceedings were not improperly brought as an abuse of Court process. (2)the Court could not determine the potential "traffic impact" of the project and should refrain from engaging in such merits related matters: see Shellharbour (No 2). (3)that the Council had nothing to gain financially from the litigation is insufficient. (4)the Council's submissions (at par 19(3) and (4)) relating to the proper administration of the Act and the Regulation and the importance of the issues raised in the litigation have been dealt with above. (5)the suggestions at par 19(5) and (6) essentially repeat the submission that the issues raised in the litigation were important. Further the suggestion at par 19(6) cannot be reconciled with the fact that the legislation has been repealed. 21Henlia also denied that there were special circumstances as the statutory construction of cl 8F did not raise a novel issue of general importance nor materially contribute to the proper understanding, development or administration of the law: see Caroona Coal (No 3) at [60]. It was a discrete point which arose out of the peculiar circumstances of the case and is highly unlikely to arise again, particularly given the repeal of Pt 3A. 22Whether the litigation involves special circumstances or something more than the characterisation of the litigation as being in the public interest is a finely balanced question in this case. The matters relied on by the Council are largely relevant to whether the matter can be characterised as public interest, or certainly overlap with these. 23That the basis of challenge to the concept approval was arguable and raised serious issues is not a special circumstance. It must be accepted that the Council was successful in its legal argument in relation to owner's consent but I declined to make a finding of invalidity of the approval in the somewhat unusual circumstances of the case. For the reason given by the Minister at par 20 above, I cannot consider traffic impacts of the development as I am not able to form a view on the merits of the proposal. That the Council had nothing to gain financially from the proceedings I do not consider a particularly relevant consideration for the Council as a local government entity challenging a decision of a State government minister. I have already found that the proceedings contributed to the proper administration of planning law in relation to cl 8F of the Regulation and that is a matter I have taken into account in relation to the first step. Points (1), (4) and (5) in par 19 are really the same submission by the Council. Given the repeal of Pt 3A, I am unable to find that it is of general importance to the administration of the EPA Act in its current form. As Henlia submitted the circumstances surrounding the provision of owner's consent were unusual. 24The Council further submitted that it and the Minister are government authorities administering the Act and that the litigation related to a dispute about the meaning of the provisions administered by both levels of government. The Minister correctly submitted that this submission is wrong as the Council does not administer the provisions of Pt 3A or regulations concerning that Part. This conclusion also underscores my earlier observation with reference to Shellharbour (No 2) at [22] - [23] that the Court ought not choose between two public interests in relation to the first and second steps in Caroona (No 3). 25On balance, the circumstances relied on by the Council are insufficient to justify a departure from the usual costs rule in relation to the Minister and Henlia. The Council should pay both parties' costs.

Interest on Henlia's costs not payable 26Henlia seeks an interest order pursuant to s 101 of the CP Act which relevantly provides: ... (4) The court may order that interest is to be paid on any amount payable under an order for the payment of costs. (5) Interest under subsection (4) is to be calculated, at the prescribed rate or at such other rate as the court may order, as from: (a) the date or dates on which the costs concerned were paid, or (b) such later date as the court may order. 27Henlia submitted an interest order does not require the establishment of a special case: Amalgamated Holdings Ltd v North Sydney Council [2012] NSWLEC 138 at [40] - [51] per Biscoe J. The usual justification is that the successful party has been out of pocket by the payment of costs of his or her lawyers: Ying v Song [2011] NSWSC 618 at [99] - [103]. In the absence of any countervailing discretionary factor, it is appropriate that such an order be made to compensate Henlia for being out of pocket: Drummond and Rosen Pty Ltd v Easey (No 2) [2009] NSWCA 331 at [4]. It is not necessary for the Court to have any evidence of the amounts paid or the dates of payment: Drummond and Rosen at [3] - [7]. The Court may infer that Henlia has paid costs to its solicitors throughout the litigation, and is likely to pay such costs (to the extent that it has not already done so) for any assessment of costs: Amalgamated Holdings at [49]. In reply to the Council's submissions, it does not matter that Henlia's involvement in the matter was of a relatively short duration as that goes to the question of quantum. The Council's contention that the proceedings have a significant public interest is also irrelevant. The focus of the present inquiry is not on the Council but on Henlia which, being a developer, could have put the money used to finance the litigation to a productive use: Lahoud v Lahoud [2006] NSWSC 126 at [83], approved in Leda Pty Ltd v Weerden (No 2) [2007] NSWCA 283 at [7]. The Council opposed such an interest order. 28The Court has discretion whether to make an interest order. In Lahoud, a contractual dispute, there was no evidence of the plaintiffs having made payments to their lawyers on account of costs and disbursements. At [82] Campbell J observed that there was no requirement for a special case for such an order to be made. At [83] his Honour stated: To the extent to which the plaintiffs have been out of pocket as a result of having to pay their lawyers' costs and disbursements, it is appropriate that the compensation which is recognised in the Court's order for costs take into account the fact that the plaintiffs have been out of pocket in that way ... Given the length of time the proceedings have been on foot and the extensive preparation, the amount by which the plaintiffs have been out of pocket could be large. It is relevant that the plaintiffs, and the defendants, each conduct businesses and so the amounts which the plaintiffs have had to pay to finance the litigation is likely to be money which otherwise could have been put to a productive use. Conversely, the defendants, by not being required to pay costs until some time in the future when the costs are agreed or assessed, are likely to have been able to retain, for their own productive use, the amount of those costs. (footnotes omitted.) 29Lahoud has been cited in subsequent cases where interest orders were made including Leda (at [78], [82] - [87]), Drummond at [4], Ying v Song at [100], and Amalgamated Holdings at [45]. In Leda, a negligence case, and Ying v Song, a family dispute over company shares, there was evidence costs had been paid to solicitors. 30In Drummond (2009), a negligence claim, Macfarlan JA (Tobias JA agreeing) held at [3] it was not necessary for evidence of the dates on which costs were paid as the court did not need to know this in the usual case. Notably, Handley AJA, dissented at [49] - [52] referring to Basten JA (Campbell JA agreeing) in Robb Evans of Robb Evans & Associates v European Bank Ltd (No 2) [2009] NSWCA 170 at [34] and stated that the discretion should not be exercised without evidence of the amounts paid and the dates of payment. Even if the discretion permitted the award of costs without evidence, it was a serious question as to whether the power ought be exercised in such a case. 31Only two cases have made such orders in this Court, so far as I am aware, Taylor v Port Macquarie-Hastings Council [2010] NSWLEC 153; 175 LGERA 189 and Amalgamated Holdings. In Taylor, compulsory acquisition proceedings under the Land Acquisition (Just Terms) Compensation Act 1991 (the JT Act) there was no evidence that the applicants had made any payments to their lawyers on account of costs and disbursements. Biscoe J stated at [85] that an order could nevertheless be made in the proceedings because money paid for costs could be put to other uses. His Honour considered the special nature of JT Act proceedings in determining that an applicant should not be out of pocket in financing such litigation. 32In Amalgamated Holdings, judicial review proceedings commenced under s 123 of the EPA Act to challenge the validity of a development consent, at [43] Biscoe J stated: The exercise of the discretion under s 101(4) focuses upon whether the successful party has been out of [pocket?]its money for costs already paid and whether that party will be appropriately compensated by an award of costs in its favour without an award of interest on costs already paid: Taylor v Port Macquarie-Hastings Council [2010] NSWLEC 153 ; 175 LGERA 189 at [84] per Biscoe J; Ying v Song [2011] NSWSC 618 at [102] per Ward J. 33At [49] Biscoe J observed that no inference could be made in judicial review proceedings that it was likely that a party paid costs to its lawyers. His Honour inferred that given the nature and scale of the respondent's business, it had paid costs to its solicitors during the course of the litigation. He also inferred that it was likely to pay such costs before any costs assessment. His Honour identified relevant principles at [50]: In determining whether to exercise the discretion under s 101(4) of the Civil Procedure Act: (a) it is not necessary to show special circumstances: Australian Development Corporation Pty Ltd v White Constructions (ACT) Pty Ltd (in liq) [2002] NSWSC 280 at [31] per Einstein J; Ying v Song [2011] NSWSC 618 at [99] per Ward J; (b) relevant circumstances include whether the proceedings have been on foot for a lengthy period in which extensive preparation has been undertaken resulting in the party being out of pocket for large amounts, and whether each party conducts a business in which such amounts could have been put to productive use: Leda at [7] quoting Lahoud at [83]; Ying v Song at [100]; Ryding v Miles (No 2) [2012] NSWSC 312 at [16] per Black J. 34Biscoe J concluded at [51] that interest on costs ought be awarded although the proceedings had not been on foot for a lengthy period, because they did not have a substantial public interest nature and were "driven by concerns over the impact of the proposed development on the applicant's business at its adjoining commercial development". 35I do not consider that an interest order is justified in these judicial review proceedings. While special circumstances are not required, the nature of the proceedings and the parties, and history of the litigation, are relevant considerations, as is clear form the reasoning of Campbell J in Lahoud, and Biscoe J in Amalgamated Holdings. The proceedings can be distinguished from Amalgamated Holdings for the reasons given by the Council. There, a private company was concerned with amenity impacts on a commercial property. Here, a local government authority was concerned with the proper interpretation and administration of the planning regime and the validity of consent in the absence of owner's consent generally. The litigation was not commercial in nature and, as I have held above, did relate to the public interest. They have not been on foot for a lengthy period, therefore not requiring extensive preparation which would result in Henlia being out of pocket for large amounts. They were commenced in October 2011 and heard in March 2012. The litigation was not complex either in terms of the volume of documentary evidence or the range of issues for determination. The evidence consisted of an agreed bundle of documents and some correspondence between the parties. 36I accept that the litigation was not delayed and the Council's conduct did not result in any unnecessary delay or costs for Henlia. I am unaware of the nature and scale of Henlia's business. The Council consented to orders requiring the filing of an amended summons in which Henlia was joined to the proceedings, thereby relieving it from filing and arguing a notice of motion for joinder. Further, I do not have evidence of payment of legal costs by Henlia. I do not infer that it was likely that Henlia paid costs to its lawyers.

Earljest's costs payable 37Earljest seeks an order that the Council pay its costs, relying on Manns v Attorney General of New South Wales (No 2) [2010] NSWSC 325 at [17] per Slattery J. Earljest submitted that it was properly joined to the proceedings as the proponent nominated in the concept plan application. It retained an interest in the outcome of the development under a contract with Henlia. Earljest also applied under (now repealed) s 75W of the EPA Act to amend the terms of the concept plan approval. It was concerned with the subject matter of the proceedings as the Council's claims relied upon allegations that Earljest had not obtained the consent of all relevant owners to the making of the concept plan application, and the PAC had not allowed the Council an opportunity to respond to allegations made by Earljest's solicitor. 38Henlia was not initially joined in the proceedings. Earljest only submitted after it reviewed the Points of Claim in light of discovery of the Department of Planning's (the Department's) file and learned that the other Respondents would defend the proceedings. In addition to reviewing the Points of Claim, Earljest incurred legal costs in perusing the Class 4 application, attendance at Court mentions, obtaining discovery of the Department's file, communication of the history of the concept plan application to Henlia, production of documents concerning the option deed, owner's consent and payment of stamp duty on the option, including Court appearances at the hearing, and in taking judgment. There is nothing suggesting that Earljest unnecessarily incurred, or duplicated, costs also incurred by Henlia. 39The Council opposes such an order as Earljest filed a submitting appearance and did not participate in the litigation. It submitted that an appearance in response to a notice to produce is not a sufficient basis to award costs. 40In Manns at [17] Slattery J considered that a submitting party should receive costs at least for "responding to court orders and directions, reading and dealing with court process served upon a submitting defendant and, finally, appearing to observe the proceedings." His Honour considered that costs beyond such work would be unusual. In Sarkar and Islam v Everest Property Holdings Pty Ltd [2011] NSWCA 305 Young JA (Beazley and Campbell JJA agreeing) stated that costs on a submitting appearance basis covered "taking instructions, filing appearance and like matters". 41Earljest was properly joined as a party in the summons filed on 13 October 2011. By amended summons filed on 9 November 2011 Henlia was joined as a party. Earljest's amended appearance submitting to the Court's orders save as to costs was filed 25 January 2012. Before that date Earljest's counsel appeared at four mentions. At the hearing on 6 March 2012, Earljest's counsel appeared briefly in answer to a notice to produce to advise that there were no documents to produce. On 7 March 2012, Earljest's counsel appeared briefly to advise the Court in relation to the dutiable status of a put and call option deed. Earljest's counsel also appeared to take judgment on 12 June 2012. In addition to reviewing the Points of Claim, I accept that Earljest incurred legal costs in perusing the Class 4 application, attendance at Court mentions, obtaining discovery of the Department's file, communication of the history of the concept plan application to Henlia, production of documents concerning the option deed, owner's consent and payment of stamp duty on the option, including Court appearances at the hearing. 42Earljest properly incurred costs up to the time it filed a submitting appearance and should receive those costs from the Council. Costs were also necessarily incurred after that date in relation to the option deed. Earljest did not exceed its role as a submitting party per Hillig at [66]. I will make a costs order in Earljest's favour.

Order 43The Court orders the Applicant to pay the costs of the First, Second and Third Respondents as agreed or assessed. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 30 August 2012