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[2012] NSWLEC 259
Land and Environment Court (NSW)
2012-11-22
Sheahan J
Original judgment source is linked above.
son (Respondent) File Number(s): 40615 of 2012
Introduction 1This judgment concerns the respondent's notice of motion ('NOM'), dated 19 July 2012, which seeks an order that the applicant provide security for costs in the sum of $75,000, or other lesser amount ordered by the Court. 2The applicant does not challenge the Court's power to make the order for security, but submits that it should be refused in the exercise of the Court's discretion, as the proceedings, which it submits are of a "public interest" nature, will be stultified, if the orders are made.
The proceedings 3The substantive proceedings were commenced by the applicant, Illawarra Residents for Responsible Mining Inc ('IRRM') on 26 June 2012, against the respondent corporation, Gujarat NRE Coking Coal Limited ('Gujarat'), under s 123 of the Environmental Planning and Assessment Act 1979 ('EPA Act'). 4IRRM seeks, among other things, an order restraining Gujarat from carrying out mining at an area referred to as "Longwall 4", until specific approval or development consent ('DC') under the EPA Act is granted.
Background 5On 13 October 2011 Gujarat received Part 3A approval (Major Project 10_0046 - 'the Project Approval') to (1) carry out mining operations at NRE No. 1 Colliery, Southern Coalfields, Russell Vale ('the Colliery'), within part of the area in which it holds the benefit of consolidated coal lease 745 ('CCL 745'), (2) extract coal from Bulli and Wongawilli coal seams, and (3) commence the first working and other preliminary works at Longwall 4, Wonga East (points of defence 'POD', par 7a)). 6The mining lease area and the location of Longwall 4 are depicted in the plans behind tabs 1(a) and (b) of the bundle labelled 'SPB-1', exhibited to Simon Ball's affidavit, dated 19 July 2012. 7Relevantly, under its mining lease, Gujarat was required to obtain approval of a subsidence management plan, prior to the carrying out of longwall mining in the area covered by CCL 745. That approval was received on or about 26 March 2012 (Plan No 11858R1 - 'SMP approval'), a copy of which, can be found at tab 2 of SPB-1. 8The SMP approval stated that it was granted after a consideration of (tab 2, p 1/8): ...the likely environmental impacts of the mining operations identified in the Project Description specified in Schedule 1 and having had regard to the principles of ecologically sustainable development as defined in the Protection of the Environment Administration Act 1991". 9Various conditions were attached to the SMP approval to (tab 2, p 1/8):
The parties and pre-litigation correspondence 12IRRM is a not-for-profit, incorporated association with 15 members. It is predominately comprised of residents of the Illawarra area, some of who are currently in some form of paid employment (see affidavit of Kaye Osborn, the association's secretary, pars 9-10, Ball's affidavit, SPB-1, tab 7, and Tp 10 LL 43ff). 13The association first formed in January 2011 (Tp 12 L 8), to "engage on behalf of the community on issues associated with the expansion" of the Colliery (tab 7), and "to advocate for responsible mining, including mining which puts the health and wellbeing of ordinary people and of the environment above all else" (Osborn affidavit, par 5). 14On 5 December 2011, IRRM incorporated (SPB-1, tab 8), according to Osborn, for the primary purpose of enabling it to open a bank account. During cross-examination, however, Osborn agreed that when making the decision to incorporate, she was aware that incorporation did offer "some legal protection" to the association's members, but noted it was "part of the reason but it wasn't the primary part of the reason" (Tp 13, L19). 15From April 2012 to June 2012, there was much correspondence between the parties, and with the Department of Planning and Infrastructure, in relation to the permissibility of the mining works, and the respondent's alleged non-compliance with its approval conditions. 16Of particular relevance, on 11 April 2012, a letter was sent by Gavin Workman, President of IRRM, on behalf of IRRM, to the Department, expressing the association's concerns that Gujarat did not intend to implement a Community Consultative Committee ('CCC'), as required under the conditions attached to the Project Approval. The letter sought the establishment of a transparent and accountable consultative framework to oversee the mines, and a response as to what action would be taken by the Department to address Gujarat's "non-compliance" (Osborn affidavit, Annexure B). 17On 20 April 2012, Osborn, on behalf of IRRM, wrote to the Minister for Planning and Infrastructure and the Minister for Trade and Investment, again outlining IRRM's concerns about Gujarat's failure to establish a CCC, in addition to another 14 alleged breaches of its approval. The letter requested that the Department stop all operations at the Colliery, until compliance with the stage 1 development approval is achieved (Osborn affidavit, Annexures C, G and H). 18Felicity Greenway, Acting Director of Mining and Industry Projects, Department of Planning and Infrastructure, responded on 23 April 2012, assuring the applicant that (Annexure D): ...the Department takes the matters you have raised, as well as matters of non-compliance with project approval conditions, seriously. The Department therefore intends to conduct an investigation into the matter, and take these issues up with Gujarate (sic) NRE Coking Coal Limited. 19On behalf of the applicant, the Environmental Defender's Office ('EDO') wrote to the respondent, on 11 and 29 May 2012. Gillard Consulting Lawyers responded, in a letter dated 5 June, confirming Gujarat's support for responsible mining, and protection of the natural environment (Novak affidavit, Annexure K). That letter went on to say: ...our client would be happy to hold a dialog (sic) with your client's members to explain its approach and come to understand your client's objects and purposes with the intention of developing a mutual respect and common purpose. ... Your office will be aware that our client makes regular disclosures to the market in compliance with its obligations. We encourage your office to consider relevant material... You will, from that material, be in a position to reassure your client that, as disclosed, our client is not acting contrary to its obligations.
Commencement of the substantive proceedings 20In June 2012, correspondence between the parties, and their representatives, continued in relation to the permissibility of longwall mining at Longwall 4 (Ball affidavit, SPB-1 tabs 4 and 5, and Novak affidavit, Annexures L, M and N), and the applicant's summons and points of claim ('POC') were filed on 26 June 2012. 21The relief claimed by the applicant, as outlined in its summons, is as follows: 1 A declaration that, the extraction of minerals from a panel area known as 'NRE No. 1 Colliery Longwall 4' within consolidated coal lease 745 (longwall 4), absent an approval under the Environmental Planning and Assessment Act 1979, is unlawful. 2 A declaration that clause 8K of the Environmental Planning and Assessment Regulations 2000 does not continue in effect s 74 of the Mining Act 1992 for the purposes of the Respondent extracting minerals from NRE No 1 Colliery Longwall 4. 3 An order that the respondent by itself, its servants or agents, be restrained from carrying out development for the purpose of the extraction of coal from the area known as longwall 4 under consolidated coal lease CCL 745 under the Mining Act 1992 until an approval under the Environmental Planning and Assessment Act 1979 is obtained. 4 An order that the respondent pays the applicant's costs of the proceedings. 5 Such further or other orders as the Court thinks fit. 22The applicant essentially contends that, in commencing and continuing to carry out the extraction of coal from Longwall 4, without project approval under Part 3A, or DC under Part 4 (POC, par 5), the respondent is in breach of the EPA Act (POC, par 7). 23In response, Mr Hale SC and Mr Ireland submit that, as a result of cl 8K of the Environmental Planning and Assessment Regulation 2000, s 74 of the Mining Act 1992 continues to operate in the current matter, so that Longwall 4 is effectively exempt from any requirement for any approval under the EPA Act, until the "earlier of an approval being obtained, or the end of the 'transition period', which is now 30 September 2012" (Respondent's subs on security for costs, par 8). 24The respondent's submissions go on to say (at par 9) that: Having regard to the continued application of s74 to exempt Longwall 4 from any requirement for development consent or Part 3A approval under the EP & A Act, Longwall mining operations have commenced pursuant to a subsidence management plan approval (SMP Approval) and Part 5 EP & A Act assessment, rather than the Project Approval. 25In the respondent's POD, it claims that, even if the Court finds against it in relation to its interpretation of cl 8K and s 74, the Court would permit the development to continue, on discretionary grounds, because of the (POD, par 9): (a)technical nature of the breach flowing from the absence of evidence of material adverse environmental impact arising from extraction of coal using longwall mining, from Longwall 4; (b)Part 5 environmental assessment of longwall mining from Longwall 4, undertaken in the SMP Approval; (c)respondent's pending application under s 75W of the EPA Act seeking to modify the Project Approval; (d) "likely geotechnical and safety risks and consequences of granting the injunctive relief sought" as the mining has commenced; and (e)adverse financial impact on the respondent and third parties should the injunction be granted, including loss of revenue, and the redundancy of employed and contracted personnel. 26The respondent also contends that upon expiration of cl 8K (30 September 2012) s 109 of the EPA Act operates to provide existing use rights for the extraction of coal from Longwall 4, and, therefore, remove any requirement for further consent or approval under the EPA Act (POD, par 6g)). 27The applicant argues that as longwall mining had not commenced prior to the grant of project approval, the respondent is not entitled to rely on existing use rights (applicant's reply, par 10). 28It appears that there are two central issue to this dispute: (1) the application of cl 8K to s 74 in the current matter, which Mr Hale characterises as a "technical" argument (Tp 3, L31), and (2) the possible application of s 109, to Longwall 4.
The respondent's estimate of its legal costs to date 29The relief sought will have serious implications for Gujarat, and so both senior and junior counsel will be instructed. The respondent's solicitor, Simon Ball, estimates that at least three days will be required to hear the matter (pars 31-32). 30He also considers that expert evidence will need to be prepared (and those experts then required for the hearing) to: (1) properly explain to the Court the "relationship of the mining operations approved by the Part 3A Approval to the mining of Longwall 4", and (2) provide expert evidence on the "geotechnical and safety consequences which...are likely to arise from the grant of the injunctive relief sought by IRRM" (pars 30(c) and (d)). 31Ball estimates Gujarat's costs of defending the proceedings to be approximately $107,184 on a solicitor/client basis, and anticipates that, if the respondent is successful in obtaining an order for party/party costs in relation to the substantive proceedings, an amount of $75,000 (after costs assessment) could be expected (Ball affidavit, par 28). 32The breakdown of those costs was provided in Ball's affidavit (at tab 10 of SPB-1), and for convenience, is extracted below: Person Acting "Rate (including GST/day) Number of Days Total Costs Accrued ($) (including GST) Hale (SC) $(880/hr x 8 hrs) 5 $35,200 Ireland (JC) $(330/hr x 8 hrs) 7 $18,480 Ball (partner) $(792/hr x 8 hrs) 5 $31,680 Linkio (graduate) $(341/hr x 8 hrs) 8 $21,824"
33As at 17 July 2012, IRRM had a net asset position of $115.00, with limited income and assets (Osborn affidavit, par 11 and SPB-1, tab 7). 34Osborn deposes that if the Court makes an order for security against IRRM, the association would not be able to continue with the proceedings (pars 13-14). 35Although she admitted, during cross-examination, that, if required, she would personally be able to come up with some money ($5,000) for security, Osborn said that there "would be a number of things" (Tp 17 L33), including financial risk, that would stop her from commencing proceedings in her own name. 36Osborn also deposed (at par 15) that, in her opinion, none of the members stand to receive any financial benefit from the proceedings, and that the non-financial benefit sought to be gained, is "compliance with planning processes, including community participation which may lead to a better quality local environment..."
The Motion for Security for Costs 37The respondent seeks security for costs pursuant to r 42.21 of the Uniform Civil Procedure Rules 2005 ('UCPR'), s 1335 of the Corporations Act 2001, and the implied/inherent jurisdiction of the Court (s 23 of the Land and Environment Court Act 1979 ('Court Act')). 38Rules 42.21 provides: (1) If, in any proceedings, it appears to the court on the application of a defendant: ... (d) that there is reason to believe that a plaintiff, being a corporation, will be unable to pay the costs of the defendant if ordered to do so, or (e) that a plaintiff is suing, not for his or her own benefit, but for the benefit of some other person and there is reason to believe that the plaintiff will be unable to pay the costs of the defendant if ordered to do so, the court may order the plaintiff to give such security as the court thinks fit, in such manner as the court directs, for the defendant's costs of the proceedings and that the proceedings be stayed until the security is given. (2) Security for costs is to be given in such manner, at such time and on such terms (if any) as the court may by order direct. (3) If the plaintiff fails to comply with an order under this rule, the court may order that the proceeding on the plaintiff's claim for relief in the proceedings be dismissed. (4) This rule does not affect the provisions of any Act under which the court may require security for costs to be given. 39Section 1335 similarly provides the Court with jurisdiction to require a corporate plaintiff to provide sufficient security, where there is evidence to suggest that it will be unable to pay the defendant's legal costs. 40This Court's implied or inherent power to award security pursuant to s 23 of the Court Act, although expressly left open by the Court of Appeal in Melville v Craig Nowlan and Associates (2001) 54 NSWLEC 82 ('Melville'), was recognised by this Court in Burrell Place Community Action v Griffith City Council [2009] NSWLEC 120 ('Burrell Place'), at [2]-[4], and Reid's Farms Pty Limited v Murray Shire Council [2009] NSWLEC 171; 169 LGERA 307 at [23]. 41The applicant disputes the power to make the order under s 1335, arguing that an association is an excluded matter for the purposes of the Corporations Act (see s 95(1) of the Associations Incorporations Act 2009), but, agrees that the jurisdiction to award security under r 42.21 is enlivened, as it has insufficient funds to meet a costs order, if made (applicant's subs, pars 5-6. For a discussion of the application of r 42.21 to incorporated associations, see Burrell Place, at [7]). 42As the respondent has established a prima facie entitlement to the order of security, the onus is on the applicant to show that security for costs should not be granted, or should be for a lesser amount than that sought (see Idoport Pty Limited v National Australia Bank Limited [2001] NSWSC 744 ('Idoport'), at [60] and [62] and Friends of King Edward Park v Newcastle City Council [2012] NSWLEC 113 ('King Edward Park'), at [34]). 43The Court's discretion to order security for costs is unfettered, and there is "no absolute rule to control the exercise of the discretion to order security for costs where that jurisdiction derives from the inherent power of the Court" (Merribee Pastoral Industries Pty Ltd v Australia & New Zealand Banking Group Ltd [1998] HCA 41; 193 CLR 502, at [26]). 44Whether an order is made will depend on the circumstances of the case, but there are established guidelines that the Court takes into account in the exercise of its discretion (KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 ('Cable Investments')). 45I cited those guidelines (as set out in Cable Investments at 197-8), in my judgment in John Williams Neighbourhood Group Inc v Minister for Planning [2011] NSWLEC 100; 183 LGERA 327 ('John Williams'), at [25]. They are as follows:
Promptness? 48Mr Seymour concedes that the respondent's application, commenced (1) following receipt of a letter answering a request for details of the applicant's financial position, and (2) within a month of the commencement of the proceedings, was brought promptly (see King Edward Park, at [37]). 49There is, therefore, no issue of delay in this case.
Bona fides and prospects of success? 50Mr Hale submits (par 23) that the applicant's case is weak, ... it being admitted by the applicant that the area of Longwall 4 is not one in which mining operations were approved by the Project Approval, but it being simultaneously (and inconsistently) denied that clause 8K applies and continues s74 to those areas. 51Mr Seymour argues, however, that the matters regarding the operation of cl 8K(1)(b) are reasonably arguable, and notes (par 17) that: i) ...there would be important consequences for the continued mining operations on longwall 4 in the event that IRRM was correct in its construction of clause 8K; and ii) ...there would be important consequences for the administration of clause 8K of the Regulations to mining operations across the State if IRRM is correct in its construction. 52It is generally accepted that a claim, which is prima facie regular, and which discloses a cause of action, should, in the absence of evidence to the contrary, be treated as bona fide, and as having a reasonable prospect of success (see Bryan E Fencott and Associates Pty Ltd v Eretta Pty Ltd (1987) 16 FCR 497, at 514). 53I accept the bona fides and regularity of the applicant's case.
Oppression and stultification? 54Mr Seymour notes IRRM's "frank admission that there are no members, persons standing behind ...the Applicant, who would be both willing and able to pay any order for security should such an order be made" (applicant's subs, par 20). 55He argues that the application for security would stultify the proceedings (see pars 11-14 of Osborn's affidavit), and is, therefore, oppressive. As a result, the claims of IRRM are unlikely to be heard, a factor which he submits would weigh heavily in the Court's consideration (pars 19-21). 56Mr Hale submits that the application for security does not have the sole purpose of denying an impecunious applicant the right to litigate. 57He argues that the respondent is likely to incur significant costs in these proceedings, and that it merely seeks to protect itself from a costs order, which might be rendered nugatory (subs, par 26). The application is not oppressive, and the inability of an applicant to pay a respondent's costs is a substantial factor in favour of the grant of security (see Idoport, at [56]). 58Mr Hale notes that the proceedings rely on the open standing provision in s 123 of the EPA Act, and, therefore, if the applicant elected not to proceed with the matter, it cannot be concluded that another person cannot challenge the issues raised by the proceedings (see Melville, at [109], and Burrell Place, at [140]). Relevantly, the EDO has acted for the Total Environment Centre regarding issues which are also the subject of these proceedings (see affidavit of Novak, Annexure A, p5). 59Mr Hale also submits that there are persons standing behind the applicant, who have the capacity to provide the necessary security. He cross-examined Osborn on these issues ([35-[36] above). Although the exact employment of all members is unknown, as well as what assets, if any, they may have, he argues that there is no reason to suggest that the association's members would not be in a position to personally borrow funds to contribute to an order for security (T p 19 LL15ff). He further submits that, in the absence of evidence regarding the financial status of those who stand behind the association, showing their impecuniosity, the applicant cannot maintain its submission that the proceedings would be stultified by the security order sought (subs, par 29). 60Mr Seymour argues that, if impecuniosity is the ground for the application, then (T p20 LL30-36): ...the test under the rules is whether a costs order will be met so either the members can put their hands in their pockets and meet the costs order or they can put their hands to meet the security for costs order but if they're relying on the impecuniosity as being the source of the power to grant the order then it must follow that the same result would follow in terms of the members being unable to contribute. If they are unable to contribute to a costs order then they are unable to contribute to a security order as well. 61Mr Hale suggests that this is a stronger case for the finding of no stultification or oppression, and is not a case, like John Williams, where other litigants would be time-barred from commencing proceedings (subs, par 30). In any event, security for costs may be awarded even if there is no evidence of a person who is willing to provide security (Burrell Place, at 29), or if it is concluded that the proceedings would be stultified by the order (Sales-Cini v Wyong City Council [2009] NSWLEC 201, at [58]). 62The fact that an order of security will frustrate the plaintiff's right to litigate its claim because of its impecuniosity, although a powerful factor weighing against the grant of such order, does not automatically lead to its refusal: Yandil Holdings Pty Ltd v Insurance Co of North America (1985) 3 ACLC 542, cited in Cable Investments, at 197-198. 63In Hession v Century 21 South Pacific Ltd (in liq) (1992) 28 NSWLR 120, at 123 (cited in Cable Investments at 197-198), Meagher JA stated: ...a company in liquidation against whom an order for security for costs is sought cannot successfully resist such an order merely by proving that it cannot fund the litigation from its own resources if an order for security is made; it must prove that it cannot do so even if it relies on the other resources available to it (the company's shareholders or creditors)...Finally, whilst it is both true and important that poverty must be no bar to litigation, what that means is that the courts must be astute to see that no person pursuing a claim which is not frivolous is precluded from doing so by the erection of obstacles which poverty is unable to surmount; it does not mean that proof of insolvency automatically confers an immunity from statutory provisions which deal with insolvent plaintiffs. 64The Court notes the evidence of Osborn's unwillingness to provide security, or bring proceedings in her own name, but, in the absence of evidence from the other members of the association, going to their willingness or ability to personally provide security for the proceedings to continue, or to bring proceedings personally, I do not think the applicant has provided the Court with sufficient evidence to support its submission that the proceedings will be stultified. 65I also do not accept that the application for security was brought to frustrate IRRM's ability to litigate, and I, therefore, reject also the applicant's submission that it is oppressive.
Public interest litigation? 66The concept of "public interest" is wide, and difficult to define (see Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 at [71]-[75]). I considered the principles relating to it, in detail, in my judgment in John Williams at [31]-[51], and I need not repeat now what was said there, nor the similar analyses of authority by the other judges of the Court, such as Biscoe J in King Edward Park, Pain J in Blue Mountains Conservation Society Inc v Delta Electricity (No 2) [2009] NSWLEC 193, and Preston ChJ in Caroona Coal Action Group Inc v Coal Mines Australia Pty Ltd (No 3) [2010] NSWLEC 59; 173 LGERA 280 ('Caroona'). 67Mr Seymour argues that the proceedings have been brought in the public interest, and relies on r 4.2 of the Land and Environment Court Rules 2007 ('the Court Rules'), to support his submission against the order for security. The rule 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. (2) The Court may decide not to make an order requiring an applicant in any proceedings to give security for the respondent's costs if it is satisfied that the proceedings have been brought in the public interest. (3) In any proceedings on an application for an interlocutory injunction or interlocutory order, the Court may decide not to require the applicant to give any undertaking as to damages in relation to: (a) the injunction or order sought by the applicant, or (b) an undertaking offered by the respondent in response to the application, if it is satisfied that the proceedings have been brought in the public interest. 68In support, Mr Seymour contends that advocating the public interest is a constituent element of the group's purpose (subs, par 25, and Osborn affidavit at pars 5-6, 21). He also suggests that IRRM's communications with the Department, and the respondent, before the commencement of these proceedings would satisfy the Court that they were brought in the public interest (par 26). 69He suggests that "the real risk of incorrect administration by the Department" of cl 8K (par 27), is the "something more" required in Caroona (at [13]). He contends that the claims in relation to the interpretation of cl 8K (par 28): (a) are novel and generally important; (b) will contribute in a material way to the understanding or administration of the law; (c) are brought to protect the environment through the proper administration of environmental laws; (d) will affect a significant section of the public; and (e) will not result in a personal gain for IRRM, though success for IRRM would require Gujarat to change its operations so as not to continue receiving an unlawful benefit. 70Mr Seymour also submits that the Court must assess whether, if the matter proceeds to trial and the applicant is unsuccessful in its application, costs would, in any event, be ordered against it. He argues that this is not an ordinary commercial proceeding, and it is, therefore, possible that r 4.2(1) would apply, so that costs would not be ordered. 71Mr Hale relies on Hastings Point Progress Association Inc v Tweed Shire Council (No 3) [2010] NSWCA 39; 172 LGERA 157 ('Hastings Point'), at [33]-[34], to argue that this is not public interest litigation, but that the present applicant is more akin to the second group described by Young J in that case - a group seeking to preserve the amenity of their local area, which his Honour concluded was a group that would be faced with difficulty in avoiding a costs order on grounds that it was litigating in the public interest (subs, par 34). 72Mr Hale submits that this is not public interest litigation, for four other reasons:
Other relevant considerations? 77Mr Hale submits (subs, par 42): In all the circumstances, an order for security for costs is appropriate to avoid the unfair and unjust consequence that any costs order obtained by the respondent if successful in these proceedings would amount to an entirely pyrrhic victory, with the applicant having forced the respondent to incur significant costs yet borne none of the responsibility and usual risk that as a litigant it may be ordered to contribute to payment of those costs, if unsuccessful. 78Mr Seymour concedes that, if Gujarat is successful in the proceedings, and secures a costs order in its favour, it will be at risk of not having the order satisfied. However, he submits that an order for security for costs should not be made just because there has been fulfilment of "a condition precedent to the exercise of the power" (subs, par 8), and that, upon a consideration of all of the factors, the Court would not make the order sought (applicant's subs, par 12-13). 79Mr Seymour also submits that, in trying to resolve the issues without litigation (Osborn affidavit, par 25), and putting the respondent on notice of its concerns, and requesting an indication of whether those concerns were unfounded (Novak affidavit, pars 12-18), the applicant has acted reasonably in both bringing the proceedings, and in its conduct of them (subs, par 22).
80As Biscoe J stated in King Edward Park (at [35]): ..the exercise of the power to order security for costs is a "balancing process", requiring the doing of justice between the parties. The Court should have a concern to achieve a balance between ensuring that adequate and fair protection is provided to a respondent, and avoiding injustice to an impecunious applicant by unnecessarily shutting it out or prejudicing it in the conduct of the proceedings"...the exercise of the power requires consideration of the particular facts of the case...The weight to be given to any particular consideration depends upon its own "intrinsic persuasiveness" and its impact on other circumstances, which have to be weighed...There is no code to be strictly applied. 81The commencement of the proceedings was bona fide, they have reasonable prospects of success, and there is an element of public interest involved. 82There is, however, undisputed evidence that there is also a high risk that the applicant would be unable to pay the respondent's costs, in the event that it fails in its challenge, and is ordered to pay the respondent's costs of the proceedings. The respondent did not cause the applicant's impecuniosity. 83Relevantly, the association's members are protected from its debts and liabilities as a result of its incorporation, and the "limited liability" afforded to it, and no members have offered any personal undertaking to be liable for costs of the proceedings. 84The respondent's application was brought promptly, and is not considered by the Court to be oppressive. I cannot conclude that it was brought specifically, and/or solely, to prevent an impecunious applicant from litigating its case. 85I have, therefore, concluded that an order for security costs is appropriate, in all the circumstances. 86On the question of the appropriate quantum to order, the respondent nominates $75,000. 87Mr Seymour submits, for the applicant, that, by (1) including an estimate for the cost of a "discretionary" defence, (2) assuming the Court will permit expert evidence in the absence of an application to permit the preparation of such evidence, and (3) assuming that the constructional and discretionary issues will both be heard at the same time, when procedural steps could be taken to reduce such costs, the amount estimated by the respondent is "wildly inflated beyond what is adequate" (par 23). 88He argues that the central issue, ie the application of cl 8K, can be determined without "complicated factual analysis or contested evidence" (par 16), and that the bulk of the respondent's expected costs come from its alternative defence regarding the Court's discretion (par 18). As a possible cost-saving measure, the issues could be separated, so that the costs of preparing a discretionary defence may not arise. The construction of cl 8K could even be determined on written submissions, rather than by way of a hearing (par 24). 89I accept the applicant's submissions that some procedural measures could be implemented to reduce the potential costs of the proceedings, and that the bulk of the respondent's costs would be expected to concern its discretionary defence. A separate question may be appropriate, but that issue has not been argued before me. 90In all the circumstances, I think an appropriate amount to order by way of security is $40,000.
91The Court, therefore, makes the following orders: (1)The respondent's notice of motion seeking security for costs is upheld; (2)Pursuant to Rule 42.21 of the Uniform Civil Procedure Rules 2005, the applicant is ordered to provide within 28 days, security for costs of the respondent in the sum of $40,000, by way of unconditional bank guarantee or in some other form acceptable to the Registrar and the respondent; (3)The proceedings are stayed until Order (2) has been complied with; (4)The parties have liberty to apply in respect of the implementation of Order (2); (5)The substantive matter is stood over to the List Judge's list on Friday 14 December for further directions, as necessary and appropriate; (6)The costs of the motion are reserved. 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: 22 November 2012
Illawarra Residents For Responsible Mining Inc
Gujarat NRE Coking Coal Limited
(1987) 16 FCR 497
(1992) 28 NSWLR 120
(1995) 56 FCR 189
[1998] HCA 11