Jeffman Pty Ltd and Lawrence Dry Cleaners Pty Ltd v Environment Protection Authority of NSW, Sydney Water Corporation and Douglas and Hilary Hutchinson

Judgment 1Two of the parties in a merits review appeal in Class 1 of the Court's jurisdiction each seek an order for costs against the other. 2The appeal was by the owner (Jeffman Pty Ltd) and the occupier (Lawrence Dry Cleaners Pty Ltd) of an industrial site at Waterloo on which a dry cleaning business had been and was still being conducted. Chemical solvents used in the dry cleaning business escaped and contaminated the soil and groundwater beneath the dry cleaning site (the Source Site) and had migrated and are continuing to migrate on to adjoining lands. 3The Environment Protection Authority ("EPA") issued a management order under s 14 of the Contaminated Land Management Act 1997 to the owner and occupier to take specified action, including to prevent migration of contaminated groundwater to adjoining land and to reduce contamination in the groundwater, other than at the Source Site. 4Jeffman and Lawrence Dry Cleaners were dissatisfied with the terms of the management order and appealed to this Court under s 61 of the Contaminated Land Management Act. Adjoining owners whose land has been contaminated by migrating contaminated groundwater, including Sydney Water Corporation applied to be and were joined by the Court as respondents to the appeal. 5I determined that, in light of the evidence adduced at the hearing, the EPA's management order should be replaced by a management order in significantly different terms to that originally issued by the EPA. Accordingly, I upheld the appeal, revoked the EPA's management order and made a new management order. I reserved the question of costs at the request of the parties: Jeffman Pty Ltd and Lawrence Dry Cleaners Pty Ltd v Environment Protection Authority of NSW, Sydney Water Corporation and Douglas and Hilary Hutchinson [2010] NSWLEC 89. 6One of the applicants, Jeffman, and one of the respondents, Sydney Water, have each applied for an order for costs in their favour. The other applicant, Lawrence Dry Cleaners, is in liquidation and the liquidator wrote to the Court explaining its decision not to appear on the respective applications for costs. The first respondent, the EPA, did not seek an order for costs and no order for costs was sought against it. The third and fourth respondents did not seek an order for costs and no order for costs was sought against them. 7The proceedings are in Class 1 of the Court's jurisdiction. The Land and Environment Court Rules 2007 have made special provision for orders for costs in Class 1 proceedings (Pt 3 r 3.7). These rules displace the rules dealing with costs of proceedings in the Uniform Civil Procedure Rules 2005 (see Pt 1 r 1.5(2) and Sch 1 making not applicable the usual order that costs follow the event in Pt 42 r 42.1). The special costs rule for proceedings in Class 1 of the Court's jurisdiction is that: "(2) The Court is not to make an order for the payment of costs unless the Court considers that the making of an order as to the whole or any part of the costs is fair and reasonable in the circumstances." 8Circumstances in which the Court might consider the making of a costs order to be fair and reasonable include those set out in rule 3.7(3). Jeffman relied on the circumstances in paras (c), (d), (e) and (f), while Sydney Water relied on the circumstance in (c). These circumstances are: "(c) that a party has acted unreasonably in circumstances leading up to the commencement of the proceedings, (d) that a party has acted unreasonably in the conduct of the proceedings, (e) that a party has commenced or defended the proceedings for an improper purpose, (f) that a party has commenced or continued a claim in the proceedings, or maintained a defence to the proceedings, where: (i) the claim or defence (as appropriate) did not have reasonable prospects of success, or (ii) to commence or continue the claim, or to maintain the defence, was otherwise unreasonable." 9Both parties relied on affidavit and documentary evidence of correspondence and communications between the parties and of the cost of legal and expert fees. Both parties helpfully prepared written submissions, both in chief and in reply. I have considered the evidence and submissions. 10Jeffman's arguments in support of a costs order were basically fivefold: