John Williams Neighbourhood Group Inc v Minister for Planning & Murlan Consulting Pty Limited

(1995) 56 FCR 189 Melville v Craig Nowlan & Associates Pty Ltd and Anor [2002] NSWCA 32; (2002) 119 LGERA 186 Merribee Pastoral Industries Pty Ltd v Australia & New Zealand Banking Group Ltd [1998] HCA 41; (1998) 193 CLR 502 Minister for Planning v Walker (No 2) [2008] NSWCA 334 Oshlack v Richmond River Council & Iron Gates Developments Pty Ltd (1994) 82 LGERA 236 Oshlack v Richmond River Council [1998] HCA 11; (1998) 195 CLR 72 Rajski v Computer Manufacture & Design Pty Limited [1982] 2 NSWLR 443 Ruddock v Vadarlis (No.2) (2001) 115 FCR 229 Sharples v Minister for Local Government (No 2) [2009] NSWLEC 62 Vilro Pty Ltd (In Voluntary Liquidation) v Roads and Traffic Authority NSW [2010] NSWLEC 234 Category: Interlocutory applications Parties: John Williams Neighbourhood Group Inc (Applicant) Minister for Planning (First Respondent) Murlan Consulting Pty Limited (Second Respondent) Representation: Mr P Ibbotson, Solicitor (Applicant) Mr A Shearer, Barrister (First Respondent) Mr S Nash, Barrister (Second Respondent) Maddocks Lawyers (Applicant) Legal Services Branch, Department of Planning (First Respondent) Addisons Commercial Lawyers (Second Respondent) File Number(s): 40701 of 2010

Introduction 1The substantive proceedings have been brought by the John Williams Neighbourhood Group Inc ('the group') under s 123 of the Environmental Planning and Assessment Act 1979 (NSW) ('the EPA Act' ). The Statement of Claim seeking "judicial review" was filed on 7 September 2010. 2The proceedings concern a Part 3A approval (Major Project 07-0151 - Exhibit M1 , tab 12) granted by the first respondent (the Minister) on 9 June 2010 to the second respondent Murlan Consulting Pty Limited ('Murlan') for " the construction and operation of a private hospital, adaptation and conservation of Rippon Grange house, demolition of several structures, excavation, landscaping and widening a section of Young Street ". 3This judgment deals with two Notices of Motion, namely: (1)Murlan's notice of motion, dated 6 January 2011, primarily seeks an order that the applicant provide security for costs in the sum of $50,000 (the security motion). (2)The group's notice of motion, dated 27 January 2011, seeks that the court make an order that the maximum costs recoverable by one party from the other in the proceedings is $20,000, and that the maximum costs that one party may recover from another in relation to the notice of motion is $5,000 (the maximum motion). 4The filing of these notices of motion " derailed " the directions made by Pain J on 26 November 2010, pending this judgment. The two motions were conveniently heard together, as there are some considerations which overlap. There was no challenge to the court's power to make either order, but the power in each instance is discretionary and must be exercised judicially. However, the costs discretion exercised after proceedings are concluded is not exactly the same as the discretion exercised at the interlocutory stage to make a " maximum" and/or a " security" order: Melville v Craig Nowlan & Associates Pty Ltd and Anor [2002] NSWCA 32; (2002) 119 LGERA 186. 5The Minister sought to be heard only in opposition to the maximum motion, and particularly on the question of "public interest litigation".

Background 6The Minister's approval of 9 June 2010 covered (according to the Statement of Claim, par 6): " a private hospital comprising 129 beds, adaptive reuse of heritage buildings, demolition of buildings with low heritage value, restoration of heritage landscapes, associated vegetation removal, excavation, bulk earthworks and car parking ". The project was estimated to cost, at the date of approval, $44.23M. 7The subject site is 35 Water Street, Wahroonga, but it also comprises 64 Billyard Avenue, and is bounded on its eastern side by Young Street. It is known as the "John Williams" site as various uses of it have borne that dedication since 1951. It is located within the Ku-ring-gai Local Government area. (See Exhibits A1 and A2 ). It was acquired by "Waterbrook of Wahroonga Pty Ltd" in 2005. 8The group was incorporated on 31 August 2006, after that sale, and its contact address is given on various documents for various purposes as either 28 or 49 Water Street (see Exhibit M2 ). Key players in the group have lived quite close to No.35 Water Street, i.e. in the "neighbourhood" of the "John Williams" site, since the early 1990s (O'Connor affidavit 9 February 2011, Annexures R to U). The group's sole object is to "co-ordinate a community response to the proposed redevelopment" of the subject site. (O'Connor affidavit 9 February 2011, p5 Annexure 'J') 9The Minister granted his approval to the project, which has had quite a history, following an environmental assessment report completed by the Director General of Planning in March 2010, pursuant to s 75 I of the EPA Act (Annexure 'D' to Summerhayes's affidavit), the Executive Summary of which (in Exhibit M1 , tab 11, p3 of 51) concluded as follows: This assessment found that the site has unique constraints in terms of cultural heritage and biodiversity, but that the proposal, as amended through recommended conditions of approval, adequately responds to these constraints and the character of the surrounding area. Key issues relate to bulk and scale of the new buildings, traffic and access, heritage and the conservation of [Blue Gum High Forest ("BGHF")]. These issues have been assessed in detail and the Department is satisfied that each issue has been adequately addressed through revisions made to the project during the assessment process and through the recommended conditions of approval including reductions in the bulk and scale of the buildings. Accordingly, none of the key issues, either individually or cumulatively, warrant refusal of the project. The project would be in the public interest through the provision of health services, the generation of employment, and the investment in the site resulting in the generation of funds for extensive conservation work to Rippon Grange and grounds, including the BGHF. Consequently, the Department considers that on balance the project warrants approval, subject to conditions. 10The Department of Planning had received 307 objections, including one from the group, several from individual members of it, and two from the Council. (Some of the public submissions are summarised at Exhibit M1 , tab 16). The Department of Health expressed some concerns (see Exhibit M1 , tab 11, p19 of 51, s 4.1.3). 11The Director General's report relevantly deals with (1) the proposal to end up with an increase in the area of BGHF, (2) the widening of Young Street, and (3) the conservation of Rippon Grange in its landscaped setting. Exhibit M1 also contains many documents pertaining to the assessment of the project (tabs 8, 9, 10). 12The approval (at tab 12) includes conditions relevantly requiring the widening of Young Street (B5) and the obtaining of Department of Health " approval in principle to operate a private health facility " (B15), both prior to the issue of a construction certificate. The conditions also impose strict requirements regarding the ecology of the BGHF (D20), and the protection of " the heritage fabric of the site " (D18), both during construction. Condition E1 requires the Department of Health licence to be obtained before the occupation certificate is issued, and condition F12 requires, when the project is operational, that Young Street be promoted as its main address. 13On 26 July 2010, the group made a detailed submission attacking the approval, seeking modifications, and reserving its rights to launch this challenge. When no reply was received as the three-month period of limitation drew to a close, the class 4 application was filed. On 27 September 2010, the solicitor for the Minister indicated that the Director General did not propose to respond to the letter of 26 July as these proceedings were by then on foot. 14The group contends that the Minister's approval will lead to irreparable damage to the critically endangered ecological community (the BGHF - see Exhibit A3 ) and to Rippon Grange . Reinstatement and expansion to the forest community and restoration of the heritage-significant house form parts of the approved project, and the Minister remains committed to them, submitting to the court that the argument between the group and the respondents concerns how those objectives will be afforded and achieved, not whether they should be pursued. 15Mr Nash, junior counsel for Murlan, summarised the group's grounds of challenge thus (written submissions on the security motion, par 5): a. Failure by the Minister to consider the 'implied mandatory consideration' of the 'public interest' and the 'principle of ecologically sustainable development ... as it applies to the protection of and mitigation of impacts on the critically endangered ecological community, the Blue Gum High Forest, in the event that the Project is not economically viable following the commencement of work on the Project' (Ground 1); b. Failure by the Minister to consider the 'implied mandatory consideration of the public interest as it applies to the protection of the Project and people from bush fire hazards when the Blue Gum High Forest on the Site is regenerated on the Site or surrounding land is identified as being bush fire prone land' (Ground 2); c. The Minister's decision was 'manifestly unreasonable' based on various grounds (Ground 3); d. The Minister had no jurisdiction to determine the application or grant approval as the second respondent's environmental assessment failed to consider various matters concerning funding for the project (Ground 4); and e. The Minister had no jurisdiction to determine the application or grant approval due to the failure to procure the consent of Ku-ring-gai Council to the application as it was the owner of land in respect of which approval was sought (Ground 5). 16All grounds of challenge are denied by both respondents.

Maximum or Protective costs orders 17The power of the court to make a " protective costs " order, or an order for " maximum costs ", comes from r 42.4 of the Uniform Civil Procedure Rules 2005 (NSW) ('UCPR'): (1) The court may by order, of its own motion or on the application of a party, specify the maximum costs that may be recovered by one party from another. (2) A maximum amount specified in an order under subrule (1) may not include an amount that a party is ordered to pay because the party: (a) has failed to comply with an order or with any of these rules, or (b) has sought leave to amend its pleadings or particulars, or (c) has sought an extension of time for complying with an order or with any of these rules, or (d) has otherwise caused another party to incur costs that were not necessary for the just, quick and cheap: (i) progress of the proceedings to trial or hearing, or (ii) trial or hearing of the proceedings. (3) An order under subrule (1) may include such directions as the court considers necessary to effect the just, quick and cheap: (a) progress of the proceedings to trial or hearing, or (b) trial or hearing of the proceedings. (4) If, in the court's opinion, there are special reasons, and it is in the interests of justice to do so, the court may vary the specification of maximum recoverable costs ordered under subrule (1). 18The group's critical point on its own notice of motion was that its litigation is properly characterised as " public interest litigation ". Their advocate, Mr Ibbotson, relied upon Preston ChJ's judgment in Caroona Coal Action Group Inc v Coal Mines Australia Pty Ltd and Another (No.3) ("Caroona No.3") [2010] NSWLEC 59; (2010) 173 LGERA 280. In the first of His Honour's three judgments in that litigation ( Caroona No.1 [2009] NSWLEC 165; (2009) 170 LGERA 22) he declined to make a maximum order. In the second ( Caroona No.2 [2010] NSWLEC 1; (2010) 172 LGERA 25), His Honour dismissed the substantive proceedings. In the third, His Honour determined, post -litigation, the issue of costs. His Honour outlined (No.3 at [13]) a three-step approach to determining costs in public interest litigation, in the light of Oshlack v Richmond River Council & Iron Gates Developments Pty Ltd (1994) 82 LGERA 236 (and, in the High Court, [1998] HCA 11; (1998) 193 CLR 72) as follows: (1) Is the litigation " public interest litigation "? (2) Is there " something more " involved than the fact that the litigation is brought in the public interest? (at [47]-[60]) (3) Are there any " countervailing circumstances ", including the conduct of the applicant, and matters contrary to the public interest, that would speak against some departure from the usual order that costs follow the event? (at [61]) 19Preston J had said in Caroona No.1 (at [58]): The critical question in determining any application for a maximum costs order is whether access to justice will be promoted or impeded by the making or not making of a maximum costs order. The particular circumstances of the litigation and of the plaintiff are relevant in answering this critical question, but these matters are not ends in themselves . (emphasis mine)

Security for Costs 20Orders for security for costs are made under UCPR 42.21, which provides: (1) If, in any proceedings, it appears to the court on the application of a defendant: (a) that a plaintiff is ordinarily resident outside New South Wales, or (b) that the address of a plaintiff is not stated or is mis-stated in his or her originating process, and there is reason to believe that the failure to state an address or the mis-statement of the address was made with intention to deceive, or (c) that, after the commencement of the proceedings, a plaintiff has changed his or her address, and there is reason to believe that the change was made by the plaintiff with a view to avoiding the consequences of the proceedings, or (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. 21In terms of sub par (d) of r 42.21(1), Mr Nash submitted, and it appears to be conceded, that the group, being an incorporated association under the Associations Incorporation Act 1984 (NSW), comes within the scope of r 42.21. In Burrell Place Community Action Group Incorporated v Griffith City Council ("Burrell") [2009] NSWLEC 120, Lloyd J stated (at [7]): ...an incorporated association nevertheless remains a "body corporate" which is capable of suing and being sued like any other body corporate and, in particular, must be treated like any other body corporate within the meaning of the word "corporation" in r 42.21 of the Uniform Civil Procedure Rules . Rule 42.21 does not refer to "a corporation" within the meaning of the Corporations Act 2001 (Cth) - it refers to "a corporation", which would clearly include any body corporate and therefore an incorporated association. 22In addition to the court's statutory power to order security for costs, Mr Nash submitted that the court has an inherent or implied power to make such an order, pursuant to reasoning applied in Burrell, and in Rajski v Computer Manufacture & Design Pty Limited [1982] 2 NSWLR 443 ( written submissions on security motion, par 11) . 23Mr Nash submitted that the court is bound by Rule 4.2 of the Land and Environment Court Rules 2007 (NSW), and must be satisfied that proceedings have been brought in the public interest in order to refrain from making an order for security for costs, if otherwise appropriate (par 12). The court must "...achieve a balance between ensuring that adequate and fair protection is provided to the second respondent, and avoiding injustice to an impecunious applicant by unnecessarily shutting it out or prejudicing it in the conduct of the proceedings..." (par 13, citing Idoport Pty Ltd & Anor v National Australia Bank Ltd & 8 Ors; Idoport Pty Ltd & Market Holdings Pty Ltd v Donald Robert Argus; Idoport Pty Ltd "JMG" v National Australia Bank Ltd (No 35) ("Idoport") [2001] NSWSC 744, per Einstein J at [47]). 24Regard must be had to all the circumstances of the case. There are guidelines to be found in the authorities, but no " code " of principles to be strictly adhered to in the exercise of the discretion. Some general principles have evolved (see, e.g. Kirby J's discussion of them in Merribee Pastoral Industries Pty Ltd v Australia & New Zealand Banking Group Ltd [1998] HCA 41; (1998) 193 CLR 502, at [26], and Pain J's survey of them in Kennedy v Stockland Development Pty Ltd & Anor (No.2) ("Kennedy ") [2011] NSWLEC 10). 25Much reference has been made, in various cases over the years, to the following guidelines typically taken into account on such applications. They are drawn from the judgment of Beazley J in KP Cable Investments Pty Ltd v Meltglow Pty Ltd ("Cable") (1995) 56 FCR 189 (at 197-8):

1. Whether the application for security has been brought promptly.
2. The strength and bona fides of the applicant's case.
3. Whether the applicant's impecuniosity was caused by the respondent's conduct the subject of the claim.
4. Whether the respondent's application for security is oppressive in the sense that it is being used merely to deny an impecunious applicant a right to litigate.
5. Whether there are any persons standing behind the applicant who are likely to benefit from the litigation and who are willing to provide the necessary security.
6. Whether the persons standing behind the applicant have offered any personal undertaking to be liable for the costs and, if so, the form of any such undertaking.
7. Whether the applicant is in substance a plaintiff or the proceedings are defensive in the sense of directly resisting proceedings already brought or seeking to halt the respondent's self-help procedures. 26Her Honour found in Cable (at 198) that the applicant had " a bona fide and arguable case ", and that she was, therefore " entitled to assume in the circumstances that the claim had reasonable prospects of success ". 27These Cable principles were specifically endorsed for application in this court, by Lloyd J in Burrell (at [12]), but also in some earlier cases to which His Honour referred. They are consistently followed in security cases. 28In Idoport , Einstein J said this (at [60]) in respect of the onus of proof in security cases:
8. ... there is certainly substantial authority ... that the defendants, as applicants for security for costs, have an evidentiary burden of leading evidence to establish a prima facie entitlement to such an order and to such an order in relation to a particular amount... ...
9. ... once the defendants have led evidence to establish the above described entitlement, an evidentiary onus falls upon the plaintiffs to satisfy the Court that taking into account all relevant factors, the Court's discretion ought to be exercised by either refusing to order security or by ordering security in some lesser amount than was sought by the defendants. 29As Mr Nash says ( security submissions, par 15), " proof of the unsatisfactory financial position of the applicant 'triggers' the Court's discretion ..." to make an order for security . 30Before proceeding to determine the notices of motion it is necessary to discuss the true character of the substantive matter.

Characterisation of the litigation 31The proper characterisation of the litigation, i.e. as " public interest litigation " or not, is, like questions of financial capacity, an issue germane to both motions. It was upon this issue that Mr Shearer focussed in his submissions on the Minister's behalf. 32I have already referred to the three-point test laid down by Preston J in Caroona No 3 (see [18] above). His Honour, in formulating that test, noted (at [21]-[27]) that the " public interest " is a multi-faceted concept, and cited with approval (at [38]) Lloyd J's five considerations in Engadine Area Traffic Action Group Inc v Sutherland Shire Council (No.2) ("Engadine") [2004] NSWLEC 434; (2004) 136 LGERA 365 at [15] (citations omitted): (a) The public interest served by the litigation. (b) 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. (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. 33Preston J pointed out ( Caroona No.3 at [40]-[46]) that these considerations relevantly (1) focus on enforcing public law; (2) should not be considered a " code " for characterising public interest litigation; and (3) need not be answered in a particular way in the characterisation task. In applying the three-part test, His Honour found (at [81]) that the Caroona litigation was " public interest litigation ", and that it had no additional special features, but there were " countervailing factors " present, which would support the usual costs order being made. 34Both respondents concede in the present case that the group's challenge has elements of a " public interest litigation " character, but both submit that in all the circumstances of the case those elements are insufficient to make good the group's submission that the case as a whole be so characterised. 35The authorities recognise that there may in any one case be " many public interests ". Ruddock v Vadarlis (No.2) (2001) 115 FCR 229, at [19]. 36In the Court of Appeal decision in Hastings Point Progress Association Inc v Tweed Shire Council (No 3) ("Hastings") [2010] NSWCA 39; (2010) 172 LGERA 157, Basten JA (with whom McColl JA agreed) stated (at [11]): ...the proceedings were brought predominantly in the public interest...There are three particular factors which militate in this case...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... 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. 37Young JA (with whom McColl JA also agreed) identified (at [33]) five categories of " so-called public interest groups ": ... 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 faade 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. 38His Honour found (at [34]) that the third group " cannot expect mercy on costs ", and that the second group " would have great difficulty ". The court was, therefore, required to " look further than the name of the applicant group and its professed aims " . 39Mr Ibbotson identified the following factors that would lead the court to come to a determination that the group's proceedings were truly " public interest litigation ": the group is not seeking to preserve the (pecuniary or commercial) interests of any individual; it would have preferred to resolve this issue by negotiation, consultation, and mediation, rather than litigation; the proceedings relate to public law; and it is not seeking to gain anything for itself from opposition to the development. 40He submitted that the proceedings should be identified as " public interest litigation " because of the effect that the development would have on the critically endangered ecological community. Although the development application foreshadowed eventual regeneration of the elements of BGHF which would be cleared for the development, that would not be possible if the project proved not to be economically viable. 41Some key members of the group live near the development, and have personal amenity concerns, but Mr Ibbotson submitted that that fact simply meant that those people were best placed to know the issues that were of concern to not only the local area, but also to the wider community. Insofar as the group might properly be thought to be within Young JA's second category - a local group seeking to protect the amenity of the area - Mr Shearer referred the court to Stein J's decision in Darlinghurst Residents Association v Elarosa Investments Pty Limited & Anor ("Darlinghurst") (1992) 75 LGRA 214, where the membership of the Association consisted, as here, mostly of residents living close to the site. Stein J found (at 216): ... the challenge by the Association to the consent for the building was representing and expressing far wider objections than the narrow private amenity of residents living in close proximity to the proposal. A wider public purpose was served by the litigation than solely that of some of the members of the applicant. 42In Engadine, Lloyd J applied the Darlinghurst principle to arrive at his five considerations, as outlined above at [32]. The question of a local group protecting its members' public amenity was considered, but not found to be determinative, in Minister for Planning v Walker (No.2) [ 2008] NSWCA 334. Mr Shearer, therefore, argued that wider public interest considerations do not apply to the present matter, and that the group was primarily concerned with local issues. 43Mr Shearer also argued that the group failed to demonstrate that its litigation was public interest litigation because no " complex or novel legal matters or any legal principle of general significance " was involved, unlike, for example, Sharples v Minister for Local Government (No.2) [2009] NSWLEC 62, where Biscoe J stated (at [15]): The outcome of the case directly affected all ratepayers in the Tweed Shire and the legal principles were of general significance to the legality of revenue raising activities of all local governments in New South Wales. In my opinion, the public interest served by the litigation was wide. or Engadine, where Lloyd J stated (at [17]): The proceedings also served the interests of the council, developers and the wider community in providing clarification of the council's powers and obligations in applying and refunding contributions. As such, it can be said that the proceedings constituted public interest litigation. 44Mr Shearer also sought to negate the contention that the matter is in the public interest, on the basis that there was no failure by a relevant regulatory authority to take necessary action, as was the case in Delta Electricity (at first instance before Pain J, Blue Mountains Conservation Society Inc v Delta Electricity [2009] NSWLEC 150; (2009) 170 LGERA 1, and, on appeal to the Court of Appeal, Delta Electricity v Blue Mountains Conservation Society Inc [2010] NSWCA 263; (2010) 176 LGERA 424 - see [121]). The relevant regulatory authority in this case is the Minister for Planning, who has actively engaged in the matter and with the group. 45In Delta Electricity, Pain J had to characterise the matter, as " public interest litigation " or not, well in advance of a trial, and before all issues were known. Her Honour concluded that, on balance, the matter before her was such a case, and made a maximum costs order. The community group there involved would not proceed in the absence of such an order. Her Honour's decision was appealed, with the leave of the court of Appeal, on 19 grounds. 46On appeal, Beazley JA (in a lengthy dissenting judgment) surveyed the cases where such a protective or maximum costs order had been made. Inter alia, Her Honour dealt with Walker, Engadine and Caroona before turning (at [115]) to the question of whether the case met the test of " public interest litigation ". Beazley JA would have allowed the appeal, but agreed with Pain J's decision on the characterisation point, noting that (1) a central issue in the case was of widespread concern, namely possible pollution by Delta of Cox's River which feeds into Warragamba Dam, the source of Sydney's water supply, and that (2) the community group involved could not persuade the relevant regulator to take action (see especially [121]). Her Honour found a disproportionality between the quantum of the maximum costs in the order Pain J made and a reasonable estimate of the relevant costs. Basten and Macfarlan JJA joined Beazley JA in granting leave but, in far less comprehensive judgments, dismissed the appeal. However, neither demurred from the characterisation of the case as " public interest litigation ". 47Mr Nash relied on the Court of Appeal's application in Walker of Lloyd J's five considerations in Engadine, and submitted that the " primary motivation " of the present litigation was the shared interest of a group of understandably concerned nearby citizens for their own amenity, rather than any general concern of citizens from a wider area to enforce the relevant public law obligations in play here, or uphold the public interest and the rule of law, i.e. the predominant concern of the group lies with matters of local, albeit some public, interest. All submissions on the project from its members and other locals and all its publications raise only issues of local amenity and lead to the inference that the "primary motivation" of the proceedings is "local interests" , and not the broader "public interest" contemplated in the authorities. 48Mr Nash submitted that, even if the court did not accept that submission, there was in this present case no evidence of any relevant " other factor ", or what Preston J had called, in Caroona No 3 (at [53]), " something more ". See also Biscoe J in Anderson on behalf of Numbahjing Clan within Bundjalung Nation v NSW Minister for Planning (No 2) [2008] NSWLEC 272; (2008) 163 LGERA 132. 49I have concluded that, while there are some elements of a broader public interest nature involved in this matter, especially the threat to Blue Gum High Forest in the Sydney Basin, the real aim of the group bringing the challenge is to preserve the amenity of the residential neighbourhood where its members reside, in the face of the " threat " posed to it by a six-storey private hospital. 50I, accordingly, decline to classify this challenge as " public interest litigation ". 51The consequences of that conclusion are that the usual costs regime in class 4 matters should " inform" the consideration of the two notices of motion presently before the court, but not dictate the outcome (see [4] above). 52I now turn to consider, first, the group's application for a maximum costs order.

Should the court make a maximum costs order? 53The question to be answered is whether, in terms of the test in Caroona No.1 ([19] above) , access to justice would be impeded if a protective order is not made. 54The principal member upon whose evidence the group sought to rely in support of its maximum motion was Stephanie Vaughan. Those citizens named in the evidence as major office holders in the group, such as the President, Cameron Harris, or the Treasurer, Craig Parker, have taken no role in this part of the proceedings. When Ms Vaughan did not attend the hearing and offer herself for cross-examination on her affidavit of 16 February 2011, Mr Ibbotson did not seek an adjournment to secure her attendance, or obtain any evidence to lead in her absence, but, instead, readily conceded that he could not read nor rely upon her evidence. (T10.3.11, p6, LL1-34). He then raised no objection to the tender, by Mr Nash in Murlan's case, of an annexure to the Vaughan affidavit, and the group's standard letter canvassing for financial support, dated 20 September 2010, at annexure 'B' became Exhibit M2 . 55Mr Nash ( maximum submissions par 11) took the court to Pain J's judgment in Vilro Pty Ltd (In Voluntary Liquidation) v Roads and Traffic Authority NSW [2010] NSWLEC 234, where Her Honour stated (at [101] and [110]): A party can be reasonably expected to call a person as a witness who is likely to be able to speak on some relevant fact or issue. Failure to do so suggests that an adverse inference may be drawn by that failure ... [ Jones v Dunkel (1959) 101 CLR 298, at 308-312, and Brandi v Mingot (1976) 12 ALR 551, at 559-560]. ... The principle the Court is applying is that the party most likely to be able to fill a gap in evidence which does not do so cannot expect a court to speculate on what that evidence might be in order to draw an inference in that party's favour. 56Mr Nash submitted that the group, being restricted, as a result of Ms Vaughan's position, by the principles in Jones v Dunkel and Brandi v Mingot , could not satisfy the court on the evidence actually before it, that the group had discharged its onus (pars 8 and 12). 57Mr Nash also submitted that the group would continue with the proceedings regardless of any protective costs order made by the court (par 13). In any event, as the incorporation documents are based on raising and possibly spending up to $50,000, all funded by "member contributions" . Mr Nash submits that, in those circumstances, the court should not make a maximum order limiting costs exposure to $20,000. 58True it is that there is no evidence from the group on this question, and the financial statements of the group suggest that it may well not be in a financial position to continue with the proceedings, having available " members' funds " limited to approximately $12,000, as at 1 November 2010 (O'Connor affidavit 6 January 2011, p13). However, there would appear to be no evidence to establish " impecuniosity " on the part of the group and its members, and some financial incentive for local members of the group to provide funding for the group to continue this litigation and to fight the project. Mr Nash further submitted that the applicant had not taken sufficient steps to raise funds from its own members to finance the proceedings (par 10). 59Mr Ibbotson, during oral argument, made the following relevant comments on the group's likely position if it failed on these motions (some emphasis added): At T10.3.11, p2, LL4-8: ... this issue might kill the litigation, if we do not have funds to put forward in relation to the security for costs motion. So if we fail on that, we are going to be delayed by a number of months and possibly will have to withdraw. p15, LL48-50: ...if we are not successful ... in this motion to get a protective costs order, we may need to consider withdrawing . p30, L43 - p31, L3: ... a statement was made that there is no evidence about the group needing to withdraw. I accept that not having the affidavit of Ms Vaughan there is no stated statement (sic) to that effect in the evidence. But your Honour is able to look at the financial position of the applicant... the funds are limited ... we could seek further funds from the community. And I'll accept that that is always true, if put to it, we will have to do so. There is no guarantee of getting that funding. p47, LL36-38: ... a reasonable implication that if we are at risk of costs we would have to seriously consider withdrawing from the proceedings, or we would have to raise further funds and incur the potential delay that entails. 60Mr Ibbotson argued that, apart from the " public interest litigation " question, there were other factors in favour of the group's notice of motion. The group had brought the matter promptly and as a last resort. Also the time for challenge having expired a few days after this class 4 application was filed, Mr Ibbotson correctly submits that the group is (at least now) the only available challenger ( EPA Act s 75(4) - see T pp58-59, and Kennedy ). 61The group has " prospects of success ", and Mr Ibbotson's firm (Maddocks) is providing pro bono representation, factors considered relevant by Pain J in Delta Electricity (see generally T pp13-17) . I also note that Pain J considered that the matter before her in Delta Electricity was arguable, and, if it were to proceed, it would be a " test case " involving " novel questions" in relation to the Protection of the Environment Operations Act 1997 (NSW) which would be considered by the court for the first time (at [58]). 62There are no such " novel questions " in the present case, despite Mr Ibbotson's claims to the contrary (Tp49). The challenge raised in this case asserts the Minister's failure to give proper consideration to " the public's interests " in the BGHF, the heritage house, and the proposed use of land in Young Street (without formal consent from Council, nor proper consideration of fire issues, nor any public consultation), all being issues of local focus. 63The economic viability of the project is questioned by the group, as the regeneration of the BGHF and the restoration of the house, as required by the approval, will be costly, and the group is not convinced that the project will generate sufficient profit for the conditions to be satisfied. Maddocks has even questioned Murlan's financial capacity to meet a costs order in these proceedings (O'Connor affidavit 6 January 2011, annexure "H"). 64I have concluded that Mr Nash's submission is correct - the group has not made out a case for the court to impose a maximum order. Adopting the words in the rule, there are no " special reasons " for, and the " interests of justice " are not served by, the making of such an order in this case. 65The applicant's Notice of Motion seeking such an order should, therefore, be dismissed. 66Accordingly, I move on now to consider the second respondent's Notice of Motion for an order requiring security for costs.

Should the court make a security for costs order? 67The first question to be answered is whether there is credible evidence before the court to establish that the group would be unable to pay Murlan's likely costs in the event of the challenge failing in its proceedings. 68The first factor to be noted on this question is that the group's members are protected by the " limited liability " afforded them, in respect of the group's debts and liabilities, by Model Rule 9 in the Associations Incorporation Regulation 2010, which applies to this group, by virtue of its adoption at the time of incorporation. 69In terms of the Cable principles governing the second respondent's entitlement to security for costs ([25] above), Mr Nash submits that the application was brought "promptly" (following a relevant and timely exchange of correspondence - Cable item 1), and that the group's grounds of challenge are weak, rather than hopeless or unarguable. He raised no issue regarding the group's bona fides (item 2). The group has not said the motion is "oppressive", and, while the group's finances might be limited, the evidence suggests there are "persons standing behind the applicant who are likely to benefit from the litigation and who may be [cf. "are"] willing to provide the necessary security" (item 5). Mr Nash did not consider items 3 and 7 of the Cable principles as relevant to the present case. 70Mr Nash noted in his security submissions (par 22) that no member of the group has offered any personal undertaking to be liable for costs ( Cable item 6), despite the fact (par 26) that it is the members who are the "real applicants" standing behind the group. In those circumstances, he submits (par 28) that, despite the right of objectors to bring proceedings, Murlan should not be "forced to bear the risk of not being able to recover its costs of the proceedings if it is successful". 71I respectfully agree with, and accept, that submission. 72The likely minimum amount of costs which the group could expect to be ordered to pay on a party-party basis to Murlan if the proceedings fail is $50,000. That is Mr O'Connor's estimate, based on his experience (affidavit 6 January 2011). Given the general acceptance of that estimate by Mr Ibbotson (Tp30 L41), it is not necessary for the court to interrogate it, and I accept it as a reasonable estimate, even though the authorities would not strictly bind me to do so if it were questioned. 73From the public documents regarding its incorporation and operation, and Mr Ibbotson's comments from the Bar table regarding possible future donations (Tp30, L46-p31, L3), such an amount would appear to be capable of being raised by the group, in the event of failure, but I am conscious that it will also have its own costs to find as well, even with partly pro bono representation (O'Connor affidavit 9 February 2011). 74In all of the circumstances disclosed by the evidence, I accept Murlan's submission that the applicant should be ordered to provide security for costs in the amount of $50,000.

Costs of these interlocutory proceedings 75The applicant, as well as seeking a maximum costs order for the substantive proceedings, sought also a maximum costs order in respect of its notice of motion. However, no argument was advanced in support of such a limitation, and, as the applicant has failed on the merits in both notices of motion, it should pay the reasonable costs of both respondents in respect of both motions, on a party/party basis, as agreed or assessed.

Orders 76The court makes the following orders: (1)the applicant's notice of motion is dismissed; (2)the second respondent's notice of motion seeking security for costs is upheld; (3)pursuant to Rule 42.21 of the Uniform Civil Procedure Rules 2005, the applicant is ordered to provide within 28 days security for the costs of the second respondent in the sum of $50,000 by way of unconditional bank guarantee or in some other form acceptable to the Registrar and the second respondent; (4)these proceedings are stayed until Order (3) has been complied with; (5)the parties have liberty to apply in respect of the implementation of Order (3); (6)the substantive matter is stood over to the List Judge's list on Friday 29 July 2011 for the making of further directions, as necessary and appropriate; (7)the applicant is ordered to pay the costs of both respondents in respect of the hearing of the two notices of motion, on a party-party basis, as agreed or assessed; and (8)Exhibit M2 will remain in the court's file, but all other exhibits are returned. 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: 16 June 2011