Ku-ring-gai Council v Minister for Planning

KEY ISSUES: Costs :- judicial review proceedings in Class 4 of Court's jurisdiction - costs where no hearing of an issue on the merits - whether respondent surrendered to applicant or whether there was a supervening event which removed the subject of the dispute such that there should be no order as to costs - whether on another issue unsuccessful applicant brought proceedings in the public interest such that there should be no order as to costs - whether disentitling conduct by successful respondent such that there should be no order as to costs.

Civil Procedure Act 2005 (NSW), s 98(1) Environmental Planning and Assessment Act 1979 (NSW) LEGISLATION CITED: Land and Environment Court Rules 2007 (NSW), r 4.2 Migration Act 1958 (Cth) Uniform Civil Procedure Rules 2005 (NSW), rr 42.1, 42.19, 42.20

Anderson on behalf of Numbahjing Clan within the Bundjalung Nation v NSW Minister for Planning (No 2) [2008] NSWLEC 272 Cassegrain v CTK Engineering Pty Ltd (2005) 54 ACSR 249 Fordyce v Fordham (2006) 67 NSWLR 497 Kiama Council v Grant (2006) 143 LGERA 441 CASES CITED: Ku-ring-gai Council v Minister for Planning & Anor [2008] NSWLEC 174 Latoudis v Casey (1990) 170 CLR 534 One.Tel Ltd v Commissioner of Taxation (2000) 101 FCR 548 Oshlack v Richmond River Council (1998) 193 CLR 72 Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 True Conservation Association Incorporated v The Minister administering the Threatened Species Conservation Act 1995 [2008] NSWLEC 221

APPLICANT: Mr M. Neil QC and Ms M. Allars SOLICITORS: Deacons

FIRST RESPONDENT: LEGAL REPRESENTATIVES: Ms R. Pepper SOLICITORS: Department of Planning

SECOND RESPONDENT: No appearance SOLICITORS: N/A

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

KU-RING-GAI COUNCIL v MINISTER FOR PLANNING & ANOR (No 2)

JUDGMENT 1 HIS HONOUR: On 29 February 2008 the Minister for Planning made an order (2008 Order), which was gazetted on 3 March 2008, appointing the Ku-ring-gai Planning Panel to exercise certain functions of Ku-ring-gai Council under the Environmental Planning and Assessment Act 1979 (NSW). The council unsuccessfully challenged the validity of the 2008 Order: Ku-ring-gai Council v Minister for Planning & Anor [2008] NSWLEC 174. The Minister now seeks an order that the council pay the Minister's costs of the proceedings.

2 On 14 December 2007, the Minister made an order (2007 Order), which effectively had the same result as the 2008 Order. Contemporaneously with the making of the 2008 Order, the Minister made an order repealing the 2007 Order. The council commenced these proceedings on 18 January 2008 challenging the validity of the 2007 Order. Following the repeal of the 2007 Order, the council amended its Application to challenge the validity of the 2008 Order. Challenge to the 2007 Order 3 When the council filed its Application in the Court on 18 January 2008 seeking judicial review of the 2007 Order, it also filed a supporting affidavit of that date of Nick Ebbeck. On the same day, the council's ex parte injunction motion was heard and refused by Jagot J who, however, accepted that the matter was urgent, made an order for expedition, listed the matter for directions on 22 January 2008 and indicated that hearing dates on 29 January and 7 and 8 February were available.

4 On 21 January 2008 the council filed and served Points of Claim. At the directions hearing on 22 January 2008, by consent the Court fixed the matter for hearing on 7 and 8 February 2008 and set a timetable for the filing and service of evidence, Points of Defence and the production of documents.

5 On 25 January 2008 the Minister filed and served Points of Defence and the council filed the affidavit of Antony Fabbro sworn that day.

6 On the same date the Department of Planning provided a briefing note to the Minister attaching a draft 2008 Order and advising as follows: The Council has commenced proceedings in the Land and Environment Court ( the Court ) challenging the validity of the 2007 Order. The proceedings have been granted expedition and the hearing dates of 7 and 8 February 2008 allocated before a Judge of the Court. Associated directions have been made by the Court imposing a tight timetable on the parties to prepare the matter for hearing.

It is open to the Minister to give consideration to repealing the 2007 Order and making an order in substitution, given: · the potential costs of litigation to all parties in relation to allegations of procedural irregularity, · the uncertainty brought to the planning and development of the area by the continuation of the proceedings, and · the need to ensure the panel's continuing operation in the area notwithstanding the proceedings …The draft 2008 Order removes doubt as to the area of land over which the Panel is to exercise all functions of the Council in relation to the making of environmental planning instruments under Part 3 of the Act in relation to the control of development within the Ku-ring-gai town centres. 7 Also on 25 January 2008 the Department of Planning wrote to the council's solicitors advising that the Minister was currently giving consideration to repealing the 2007 Order and making a 2008 Order. Drafts of each were enclosed and the council was invited to make submissions within 7 days. It was noted that in the event the 2008 Order was made, the subject of the current proceedings (the 2007 Order) would be repealed.

8 A month later, on 25 February 2008, the Department provided the Minister with another briefing note in relation to the draft 2008 Order and the draft Repeal Order. In setting out the background matters as to why the Minister should sign the draft orders, the briefing note acknowledged the council's claims relating to representations made by the Minister and the defect in the 2007 Order as follows: · The Council has commenced proceedings in the Land and Environment Court ( the Court ) challenging the validity of the 2007 Order. · One of the major concerns is the area delineated in the map. The Council's allegations include, that the Minister denied the Council an opportunity to comment on the areas in which the Panel would exercise functions in relation to the draft LEP as shown in the Map. Council asserts that the Minister had represented that the areas would not be substantially bigger than the areas to which the draft LEP is to apply, when in fact they are. 9 This briefing note not only attached draft orders, but also a draft letter to the Minister for Local Government for signature by the Minister. Next day the Minister sent a letter in those terms to the Minister for Local Government. The letter stated in part: Ku-ring-gai Council ( the Council ) has commenced proceedings in the Land and Environment Court challenging the validity of the 2007 Order. The grounds of challenge relate to the areas, as outlined in the map forming part of the Order, over which the Panel has certain LEP making functions. It is alleged that there is uncertainty as to the land to which the Panel is to exercise its functions in relation to the making of environmental planning instruments, under Part 3 of the Act, specifically, the land to which the Town Centres LEP applies. 10 Meanwhile, on 30 January 2008 the council amended its Application and Points of Claim. On 31 January 2008 the matter was re-listed before the Court by the Minister who, by motion, sought vacation of the hearing date. Counsel for the Minister informed the Court that there was a possibility that the Minister may repeal the 2007 Order and bring in a substituting order, or the Minister may make either or none of those orders. The Court granted the motion to vacate the hearing date over the council's opposition. At a directions hearing on 8 February 2008, the council sought to have the matter put back in the list the following week in order for a timetable to be put in place and a new hearing date to be fixed. The Court stood the matter over for directions on 15 February 2008 for the purpose of fixing the date for hearing and making directions as to evidence and submissions.

11 At the directions hearing on 15 February 2008, the council sought to have the matter fixed for hearing. Counsel for the Minister indicated to the Court that on 25 January the Department had written to the council indicating that the Minister was considering the making of a new order. Counsel for the Minister noted that this order was really two orders: one rescinding the 2008 Order and the other effectively (although this was not said as an admission) substituting an order that may cure some of the defects that had been identified. Counsel for the Minister said that, in an effort to save costs and bearing in mind that there did not appear to be any grave probability that something would be done which could not be undone in the interim, the Minister requested that the matter be stood over for two weeks, which would put the Minister in a position to know then what order was extant. The council sought to have the matter fixed for hearing. Jagot J was persuaded, as a matter of practicality, to allow the matter to go over to 29 February on the basis that it might be fixed for hearing on that date.

12 At the directions hearing on 29 February 2008, the council sought a hearing date. Counsel for the Minister advised that the concurrence of the Minister for Local Government to a proposed new order had been granted and that the proposed new order was before the Director-General of the Department that morning and was likely to go to the Minister for Planning that day. The Court listed the matter for hearing on 22, 23, and 24 April 2008.

13 On 29 February 2008 the Minister made an order repealing the 2007 Order and made the 2008 Order. Both orders were published in the gazette on 3 March 2008.

Challenge to the 2008 Order 14 On 14 March 2008 the council filed a Further Amended Class 4 Application and Further Amended Points of Claim directed only at the 2008 Order. Most of the grounds of challenge to the 2007 Order were not raised in relation to the 2008 Order and some new grounds of challenge were introduced. The challenge to the 2008 Order was heard by me in April 2008 and failed.

Submissions 15 The Minister makes the following alternative submissions in descending order of preference: (a) the Minister should have his costs of the entire proceedings, given that the council elected to continue the proceedings by challenging the 2008 Order;

(b) the Minister should have his costs of the proceedings after the date of repeal of the 2007 Order (29 February 2008) or the date that his Department wrote to the council putting it on notice of the possibility of the repeal of the 2007 Order (25 January 2008); and no order should be made as to prior costs. The Minister submits that the repeal of the 2007 Order, or earlier notification of the prospect of its repeal, constituted a supervening event that would, at its highest, entitle the council to an order that each party bear their own costs up to that time, but not thereafter. The Minister submits that it cannot be said that the repeal of the 2007 Order was unreasonable nor that the council would almost certainly have succeeded if the matter had been tried: True Conservation Association Incorporated v The Minister administering the Threatened Species Conservation Act 1995 [2008] NSWLEC 221; Kiama Council v Grant (2006) 143 LGERA 441 at [80(b)]; Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 at 624; and Fordyce v Fordham (2006) 67 NSWLR 497 at 515 [97];

(c) each party should pay its own costs. This is on the basis, I understand, that the Court would otherwise be minded to order the Minister to pay the council's costs to 29 February and the council to pay the Minister's costs thereafter. The rationale of the preferred order, I understand, is that it avoids the expense of assessment of costs and offsetting of costs that would otherwise be required in a situation where it is perceived that they are likely to substantially offset each other. 16 The council submits that: (a) the Minister should pay the council's costs to 29 February 2008 because, by making the 2007 Order, the Minister invited the challenge to the 2007 Order and then effectively surrendered on 29 February 2008 by repealing that Order and making the 2008 Order; and

(b) there should be no order as to costs thereafter because of: (i) public interest considerations; and (ii) disentitling conduct by the Minister in relation to delay in the hearing of the proceedings; (c) alternatively to the above, there should be no order as to the costs of the proceedings. During the costs hearing the council made an open offer that the costs issues be resolved on that basis. Costs in relation to the 2007 Order 17 The ordinary rule with respect to costs in Class 4 proceedings is that, whilst in the discretion of the Court, costs follow the event: s 98(1) Civil Procedure Act 2005; r 42.1 Uniform Civil Procedure Rules 2005. The reason for this "loser pays" rule is that the award of costs to a successful party in civil litigation is made not to punish the unsuccessful party but because it is just and reasonable to compensate the successful party against the expense to which it has been put by reason of the litigation: Latoudis v Casey (1990) 170 CLR 534 at 567; Oshlack v Richmond River Council (1998) 193 CLR 72 at 97 [67].

18 The usual "loser pays" costs rule encounters an obstacle where there has been no hearing on the merits. There has been no hearing on the merits in relation to the 2007 Order. The leading case on the approach to costs where there has been no hearing on the merits is Lai Qin (above) at 624 - 625 where McHugh J held (omitting most citations): When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.

In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation. Thus, for example, in R v Gold Coast City Council; Ex parte Raysun Pty Ltd , the Full Court of the Supreme Court of Queensland gave a prosecutor seeking mandamus the costs of the proceedings up to the date when the respondent Council notified the prosecutor that it would give the prosecutor the relief that it sought. The Full Court said that the prosecutor had reasonable ground for complaint in respect of the attitude taken by the respondent in failing to consider the application by the prosecutor for approval of road and drainage plans.

Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. This is perhaps the best explanation of the unreported decision of Pincus J in South East Queensland Electricity Board v Australian Telecommunications Commission where his Honour ordered the respondent to pay 80 per cent of the applicant's taxed costs even though his Honour found that both parties had acted reasonably in respect of the litigation. But such cases are likely to be rare.

If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases.

19 The facts of Lai Qin are instructive. The applicant's application for a protection visa under the Migration Act 1958 (Cth) had been refused by the Minister and the applicant's review proceedings before the Refugee Review Tribunal failed. She then commenced proceedings in the High Court for prohibition, certiorari and mandamus directed to the Minister and the Tribunal. Before the application was heard, the Minister exercised his discretion and granted a protection visa to the prosecutrix. The prosecutrix did not the pursue the proceeding thereafter but applied unsuccessfully to a single justice for an order for costs up to the time the visa was granted. McHugh J noted that the Minister granted the visa because of the changed circumstances of the prosecutrix since her arrival in Australia. She had married, given birth to a child and was eligible after leaving the country to apply for a migrant spouse visa. On humanitarian grounds the Minister granted her a protection visa without requiring her to leave the country. The recommendation of the Minister's Department to grant her that visa was put before the Minister about four days before the proceedings were commenced. The vital question in the case was whether or not the legal advisors to the Minister had acted unreasonably in those few days in not informing the prosecutrix's solicitors that the application for a visa might be reconsidered by the Minister when they knew the prosecutrix was contemplating legal proceedings to challenge the Tribunal's decision (at 627). McHugh J decided that the conduct of the Minister and his advisors was quite reasonable. Lai Qin is distinguishable. In that case the Minister granted the applicant that which the applicant was seeking. In the present case the Minister abandoned the 2007 Order by repealing it, but made the 2008 Order which had the same effect.

20 In One.Tel Ltd v Commissioner of Taxation (2000) 101 FCR 548 at [6] Burchett J, after considering Lai Qin, said: In my opinion, it is important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event or settlement so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the Court's discretion otherwise than by an award of costs to the successful party. It is the latter type of case which more often creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs. 21 The distinction between the two types of cases - a surrender case and a supervening event case - was adopted in Cassegrain v CTK Engineering Pty Ltd (2005) 54 ACSR 249 at [10] (White J) and Kiama Council v Grant (2006) 143 LGERA 441 at 457 - 458 at [80] where Preston CJ summarised the principles as follows: The principles that emerge from these cases are that in a civil enforcement or judicial review case where there has been no hearing on the merits: (a) where one party effectively surrenders to the other party by: (i) discontinuing without the consent of the other party; or (ii) giving undertakings to the Court or submitting to the Court making orders against the party substantially in the terms or to the effect claimed by the other party; the proper exercise of the costs discretion will ordinarily be to make the usual order as to costs, unless there is disentitling conduct on the part of the other party; and (b) where some supervening event or settlement so removes or modifies the subject of the dispute that no issue remains except that of costs, the proper exercise of the costs discretion will ordinarily be to make no order as to costs unless: (i) one of the parties has acted so unreasonably that the other party should obtain the costs of the action; or (ii) even if both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried so that the party should obtain the costs of the action. 22 The principle concerning costs where proceedings are discontinued, expressed in Kiama v Grant at [80(a)(i)], may require further consideration in light of the majority view in Fordyce v Fordham (2006) 67 NSWLR 497 (CA) at [84] and [87]. The Uniform Civil Procedure Rules relating to costs on discontinuance of proceedings (r 42.19) and on dismissal of proceedings (r 42.20) provide that "unless the court orders otherwise" the plaintiff must pay the defendant's costs. Uninstructed by authority, I would have thought those rules create a rebuttable presumption that the plaintiff should pay the defendant's costs. However, the majority in Fordyce held that they do not create such a presumption; that the costs discretion is unconfined; and that the matters referred to in Lai Qin are pertinent although not necessarily determinative. In contrast, the third judge, Santow JA, at [3] considered that the fact of discontinuance is likely to be a factor of some weight in exercising the discretion and the onus is on the discontinuing party to justify why it should not pay the other party's costs.

23 In True Conservation Association Incorporated v The Minister administering the Threatened Species Conservation Act 1995 [2008] NSWLEC 221 the applicant sought judicial review of an order of the respondent Minister. Before the hearing could take place, legislation was passed which had the effect of rendering the proceedings inutile. They were therefore dismissed by consent. The applicant applied for an order for costs. Preston CJ ordered each party to pay their own costs of the proceedings and of the motion for costs. His Honour held that both parties had acted reasonably until further prosecution of the litigation became inutile by Parliament passing the legislation; the passing of the legislation was not relevantly conduct of the respondent nor was it unreasonable; and neither party had won nor lost. Rather, the proceedings became futile by reason of Parliament passing the legislation. True Conservation is distinguishable. There the supervening event was not the act of the respondent. 24 In the present case, the council submits that the Minister had effectively surrendered to the council in relation to the 2007 Order by repealing it, and therefore should pay the council's costs relating to the 2007 Order. The Minister, on the other hand, submits that the repeal of the 2007 Order was a supervening event which made the further prosecution of the proceedings in relation to the 2007 Order futile, that it acted reasonably, and that the Court should therefore at least make no order as to the costs of the proceedings relating to the 2007 Order.

25 The Minister's repeal of the 2007 Order on 29 February 2008 made the further conduct of the proceedings in relation to the 2007 Order futile. On the other hand, the repeal of the 2007 Order and the making of the 2008 Order were directly responsive to the grounds of challenge by the council. On 22 January the Minister agreed to the fixing of hearing dates to determine the proceedings in relation to the 2007 Order. Between 25 January and 29 February the Minister communicated to the council the possibility of a repealing order and a new order. In that context, the hearing dates were vacated and the council continued to incur costs in a state of uncertainty.

26 In my opinion, the Minister surrendered in relation to the 2007 Order by repealing it. The Minister did not act unreasonably in repealing the 2007 Order and making the 2008 Order. There may have been pragmatic considerations in the Minister preferring to take that course rather than contesting the validity of the 2007 Order. However, litigants not infrequently surrender to their opponents for pragmatic reasons when settling. Nonetheless, they have surrendered and there is a costs consequence. Consequently, the Minister should be liable to pay the council's costs to 29 February 2008 (when the 2008 Order was made).

27 I am not attracted by the Minister's alternative submission that those costs should not be paid by the Minister after 25 January 2008. The reasoning behind the submission is that from that date the Minister put the council on notice that the 2007 Order might be repealed. I do not think that is a sufficient reason to adopt 25 January or any other date before 29 February as the date to which costs should run.

Costs in relation to the 2008 Order 28 The Minister succeeded on the council's challenge to the 2008 Order. Therefore, under the usual "loser pays" costs order the Minister should have his costs after 29 February 2008 (when the 2008 Order was made). The council, however, submits that the "loser pays" order should not be made for two reasons.

29 The first reason is that the council is said to have brought the proceedings in the public interest. Rule 4.2 of the Land and Environment Court Rules 2007, which came into force on 28 January 2008, provides for costs in public interest litigation. There is no analogous provision in any other jurisdiction. It is in the following terms: 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. 30 By empowering the Court not to make an order for the payment of costs against an unsuccessful applicant, the new rule 4.2(1) acknowledges that the usual rule is to the contrary. In my recent judgment in Anderson on behalf of Numbahjing Clan within the Bundjalung Nation v NSW Minister for Planning (No 2) [2008] NSWLEC 272 I explored the content and application of this new rule.

31 The council submits that the proceedings in relation to the 2008 Order were brought in the public interest because they sought to clarify the law relating to planning panels and that this was the first litigation on fairly recent legislation dealing with planning panels.

32 It is not uncommon in this jurisdiction for proceedings to be brought which relate to matters of public interest. Many administrative and constitutional matters and ordinary civil matters can also answer that description. Assuming that these proceedings were brought in the public interest, I do not consider that that public interest, of itself, is of sufficient moment to justify departure from the usual order. Although there were questions of construction of fairly recent legislation dealing with planning panels, there was no additional factor, such as breaking new ground on a matter of legal principle, sufficient to justify departure from the usual "loser pays" costs order. The council's self-interest in the outcome of the proceedings also tends to weigh against departure from the usual costs order.

33 The second reason, the council submits, why there should be departure from the usual costs order is alleged disentitling conduct of the Minister in seeking and obtaining adjournments between 31 January and 29 February 2008 while he considered whether to repeal the 2007 Order. As I have held that the council is entitled to costs to 29 January 2008, this submission does not arise for consideration. Otherwise, having regard to the analysis at [10] - [13] and [25] above, I would think it has weight but only in relation to the period from 31 January to 29 February 2008. There is no question of any impropriety by the Minister, but disentitling conduct for costs purposes does not have to rise that high.

Conclusion 34 I have held that the Minister should pay the council's costs to 29 February 2008 and the council should pay the Minister's costs thereafter. I consider that they are likely to substantially offset each other and that it is therefore appropriate to make no order as to the costs of the proceedings. As each party has had a roughly equal measure of success in relation to costs, there will also be no order as to the costs of the costs notice of motion. The exhibits may be returned.

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