Manchee v Secretary, Department of Climate Change, Energy, the Environment and Water (No 2)

Category: Costs

Parties: Geoffrey Philip Manchee (Applicant)
Secretary, Department of Climate Change, Energy, the Environment and Water (Respondent)

Representation: Counsel (written submissions):
D Wilcox (Applicant)
F Berglund (Respondent)
Solicitors:
Webb & Boland Lawyers (Applicant)
Department of Climate Change, Energy, the Environment and Water (Respondent)

File Number(s): 2025/00154819

Publication restriction: Nil

JUDGMENT

Introduction

1. On 20 February 2026, I delivered judgment dismissing the Applicant’s Class 1 Appeal: Manchee v Secretary, Department of Climate Change, Energy, the Environment and Water [2026] NSWLEC 15 (the Judgment).

2. The proceedings concerned an appeal by the Applicant against a decision of the Respondent made on 28 January 2025 to not designate parts of a property known as “Luellan” (specifically, “Sandy’s Paddock” within Luellan) as Category 1 – Exempt Land (Category 1 Land) under the Local Land Services Act 2013 (NSW) (LLS Act), rather than Category 2 – Regulated Land (Category 2 Land). The reasons the Respondent gave for categorising Sandy’s Paddock as Category 2 Land were that:

(a) all of Sandy’s Paddock was subject to a requirement to take remedial action under a Remediation Order (construction issue): see s 60I(2)(f) LLS Act; and (b) parts of Sandy’s Paddock were unlawfully cleared of native vegetation after 1 January 1990 (clearing issue): see s 60I(1)(b) LLS Act.

3. The construction issue required determination as to whether on its proper construction, the Remediation Order applied to all of Sandy’s Paddock, or only parts of it. For the clearing issue, the parties called respective aerial imagery experts, as there was a debate about how much of Sandy’s Paddock had been unlawfully cleared after 1 January 1990, it not being disputed that some area of Sandy’s Paddock had been unlawfully cleared: see Director-General of the Department of Land and Water Conservation v Leverton [2002] NSWLEC 212, in which (following plea to an offence) Justice Talbot found some (unspecified) area of Sandy’s Paddock had been unlawfully cleared.

4. In the Judgment, I held that the Remediation Order applied to the whole of Sandy’s Paddock. This meant it was Category 2 Land, and the appeal had to be dismissed.

5. I reserved costs, and made timetabling orders for submissions should any party seek to apply for an order for costs. I indicated that I would determine any costs application on the papers.

6. On 6 March 2026, the Respondent filed written submissions in which it sought an order for the unsuccessful Applicant to pay its costs of the appeal. These submissions were supported by an affidavit of Emma Wei dated 6 March 2026. The Applicant has since lodged written submissions dated 18 March 2026, in which he contends that there should be no orders as to costs.

7. For the reasons outlined below, I am not persuaded that it would be fair and reasonable to make an order that the Applicant pay the Respondent’s costs of the proceedings.

Statutory provisions and principles

8. Rule 3.7(2) and (3) of the Land and Environment Court Rules 2007 (LEC Rules) applies to these Class 1 proceedings, and are in the following terms:

3.7 Costs in certain proceedings

…

(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.

(3) Circumstances in which the Court might consider the making of a costs order to be fair and reasonable include (without limitation) the following—

(a) that the proceedings involve, as a central issue, a question of law, a question of fact or a question of mixed fact and law, and the determination of such question—

(i) in one way was, or was potentially, determinative of the proceedings, and

(ii) was preliminary to, or otherwise has not involved, an evaluation of the merits of any application the subject of the proceedings,

(b) that a party has failed to provide, or has unreasonably delayed in providing, information or documents—

(i) that are required by law to be provided in relation to any application the subject of the proceedings, or

(ii) that are necessary to enable a consent authority to gain a proper understanding of, and give proper consideration to, the application,

(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.

9. In Port Stephens Council v Sansom (2007) 156 LGERA 125; [2007] NSWCA 299 (Sansom), Spigelman CJ (with whom Mason P, Beazley, Giles and Ipp JJA agree) said this in relation to a consideration of an award of costs in a Class 1 Appeal:

“The starting point must be the presumptive rule that there will be no order as to costs. It is in that context that the power to make an order for costs is conferred in the broadest of terms ie what is “fair and reasonable … in the particular circumstances”. There is no restriction, other than rationality, on the scope of the considerations relevant to the formulation of that judgment. However, those considerations must be, in the opinion of the first instance judge, of sufficient weight to overcome the presumptive rule.

…

Although it would be more accurate to describe the formulation – “fair and reasonable” – as calling for a judgment to be made, rather than as a discretion to be exercised, the evaluative process can be accurately described as conferring a wide discretion. (See the authorities discussed in Perpetual Trustee Company Limited v Khoshaba [2006] NSWCA 41 at [34]-[39].) Nevertheless, subject to restrictions such as s 57(1) of the L&E Court Act, it is a judgment reviewable in terms of Warren v Coombes (1979) 142 CLR 531, rather than House v The King (1936) 55 CLR 499. (See Khoshaba at [100], [107].)”: Sansom at [48], [51].

10. Following Sansom, in Dunford v Gosford City Council (No 3) [2015] NSWLEC 96, Sheahan J summarised key principles in relation to the application of r 3.7 in the following way:

“a. Rule 3.7(2) creates a basic rule where there is a presumption against the making of an order for costs [Port Stephens Council v Sansom (“Sansom”) [2007] NSWCA 299; (2007) 156 LGERA 125 at [48]].

b. The effect of the basic rule in r3.7(2) is that, in the ordinary course, costs will lie where they fall [Agonic Holdings Pty Ltd v Lithgow City Council [2009] NSWLEC 34 at [5] per Biscoe J].

c. The question then is whether, despite the basic rule, it is "fair and reasonable" that a party should be reimbursed for the costs it incurred [Sansom at [50]].

d. The formulation -"fair and reasonable" - calls for a judgment to be made, rather than as a discretion to be exercised, but in any event the evaluative process can be accurately described as conferring a wide discretion [Sansom at [51]].

e. Rule 3.7(3) identifies, without limitation, some circumstances in which the Court might consider the making of a costs order to be fair and reasonable [Pet Carriers International Pty Ltd v Botany Bay [City] Council (No. 2) [2013] NSWLEC 150 at [4] per Preston CJ].

f. The circumstances identified in r3.7(3) may rebut the presumption in r3.7(2) and may inform the Court's discretion but are neither prescriptive nor exhaustive [Pepperwood Ridge Pty Ltd v Newcastle City Council [2008] NSWLEC 196; 160 LGERA 164 at [73] per Biscoe J; Hillsong Church Limited v Council of the City of Sydney (No. 2) [2012] NSWLEC 118 at [55] per Pepper J]”: Dunford v Gosford City Council at [30].

Wei Affidavit

11. The Respondent read an affidavit of Emma Wei affirmed on 6 March 2026 in support of its application for costs which sets out the chronological background of the appeal. Ms Wei is the solicitor for the Respondent with responsibility for this matter.

12. The events outlined in the affidavit are (in summary form) as follows:

(a) on 24 September 2025, a letter was sent to the Applicant’s solicitor (the September 2025 Letter; Annexure A to Ms Wei’s Affidavit) confirming that the Department has no discretion in the categorisation of land and offered that the Applicant withdraw the appeal, with each party to bear its own costs. The offer lapsed on 2 October 2025. The further content of the September 2025 Letter is referred to below; (b) by 28 November 2025, the parties had filed a joint expert report prepared by their respective aerial imagery experts, Mr Wilkie and Mr Watts, dated 27 November 2025; (c) on 2 December 2025, the Applicant filed their written submissions. Paragraph 9 of the submissions referred to a Supplementary Expert Report by Mr Wilkie (Wilkie’s Supplementary Report) to contend that a portion of the area cleared in Sandy’s Paddock was lawfully cleared for the construction of a road. The submissions sought an order that Sandy’s Paddock be categorised entirely as Category 1 Land; (d) on 9 December 2025, the Respondent filed their Notice of Objections, objecting to the whole of Wilkie’s Supplementary Report. The hearing commenced on 15 December 2025, and Wilkie’s Supplementary Report was admitted into evidence subject to relevance. The Court subsequently ordered a further joint conference and further joint report by Mr Watts and Mr Wilkie to address certain matters concerning the road or track; and (e) on 16 December 2025, the further joint expert report was tendered in Court. The expert witnesses were cross-examined on its contents.

Respondent’s submissions

13. The Respondent seeks an order that the Applicant pay the whole of the Respondent’s costs of the hearing, or in the alternative, to pay part of the costs. It submits that rr 3.7(3)(a), (d) and (f) are engaged in the circumstances and are reasons why the Applicant should pay the Respondents costs.

14. The Respondent’s written submissions (RWS) contend that r 3.7(3)(a) is engaged because the proceedings involved a mixed question of fact and law which was both determinative of the proceedings, and preliminary to any evaluation of the merits of the case: RWS at [7]. In particular, the Respondent submits that the September 2025 Letter put the Applicant on notice of the Respondent’s position regarding the construction of the Remediation Order, which would be determinative of the outcome of the appeal, and that there was no discretion under the legislation: RWS at [11].

15. Further, the Respondent submits rr 3.7(3)(d) and (e) are engaged since the Applicant proceeded with the appeal anyway, and that the Applicant acted unreasonably in the proceedings, and continued a claim after it became apparent that it had no prospects of success.

16. The Respondent also contends that it has incurred unnecessary costs relating to the “irrelevant” supplementary report of Mr Wilkie, which the Applicant should pay: RWS at [13]-[15].

Applicant’s submissions

17. The Applicant submits that the Respondent has not established that the presumptive rule in r 3.7(2) should be displaced.

18. The Applicant rejects the Respondent’s claim that r 3.7(3)(a) could be relied upon. He contends that the determination of the construction issue was not, in any meaningful sense, preliminary. It was the first of two questions that the parties joined issue on at the hearing. The question was not an interlocutory matter, nor did the Respondent seek to deal with it as a separate question: Applicant’s Written Submissions (AWS) at [5]-[6].

19. The Applicant provided two reasons why it had not acted unreasonably in the proceedings (r 3.7(3)(d)), and why it had not continued a claim with no prospects of success (r 3.7(3)(f)). First, the hearing turned on a question of the proper interpretation of the Remediation Order. The Applicant contends that the Respondent has conflated the issues of discretion to categorise Sandy’s Paddock with the proper interpretation of the Remediation Order. Secondly, the September 2025 Letter does not refer to the position adopted by the Respondent in the hearing. As such, the letter had nothing to do with the party’s case at the hearing, and does not provide a basis to conclude that the proceedings had no prospects of success: AWS at [8]-[10].

20. The Applicant denies that its conduct led to unnecessary costs due to the continuation of the proceedings after service of the joint expert report, or that Mr Wilkie’s Supplementary Report was irrelevant. This evidence was relevant to the clearing issue: AWS at [11]-[12].

21. The Applicant also submitted it should not be ordered to pay the Respondent’s costs because:

(a) he brought proceedings in good faith to resolve a genuine and complex dispute following the introduction of a new regulatory mapping scheme; (b) the construction issue involved complex issues of interpretation. It was not inevitable that the Applicant would fail; (c) the proceedings were necessary to clarify the Respondent’s position as to the proper characterisation of the land; (d) the case was of some public interest as a test case; and (e) the practical consequence is that the land will no longer be cultivated, and it is not just and reasonable to impose a further financial burned on the Applicant and his families’ farming business.

Resolution

22. The outcome of these proceedings turned on my construction of the Remediation Order: see Judgment at [54] to [64]. A central issue was therefore a question of law that was determinative. This engages r 3.7(3)(a)(i) of the LEC Rules. I would also agree that the construction issue did not require evaluation of anything that might be considered a merit issue in the proceedings. The construction issue was, simply, the first and decisive matter I considered in the judgment.

23. I am not persuaded that the September 2025 Letter relied upon by the Respondent is a basis for finding that the Applicant continued a claim when it had been warned it did not have reasonable prospects of success. That letter addresses discretion of the decision maker. It does not, at least squarely, address the construction issues argued at the hearing, which I would not describe as straightforward.

24. I am also not persuaded that the Applicant’s conduct and prosecution of its appeal was unreasonable: r 3.7(3)(d) LEC Rules. It is true that as at 28 November 2025, the aerial imagery experts had reached agreement concerning the extent of unlawful clearing that had occurred after 1990 in Sandy’s Paddock. At the hearing, I granted leave for the Applicant to rely on Mr Wilkie’s Supplementary Report, which addressed the issue of whether a further area of land in Sandy’s Paddock should be considered to have been lawfully cleared, as it was cleared for the purposes of a track or road. The experts were able to confer, and reach substantial if not complete agreement at least as to the area of a road or track. In the end, this evidence fell away because of my construction of the Remediation Order. That does not mean however that the evidence was “irrelevant” at the time it was advanced, and I am not persuaded that the conduct of the Applicant in advancing its position and arguments on the supplementary report of Mr Wilkie should be characterised as unreasonable.

25. I also do not consider that r 3.7(3)(f) arises. In no proper sense could it be said the Applicant’s claim “did not have reasonable prospects” of success. Because I have found against the Applicant on the construction issue does not mean in my view that by continuing his claim he falls foul of r 3.7(3)(f)(i) or (ii). The construction issue was not straightforward, and it was important that it be resolved. I note also that after the commencement of the proceedings, the Respondent did recategorise some of the Applicant’s land as Category 1 Land in lieu of Category 2 Land, no doubt a matter of some importance to the Applicant. That was achieved through the commencement of the Class 1 appeal.

26. In all the circumstances outlined above, I do not consider it fair and reasonable pursuant to r 3.7(2) of the LEC Rules to make an order for the Applicant to pay the Respondent’s costs of these proceedings, which involved an important determination of a Remediation Order of some complexity.

Order

27. The order I make then is that:

28. There be no order as to costs in these proceedings.

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