Mangoola Coal Operations Pty Ltd v Muswellbrook Shire Council

Introduction

1. At relevant times, Mangoola Coal Operations Pty Ltd (the Company) owned extensive landholdings that are located some 18 kilometres to the west of Muswellbrook. These landholdings are in the local government area administered by Muswellbrook Shire Council (the Council).
2. For local government rating purposes, the Company's landholdings were to be regarded as being in three distinct parts. The first part, not the subject of any controversy in the substantive proceedings, was the central element of the Company's landholdings which was used for the purposes of the open‑cut coal mine operated by the Company.
3. The remainder of the landholdings at the time relevant for the substantive proceedings could be regarded, in simplistic terms, as comprising a doughnut‑shaped agglomeration of many parcels of land that surrounds the area used by the mine. Aggregation, pursuant to s 26 of the Valuation of Land Act 1916 (the Valuation of Land Act), permits the bringing together into one nominal landholding (described for the purposes of these proceedings as "assessment parcels") many individual parcels of land that would otherwise be separately rated.
4. The surrounding land in these proceedings had been valued for council rating purposes (relevantly) in two assessment parcels pursuant to the aggregation processes permitted by the Valuation of Land Act.
5. The Company had had the two assessment parcels that were the subject of these proceedings categorised by the Council as having the dominant use as a coal mine. The Company then exercised its right, pursuant to s 526 of the Local Government Act 1993 (the Local Government Act), to apply to the Council to change the categorisation of each of these assessment parcels for each of the 2016 and 2017 rating years commencing on 1 July of the relevant year.

The initial judgment

1. On 11 June 2020 (following a 12‑day hearing in October and November 2019), I held that, in each relevant rating year, each assessment parcel had in fact been used as a coal mine (Mangoola Coal Operations Pty Ltd v Muswellbrook Shire Council [2020] NSWLEC 66). Colinta Holdings Pty Ltd (Colinta), at all relevant times, had an access licence agreement with the Company across both assessment parcels. Colinta is a cattle‑grazing enterprise that operates at a number of locations across Australia. These locations are ones generally (if not exclusively) on lands in the vicinity of coal mines operated by Glencore, the then parent company to the Company and to Colinta.
2. For land to be categorised as "farmland" for rating purposes, statutory tests posed by s 515 of the Local Government Act are required to be satisfied.
3. The factual findings in my June 2020 judgment meant it was not necessary to determine whether the necessary tests in s 515 were satisfied, by the grazing activities undertaken by Colinta, to permit classification of each assessment parcel in each year as "farmland".

Introduction

1. The Company's appeals against the rating classification for each assessment parcel in each rating year were made pursuant to an appeal process provided for in the Local Government Act. A number of provisions of the Local Government act will later require discussion, as will relevant provisions of the Land and Environment Court Act 1979 (the Court Act) and the Land and Environment Court Rules 2007 (the Court Rules). In addition, one provision of the Civil Procedure Act 2005 (the Civil Procedure Act) is also engaged as part of establishing the framework within which I am required to undertake this costs consideration.
2. Finally, a single provision of the Valuation of Land Act also arose for consideration in the substantive proceedings and, again, arises in these costs proceedings.

The Local Government Act

1. Four provisions of the Local Government Act are relevant. The first of those is s 526, the provision which permitted the Company to challenge the Council's classifications of the larger and smaller assessment parcels as "mining" in each of the relevant rating years. This provision was in the following terms: 526 Appeal against declaration of category (1) A rateable person who is dissatisfied with - (a) the date on which a declaration is specified, under section 521, to take effect, or (b) a declaration of a council under section 525, may appeal to the Land and Environment Court. (2) An appeal must be made within 30 days after the declaration is made. (3) The Court, on an appeal, may declare the date on which a declaration is to take effect or the category for the land, or both, as the case requires.
2. Three further provisions of the Local Government Act need to be reproduced. These are three of the four classification‑defining provisions, being for "farmland", "mining" and "business'. The fourth classification provision, "residential", played no part in the substantive proceedings and is also not relevant in these costs proceedings.
3. The definition of "farmland" for classification purposes in the Local Government Act is contained in s 515. This provision is in the following terms: 515 Categorisation as farmland (1) Land is to be categorised as farmland if it is a parcel of rateable land valued as one assessment and its dominant use is for farming (that is, the business or industry of grazing, animal feedlots, dairying, pig‑farming, poultry farming, viticulture, orcharding, bee‑keeping, horticulture, vegetable growing, the growing of crops of any kind, forestry or aquaculture within the meaning of the Fisheries Management Act 1994, or any combination of those businesses or industries) which - (a) has a significant and substantial commercial purpose or character, and (b) is engaged in for the purpose of profit on a continuous or repetitive basis (whether or not a profit is actually made). (2) ... (3) ...
4. As can be seen, the above provision sets two tests ‑ both of which require to be satisfied before an assessment parcel can be classified as "farmland".
5. The next relevant classification definition is that of "mining", a definition contained in s 517 of the Local Government Act. This definition is in the following terms: 517 Categorisation as mining (1) Land is to be categorised as mining if it is a parcel of rateable land valued as one assessment and its dominant use is for a coal mine or metalliferous mine. (2) ...
6. The final classification definition to be reproduced is that of "business", a definition contained in s 518 of the Local Government Act. This provision is in the following terms: 518 Categorisation as business Land is to be categorised as business if it cannot be categorised as farmland, residential or mining.
7. As can be seen, "business" is the default classification if land does not fall within any of the other three defined classifications. The definitions for the four classifications provided for in the Local Government Act are exhaustive ‑ that is, land requiring to be classified for local government rating purposes by the Local Government Act must be classified as falling within the appropriate one of these four classifications.

The Court Act

1. Appeals against rating classifications brought pursuant to s 526 of the Local Government Act are assigned, by s 19(d) of the Court Act, to Class 3 of the Court's jurisdiction. It is unnecessary to reproduce the terms of this provision.

The Civil Procedure Act

1. Relevant to costs consideration is s 98 of the Civil Procedure Act. The relevant elements of this provision are in the following terms (emphasis added): 98 Courts powers as to costs (1) Subject to rules of court and to this or any other Act - (a) costs are in the discretion of the court, and (b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and

The Court Rules

1. As can be seen from s 98(1) of the Civil Procedure Act reproduced immediately above, the costs provisions of the Civil Procedure Act (and any derivative costs provisions arising pursuant to the Uniform Civil Procedure Rules 2005 (UCPR)) are set aside if relevant court rules (here, the Court Rules) otherwise provide.
2. The Court Rules provide, in cl 3.7, a special costs regime to apply to appeals concerning rating classifications under the Local Government Act. These appeals are brought within this special costs regime by virtue of the application of cl 3.7(1)(c)(iv), a provision of the rule which specifically nominates appeals pursuant to s 526 of the Local Government Act as being brought within the costs regime established by r 3.7 of the Court Rules.
3. The special costs regime that applies to these rating classification appeals is therefore that set out in cl 3.7(2) and (3). These elements of r 3.7 of the Court Rules are in the following terms: 3.7 Costs in certain proceedings (1) This rule applies to the following proceedings (except for appeals under section 56A of the Act) - (a) …, (b) …, (c) the following proceedings in Class 3 of the Court's jurisdiction - (i) …, (ii) …, (iii) …, (iv) appeals and applications under section 526 (including section 526 as applied by section 531) or 574 of the Local Government Act 1993, (v) …, (vi) …, (vii) … (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.
4. It is to be observed that the list of matters set out in r 3.7(3) as potentially providing a basis for when it might be appropriate to consider it "fair and reasonable" to make a costs order in proceedings such as these does not comprise an exhaustive list of such potential circumstances. Further potential bases for concluding that it would be "fair and reasonable" to make a costs order (albeit considered in the Court's Class 1 jurisdiction) were addressed by Preston CJ in Grant v Kiama Council [2006] NSWLEC 70. The matters discussed by his Honour, to the extent that they are in addition to matters set out in r 3.7(3), also do not exhaust the circumstances where it might be "fair and reasonable" to make a costs order for proceedings which are the subject of this special costs regime.

The Valuation of Land Act

1. Finally, as it constituted a separate statutory basis advanced on behalf of the Company as to why the smaller assessment parcel was not able to be classified as "mining", it is appropriate to set out the terms of s 14F(3) of the Valuation of Land Act. The relevant element of this provision was in the following terms: 14F Valuation of mines and minerals (1) … (2) … (3) If any part of a mine is separately occupied by a person for a purpose other than mining, the part is taken to be distinct from the mine, and is to be valued and rated accordingly. (4) … (5) …

The Company's appeal

1. The Company appealed against the elements of my judgment concerning the larger assessment parcel. The Company did not appeal against my judgment concluding that the smaller assessment parcel had been correctly classified by the Council as a "coal mine". The Company's appeal was successful (Mangoola Coal Operations Pty Limited v Muswellbrook Shire Council [2021] NSWCA 46).
2. As I had not decided whether the statutory tests in s 515 of the Local Government Act were satisfied to establish the reclassification sought by the Company as "farmland" of the larger assessment parcel was appropriate, the matter was remitted to me for further consideration.
3. Familiarity is assumed, to the extent necessary, with my initial judgment and with the judgment of the Court of Appeal. It will be necessary, later, to turn to some aspects of the judgment of the Court of Appeal setting out the basis for the rejection of my first instance conclusions concerning the larger assessment parcel.

Matters arising pursuant to s 515(1)(a) and (b) of the Local Government Act

1. It is to be noted that the necessary evidence to make such a determination on this point was, prior to the judgment of the Court of Appeal:

• what was observed during the course of the site inspection that was undertaken;
• what was dealt with comprehensively in the written expert evidence concerning the relevant rating years given by the agronomists, the valuers and the forensic accountants on behalf of each of the parties;
• what was also dealt with by the oral evidence given concurrently by the pairings of experts in each discipline (this concurrent oral evidence being given in court, in conventional circumstances, as the hearings took place before the emergence of COVID‑19 and the subsequent pandemic);
• the evidence given, informally during the course of the site inspection and subsequently in court, by Mr Hinze, the manager of Colinta's grazing and farm management activities conducted on the two assessment parcels during the relevant rating years;
• the evidence given by Mr Adamski, Colinta's financial controller concerning the relevant rating years; and
• the comprehensive written and oral submissions from Mr Ireland and Mr Tomasetti.

1. However, had I not reached the conclusions that, as a matter of fact, the various component uses of each of the assessment parcels in each of the years required that the classifications as "coalmining" be maintained, I would not, for reasons later explained as arising from the judgment of the Court of Appeal, have been in a sufficiently informed position to determine whether or not the tests set in s 515 of the Local Government Act were satisfied. If they were not satisfied, for the larger assessment parcel in either year, the default position in s 518 of the Local Government Act would have been triggered and the larger assessment parcel in the relevant year or years would have been classified as "business" for rating purposes.

The site inspection for the substantive hearing

1. During the course of the substantive hearing, a site inspection was undertaken, one which involved a full day and part of a second day, encompassing many locations (26 being identified for the itinerary) on both the larger assessment parcel and the smaller assessment parcel. Travelling to the region where the mine is located took half a day after counsels' opening submissions. Because of travelling back to Sydney after completion of the site inspection, the second of these site inspection days can be regarded as entirely devoted to that inspection.
2. I set out a detailed exposition of what was observed during the course of the site inspection, at [75] to [85] of my primary judgment. Settled notes agreed between the legal representatives of the parties were also tendered in the substantive proceedings.

The judgment of the Court of Appeal

1. There are two aspects of the judgment of the Court of Appeal which warrant consideration for the purposes of this costs application. The first is the determination that the various offset areas required by the Company's development consent to be set aside for the purposes of:

• Aboriginal heritage cultural protection;
• biodiversity loss compensation; and
• habitat compensation were not to be regarded as being used for the purposes of mining in the classification sense required for consideration under the Local Government Act. In this regard, Macfarlan JA, at [60] and [61], said: Ground 7 ‑ biodiversity conservation and Aboriginal cultural heritage protection areas 60 It is relevant to consider why these areas existed but doing so does not lead to the conclusion that they existed or were used for mining purposes. Although their existence is a condition of the mine's operation, the point of their existence is that they are not used for mining purposes. Instead, they are an offset designed to counter the perceived adverse effects on the environment and on Aboriginal cultural heritage of operating the mine in the place that it is situated. In effect, their use is for purposes that are the antithesis of mining. They are in my view distinguishable from the environmental monitoring devices which perform an active role in relation to the mine's operations. 61 The primary judge therefore erred in finding that the use of these areas was "for a coal mine". Ground 7 should be upheld.

1. Whilst his Honour did not explain how these elements of the Company's landholding would have been required to be classified had they been held as separate parcels rather than forming part of the larger assessment parcel, it is to be presumed that they would have been classified as "business" as they were clearly neither "residential" nor "farmland" and, as his Honour reasoned, they could not contribute to a determination that the larger assessment parcel should be classified as "mining".
2. Be that as it may, for present purposes it is sufficient to note that this aspect of rating classification had not previously been explored, in either the consideration by the Chief Judge in Peabody Pastoral Holdings Pty Ltd v Mid‑Western Regional Council (2013) 211 LGERA 337; [2013] NSWLEC 86 (Peabody), nor by me in my consideration of the various assessment parcels in Ulan Coal Mines Pty Limited v Mid‑Western Regional Council [2013] NSWLEC 1167 (Ulan) where I had had to deal with buffer zones.
3. For present purposes, the necessity to consider the topic - of how such offset areas could be regarded as contributing to the overall classification assessments is required to be undertaken by me in the substantive proceedings - involves matters of novel consideration and did not propose any departure from any prior judicial determination on the subject.
4. The second aspect of the judgment of the Court of Appeal which warrants consideration is the extent to which use of the larger assessment parcel, for grazing purposes in years prior to, and after, the two years that were the subject of the Company's appeal against the Council's refusal of its reclassification application, should be considered in framing the proper understanding of the extent of the use by Colinta of the larger assessment parcel for livestock grazing in each of the two rating years addressed in my substantive judgment.
5. In this regard, Macfarlan JA said, at [40] to [45]: 40 Those authorities in my view indicate, for sound reasons, that in a land tax context, where the issue is use on a particular day, that what occurred on that day cannot sensibly be looked at in isolation from what had previously occurred on the land and what could be inferred was intended to occur after the particular day. The necessity for the broad approach is particularly obvious when the use on only one day is in question. The underlying principle is however no different where, as here, use in a longer period, such as a year, is in issue. No doubt, the period for which use is to be determined may in some circumstances be so lengthy that a "before and after" approach is of little assistance. That was not however so in relation to the two separate years in question in the present case. 41 As indicated by Roden J in Saville, there may be many reasons why a hiatus in activity on land may not indicate that a prior use has ceased. His Honour gave examples such as an owner leaving land to lie fallow before and after periods of cultivation and chance occurrences (such as disease) requiring replacement of grazing stock. His Honour contrasted those examples with a situation "in which a person gives up a particular use of the land for a period for a reason, with the intention of resuming it at a later date". In this last instance, it would, as his Honour indicated, be difficult to conclude that the relevant use was made of the land in the subject period. 42 The evidence in the present case did not suggest that there was any reason other than the drought for grazing not occurring on the Wybong lands in the relevant years. It followed that, in the absence of any evidence indicating otherwise, it could be, and should have been, inferred that grazing was intended to be resumed when the drought eased. The Council did not submit the contrary. Evidence of abandonment of the prior years' use would dictate a different conclusion but, as I have said, there was no such evidence. The primary judge's use, late in his judgment, of the word "abandonment" when describing his earlier finding concerning the absence of cattle grazing on the Wybong lands in the two assessment years was not a considered, separate finding and was not relied upon by the Council on appeal as a finding of abandonment. 43 In these circumstances, the primary judge in my view erred in not taking into account the grazing use of the Wybong lands in prior years and what could be inferred from the evidence as to their intended use after those years. It was not, as the Council contended on appeal (see [39] above), simply an option open to his Honour to consider the two years in their context, without him being required to do so. His Honour's failure to consider the years in their context led him to misapply the statutory requirements as to the determination of dominant use and therefore gave rise to an error of law. 44 Alternatively, on the facts as established in the LEC it was unreasonable, and therefore not open, for his Honour to hold that there was no use of the Wybong lands for farming in the relevant years (Hope v Bathurst City Council (1980) 144 CLR 1 at 10; [1980] HCA 16). 45 Ground 1 should therefore be upheld but that finding in Mangoola's favour only goes part of the way towards it obtaining a favourable decision on the rating issue. Whether farming, as distinct from mining, was the dominant use of the Wybong lands in the relevant period remains to be considered in the context of the other grounds of appeal. In any event, I note that there remains a matter not determined by the primary judge which would have to be determined on remitter to the LEC before a finding that farming was the dominant use could be made. That is the question of whether the conditions stated in s 515(1)(a) and (b) (see [5] above) were satisfied. His Honour specifically noted that he did not determine that question.
6. With respect to the above matter, Brereton JA also observed: 74 As to the Second Section, being land located generally to the north of Wybong Road and referred to as the Wybong lands, the finding that there was no active grazing on the Wybong lands during the relevant years was barely open on the evidence, which included photographs of cattle on those lands; but ultimately I agree that this is a finding of fact beyond the remit of this Court in an appeal confined to questions of law. 75 However, the finding that grazing on those lands had been abandoned was not open. Exigencies, such as fire, flood, or drought, or the routine rotation of paddocks, may result in a hiatus in a particular active use of particular parts of land, but that does not mean that the use has ceased, so long as there is an intention to resume it when the circumstances permit. The evidence permitted no other conclusion in this case than that, at the highest, active grazing in the Wybong lands was not possible due to the exigencies of the drought. The presence of intermittent and/or isolated mining‑related activities (exploratory activity and monitoring stations) did not convert its dominant use into use for a mine.
7. As with the issue of the offset areas and their contribution to the overall classification of the larger assessment parcel, the only extent to which questions of prior mining activity use of land had arisen, in a "mining" classification context, had been dealt with by me in Ulan. In that context, what arose was whether or not past actual underground mining activities (where mining had been completed prior to the relevant rating year) gave rise to any inference that those assessment parcels under which past mining had taken place were to be regarded as being used for mining for the classification then under review.
8. That issue is completely different from the consideration of the extent to which the circumstances arising, in the context of Colinta's grazing activities, were to contribute to a proper understanding of how the continuing nature of those activities (as to intensity and the reason for the decline in their intensity) was to be considered for classification of the larger assessment parcel.
9. Although the Court of Appeal held that I had been in error in not having regard to those past and likely future circumstances, my substantive judgment and the judgment of the Court of Appeal (contrary to my initial conclusion) were determinations addressing an aspect of rating classification consideration that had not been the subject of relevant prior consideration by the Chief Judge in Peabody or, for the reasons explained above, by me in Ulan.
10. In this regard, this aspect of my substantive judgment, and that of the Court of Appeal, addressed a broader, relevant aspect of matters arising for consideration in determining whether a dominant use in a particular rating year required to be determined by having regard to the intensity of that use when compared to an alternative use as informed by activities in an earlier rating year and the reasons for any change in the intensity of those activities to be considered in the rating year under appeal.

Consent orders remove the necessity for a further hearing

1. Following mentions of the remitted proceedings before me, the parties reached agreement (except as to the costs of the substantive proceedings before me) that the merit elements remaining for potential determination should be resolved without further substantive hearing and without me being requested to prepare and deliver a further judgment addressing the tests set by s 515 of the Local Government Act. The terms of the resolution of the terms of the proceedings remaining, concerning the larger assessment parcel in each of the assessment years, was embodied in Consent Orders made by me on 15 September 2021. Those Consent Orders were in the following terms: The Court orders that in Matter No 242761 of 2018: 1. The appeal against the failure of the Respondent to recategorise assessment parcel 113969 as farmland for the period commencing 1 July 2016 is upheld. 2. The appeal against the failure of the Respondent to recategorise assessment parcel 113969 as farmland for the period commencing 1 July 2017 is upheld.
2. Although the Court of Appeal held that I was in error in the conclusions which I had reached, there was no suggestion by that body that any conduct in the presentation of the Council's case before me, to the extent that that case engaged with these two issues, was either inappropriate or unreasonable.

Introduction

1. As earlier noted, the agreed resolution of the outstanding issues potentially arising for determination on the remitter to me from the Court of Appeal did not include orders addressing the question of costs. The question of costs remained for determination as a consequence of the fact that, although the Company had ultimately been successful in its seeking of reclassification of the larger assessment parcel as "farmland" for each of the assessment years, the Council's classification of the smaller assessment parcel as "mining" for each of the assessment years was not disturbed, as the Company had not appealed against this element of my judgments.
2. As no agreement was reached between the Company and the Council concerning costs of the proceedings before me, it was necessary for me to hold a costs hearing to enable me to determine what were the appropriate costs orders (including the possibility of apportionment), given that the original hearing before me had been conducted on a rolled‑up basis for both assessment parcels for both assessment years.

The Company's costs application

1. On 4 February 2022, the Company filed a Notice of Motion seeking costs orders for the substantive proceedings which I had earlier conducted. The Company's motion cast the primary, desired outcome as one which would have me make separate orders for the proceedings involving the smaller assessment parcel (proposed Order 1) and the proceedings concerning the larger assessment parcel (proposed Order 2).
2. In the alternative, however, the Company proposed that, if I was not prepared to make those proposed orders, a single alternative order encompassing a global outcome for both proceedings would be appropriate. As can be seen from the terms of the orders sought by the motion, as set out below, the Company also sought its costs of the costs hearing. The terms of the orders sought by the Company were: 1. An order that each party pay its own costs in proceedings 2018/242760. 2. An order that the respondent pay the applicant's costs of proceedings 2018/242761. 3. In the alternative to Orders 1 and 2 above, an order that the respondent pay 90% of the applicant's costs of proceedings 2018/242760 and 2018/242761 (considered together). 4. An order that the respondent pay the applicant's costs of this Notice of Motion.

Representation at the costs hearing

1. The Company was represented for this costs hearing by Mr A Galasso SC and Mr C Ireland, barrister. Mr Ireland had appeared for the Company for the substantive hearing. The Council was represented by Mr P Tomasetti SC for both the substantive hearing and for these costs proceedings. Comprehensive written submissions on costs were provided for both parties.

The hearing

1. The costs hearing was conducted entirely by audio‑visual link. No personal attendance in court was required. The hearing was conducted efficiently, being completed shortly after the luncheon adjournment on a single day.

The costs evidence

1. The evidence was entirely documentary, with the deponents of the affidavits that were read in these costs proceedings not being required for cross‑examination.
2. The evidence for the Company comprised two affidavits from Ms Samantha Daly, the Company's legal representative. The first of those, dated 4 February 2022, was the subject of a number of objections on behalf the Council. Some of these objections were upheld, whilst others were rejected. It is not necessary to go into the detail of the objections. The second affidavit from Ms Daly was dated 4 March 2022 and it was read without any objection being raised on behalf the Council.
3. A bundle of documents that had been exhibited to Ms Daly's first affidavit was tendered, becoming Exhibit A on the costs motion.
4. For the Council, an affidavit of Mr James Griffiths, the Council's legal representative, dated 25 February 2022 was read without objection.

Introduction

1. There are a number of topics concerning costs which warrant being noted before turning to consider the alternatives proposed by the Company in the costs orders which it seeks in these two proceedings. Those matters are:

• the separate proceedings;
• the "fair and reasonable" costs rule; and
• the broad approach of consideration of potential apportionment.

Two proceedings

1. It is appropriate to note, expressly, that, although the hearing giving rise to my original judgment was an integrated one, nonetheless, what was being dealt with were two separate proceedings - one concerning the correct classification in each of the relevant years of the larger assessment parcel and the other concerning the appropriate classification of the smaller assessment parcel in each of the relevant years.
2. Although there were not always bright lines drawn during the various phases of the hearing, when evidence or submissions switched from the larger assessment parcel issues to those of the smaller assessment parcel or vice versa, some topics can be identified as being specific to one or the other (for example, s 14F of the Valuation of Land Act is only relevant to the smaller assessment parcel, whilst consideration of Aboriginal cultural offset areas related only to the larger assessment parcel). However, although of only limited impact, it is also appropriate to note that some common elements, such as the pipeline easement, moved between the two assessment parcels depending on the assessment year being considered.
3. As a consequence, for the purposes of my consideration of the proposed costs outcomes sought by the Company, it will be necessary to consider costs issues for each of the assessment parcels and, potentially, for each of those parcels in each of the assessment years.
4. It is also appropriate to note that the Company did not appeal against my original determination as it related to the smaller assessment parcel so that that which follows from the reasoning of the Court of Appeal expressly applies only to the larger assessment parcel (although, I accept, by analogy, the appellate determination has implications for costs considerations arising concerning the smaller assessment parcel).

The "fair and reasonable" rule

1. I have earlier set out the terms of r 3.7 of the Court Rules. For present purposes, it is sufficient to note that the "fair and reasonable" test for costs applications mandated by that rule applies, by virtue of r 3.7(1)(c)(iv), to my consideration of whether or not costs should be awarded for any portion of the combined hearing in the proceedings concerning the larger assessment parcel or those concerning the smaller assessment parcel.
2. Because, as earlier noted, there were not always bright lines during the course of the original hearing when the evidence or the submissions transitioned from matters relating to the larger assessment parcel or to the smaller assessment parcel or vice versa, it is necessary for me to make impressionistic determinations as to how elements of the hearing might be regarded as relating to one assessment parcel or the other or to both assessment parcels in a combined fashion. An example with respect to this latter blended area of the hearing was the necessity to devote, as later discussed in more detail, disproportionate time in an endeavour to obtain (as finally became the position) accurate GIS derived mapping of the boundaries of each of the assessment parcels in each of the assessment years.
3. As a consequence, the fair and reasonable analysis for a costs assessment necessary to be undertaken for each of the assessment parcels is impressionistic and intuitive. It cannot be done based on any mathematical calculation based on any word count or transcript page analysis to derive an integer which could be applied to the two assessment parcels for each of the assessment years.

Apportionment

1. It is also appropriate to note that, within a costs assessment process, apportionment can be appropriate. In this instance, apportionment can potentially arise, not only between consideration of the larger assessment parcel proceedings and those of the smaller assessment parcel, but also, potentially, within each of those proceedings. This particularly applies, as later discussed in more detail, concerning the aspect of the Company's case founded on the s 14F of the Valuation of Land Act concerning the smaller assessment parcel. This approach to apportionment is based on clear authority.
2. In James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 (James v Surf Road), the Court of Appeal (Beazley, Tobias and McColl JJA) addressed the issue of how questions of apportionment might be approached, at [31] to [36], saying: 31 Costs orders in the Supreme Court are governed by the provisions of s.76 of the Supreme Court Act 1997 and the Supreme Court Rules. Section 76 provides, relevantly that subject to the Act and the Rules, costs shall be in the discretion of the Court: s.76(1)(A). Part 52A r.11 acts as a limited proscription of the Court's discretion conferred by s.76. Part 52A r.11 provides that, subject to Part 52A, the Court shall order that costs follow the event "except where it appears to the Court that some other order should be made as to the whole or any part of the costs". 32 The effect of Pt 52A r.11 is that an unsuccessful party may be ordered to pay the entirety of the costs of the successful party, even though the successful party did not succeed on all issues. However, as is specified by the rule itself, the Court is entitled to make a different order. That may occur where there are multiple issues involved. This was the subject of comment in Waters v. P C Henderson (Aust) Pty. Limited (unreported CA(NSW) Kirby P, Mahoney and Priestley JJA, 6 July 1994) where Mahoney JA said: "Where the proceedings involve multiple issues the application of the rule that costs follow the event may involve hardship where a party succeeds on some issues and yet fails on others. Particularly is this so where, for example, a defendant succeeds on issues that occupied the bulk of the time taken by the proceedings. Nevertheless, unless a particular issue or group of issues is clearly dominant or separable, it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed." 33 Similarly, Toohey J made the following observations in Hughes v Western Australian Cricket Association (1986) ATPR 40‑748: "1. Ordinarily, costs follow the event and a successful litigant receives his costs in the absence of special circumstances justifying some other order. 2. Where a litigant has succeeded only upon a portion of his claim, the circumstances may make it reasonable that he bear the expense of litigating that portion upon which he has failed. 3. A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the party's costs of them. In this sense, "issue" does not mean a precise issue in the technical pleading sense but any disputed question of fact or of law." (references omitted) 34 Where a matter involves multiple issues and the question before the court is whether it should make some other order as to costs other than the order that costs follow the event, a distinction is commonly drawn between cases which involve clearly discrete issues for determination, and those in which all issues are inseparable, or at least sufficiently linked, with respect to the overall disposition of a particular matter. In Permanent Trustee Aust Ltd v FAI General Insurance Co Ltd (unreported, NSWSC, 3 June 1998), Hodgson CJ in Eq noted that the obvious examples of a matter involving discrete issues is one where a plaintiff makes separate claims for different relief, or a claim by a plaintiff and a cross‑claim by a defendant. Another example is where a respondent is successful in having an appeal against an earlier decision dismissed, but for reasons other than those raised in the respondent's Notice of Contention. This is not to say that so‑called "discrete issues", for the purposes of apportioning costs, only exist in cases where there are separate claims made within a single matter. As Toohey J stated in the passage quoted at [33] above, it can relate to "any disputed question of fact or law" before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter. 35 In Madden v Connell [2001] NSWSC 1051, Hamilton J referred to there being a "rule" that where there are "discrete issues and the time taken on each issue at the hearing can be identified or realistically estimated", an order for costs may be made against the party which fails on such issues, or alternatively, that party may be deprived of its costs for that portion of the matter. In the Court's opinion it is preferable not to speak in terms of "rules". However, the underlying approach to the "rule" stated by his Honour may be an available approach to the exercise of the court's discretion as to costs in a particular case, depending upon all of the circumstances. 36 Where the court does exercise its discretion to apportion costs, the apportionment itself involves the exercise of discretion. As Gummow, French and Hill JJ recognised in Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261: "Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion for the trial judge. Mathematical precision is illusory and the exercise of the discretion will often depend upon matters of impression and evaluation.

The costs decision‑making matrix

1. As can be seen from the orders sought in the Company's motion, Orders 1 and 2 comprise a proposed package outcome. If it is not appropriate to make Order 1 (as I have concluded is the position for reasons later explained), it becomes unnecessary to consider proposed Order 2.
2. Having reached that conclusion concerning proposed Order 1, my costs decision‑making task then shifts to whether or not I should make proposed Order 3.

The specific submissions for the Company concerning proposed Order 1

1. With respect to the smaller assessment parcel, Mr Galasso submitted that the Company's primary position was seeking Order 1 in its costs application, leading to the making of Order 2 as a consequence. In support of this proposition, he said (Transcript 22 March 2022, page 13, line 33 to page 14, line 18): Next, we accept that your Honour determined with respect to the smaller parcel, that the categorisation was not to change. We accept the obvious circumstance that there is to be submitted, not only submitted but your Honour observed the potential effect on a costs order by that fact. However, we would submit there are a number of reasons why the position on the smaller parcel is not and should be used to adjust in any material way the proper position on costs. The first is that with respect to the smaller parcel, as I've submitted already, that hearing was infected with the abandoned part of the case. That is, there's an element within that appeal that was not determined but which your Honour can infer would not have been advanced with respect to the abandoned two elements of 515. The second is that proportionately, the smaller parcel was less than 10% of the combined cases, at least on an area basis and also on a value basis. That is, if your Honour went to Ms Daly's affidavit at para 17, your Honour would see ‑ and this is the extract from the council's report ‑ both for area, and this is evident from the judgment, the larger which was assessment parcel 113969 6,616 hectares, the smaller parcel, the one that ends in 1111 727 hectares, so in area, it's of very small proportion. In value, it's equally of very small proportion, if not less. That is, $24.1 million of value plus $442,000 of value. That is, for it to infect the costs consequence for the larger parcel is ‑ if I didn't use the metaphor before, I'll use it now ‑ the tail very much wagging the dog. Combined, that is, if you look at the two matters together, we would submit that it's wrong to that effect, the proper consequence in terms of costs for the larger parcel by reference to the smaller parcel. For no other reason than, if the Court was to do so, there would be little motivation for an applicant agreeing to a suggestion by whomever, the two appeals should be heard together. That is, if the infection of the larger parcel was to occur because of the result on the smaller parcel, going forward, no‑one would ever agree to splitting it for fear of one infecting the position on costs for the other. That is, contrary to s 56 of the Civil Procedure Act to the extent that the motivation should be for economy and litigation, there may be economy and litigation but it comes at the price of an effect on costs. We would submit that that is in appropriate and certainly should not be sponsored by an affectation on the costs order.
2. Mr Galasso next submitted (Transcript 22 March 2022, page 15, line 46 to page 16, line 7): However, there were findings in the small case, that is in the smaller parcel case, that brought with them the same errors at law that were permitted by the council. The two primary ones are firstly the offset area, see your Honour's judgment at 296, that is the council submitted that the offset areas were mining areas. Secondly, the importance of the pipeline, see your Honour's judgment at 307. While the result was a particular result on the facts and this is, as it were, closing the loop of what I said earlier about not necessarily accepting the proposition that we're unsuccessful in the small parcel, there is still the case that there were elements advanced by the council in the smaller parcel that were not of law. That's why the pendulum, as it were, or the costs order pendulum swings back in favour of the applicant.
3. The remainder of Mr Galasso's oral submissions addressed general propositions relating to proposed Order 3, being the case for apportionment of the costs across the combined hearing of issues relating to the larger and smaller assessment parcels. These are dealt with later.

The submissions for the Council concerning proposed Order 1

1. Mr Tomasetti addressed the position with respect to the smaller assessment parcel in paragraph 9 of his written submissions. This paragraph was in the following terms: 9 The Council was successful in the Class 3 proceedings in relation to the SAP. Those proceedings involved a fact enquiry. The Court found contrary to the Applicant's case that the dominant use of the SAP in the relevant years was for a mine. The Council had re‑categorised that land as from 1 July 2016 over the vigorous objection of the Applicant and as the judgment records, Council was right to do so. Council seeks no order for costs. The Applicant was entitled to present the best case that it could muster. That it lost, does not justify an order for costs being made against it having regard to Rule 3.7. The appropriate costs order to now make is that there should be no order as to costs of either of the proceedings.
2. His written submissions later returned to the question of the smaller assessment parcel in paragraphs 77 and 78. These paragraphs were in the following terms: 77 This Court agreed with the Council's categorisation of each assessment parcel and the Applicant has not sought to displace the Court's finding in respect of the SAP. It was only on appeal that error in this Court was identified, and the identification of that error alone is not self‑evidently unreasonable conduct of the council. 78 On numerous occasions prior to commencing these proceedings and throughout the proceedings the Applicant consistently asserted that the SAP was used for grazing and should have been categorised as farmland for rating purposes. See for example the letter from the Applicant's lawyer to the Respondent dated 31 July 2018 pages 69‑73 of Exhibit SD‑1 and each of the applications for change in category of land dated 28 August 2018 and 30 May 2018 which appear as pages 63‑64 and 67‑ 68 of Exhibit SD‑1.
3. Mr Tomasetti's oral submissions did not focus specifically on matters relating to the Company's proposed Order 1 applying to the smaller assessment parcel. His oral submissions dealt with broader aspects of the conduct of the original proceedings and how that was to be viewed in light of the judgment of the Court of Appeal, as well as to how the Council's decision not to proceed to require me to determine matters arising from the tests in s 515(1)(a) and (b) of the Local Government Act should be regarded.

The Company's reply submissions concerning proposed Order 1

1. In his oral reply submissions, Mr Galasso turned, briefly, to the smaller assessment parcel, submitting (Transcript 22 March 2022, page 42, lines 3 to 16) the proposition that, correctly viewed on any measure, the "lion's share" of matters which required to be addressed and determined in the original hearing related solely to the larger assessment parcel. He concluded these remarks, saying (Transcript 22 March 2022, page 42, lines 11 to 16): … with respect to the smaller parcel, as we've submitted already, the arguments were infected with the same legal error. It may not have been on appeal, that is the small parcel may not have been brought on appeal but nonetheless the position advanced by the council brought with it a similar infection of the position as with the larger parcel in so far as the offset areas are concerned.

Introduction

1. As can earlier be seen, the outcomes sought in proposed Orders 1 and 2 in the Company's costs application comprise a composite outcome of this costs application. As a consequence, I have considered first whether it would be appropriate for me to make Order 1 so that that each party would bear its own costs of the proportion of the proceedings that applied to the smaller assessment parcel.
2. The issues requiring to be considered in my original judgment concerning the smaller assessment parcel can be regarded as falling into two distinct categories. The first was a confined one requiring me to address and determine the specific legal propositions advanced by Mr Ireland as to why s 14F of the Valuation of Land Act operated to exclude the smaller assessment parcel from being capable of being classified as "mining".
3. The second, more diffuse element of the necessary consideration of the smaller assessment parcel formed part of the composite assessment of the activities being undertaken across both the larger and smaller assessment parcels and how, for each of those parcels, the activities might lead to a conclusion concerning whether it should be classified as "mining" or "farmland". For this purpose, the boundary changes between the 2016 and 2017 rating assessment years were relevant. This necessitated accurate GIS mapping for each of the rating years ‑ mapping which was not achieved quickly or without difficulty.
4. For the purposes of considering whether Order 1 should be made, I am satisfied that the question of apportionment arises for consideration given the distinct difference in the nature of the matters requiring to be weighed with respect to the s 14F point and the more general land‑use analysis considerations.

Section 14F(3) of the Valuation of Land Act and the smaller assessment parcel

1. In the substantive proceedings, Mr Ireland had advanced an argument based on s 14F(3) of the Valuation of Land Act to propose that the interpretation of this provision had the effect of excluding the smaller assessment parcel from being rated as "mining" during each of the relevant rating years, even if I was to be satisfied that the dominant use of that assessment parcel was not as "farmland".
2. The proposition advanced was that the smaller assessment parcel was separately occupied, in a fashion expressly recognised by s 14F(3) of the Valuation of Land Act, that required it to be valued and rated separately. This necessarily resulted, Mr Ireland had submitted, in it not being able to be classified as "mining", pursuant to s 517 of the Local Government Act.
3. I addressed all of the matters advanced for and against this proposition in my original judgment, at [144] to [198]. It is not necessary to set out these paragraphs.
4. However, I concluded that there was no proper basis, for reasons of conventional statutory construction, for the relied‑upon provision of the Valuation of Land Act to mandate any rating classification outcome pursuant to the Local Government Act. In summary, I set out the distinct differences between the Valuation of Land Act processes relied upon by Mr Ireland that rendered them irrelevant to the processes pursuant to the Local Government Act issues with which I was engaged. I said, at [199]: 199 It is to be observed that what has been carried out by the Valuer General is the determination of a valuation quantum for the smaller assessment parcel by utilising the process of s 14F(3) of the Valuation of Land Act. By doing so, however, the Valuer General has not made any finding of fact other than that which is embodied in his valuation determination. Certainly, for the purposes of these proceedings, the Valuer General has not made (and does not have the power to make) any declaratory determination about the nature of the use of the smaller assessment parcel for the purposes of rating categorisation under the Local Government Act.
5. It is to be observed that the Company did not appeal my determination that, for each of the relevant rating years, the smaller assessment parcel should be classified as "mining". Important, here relevantly, my judgment concerning the propositions advanced on behalf of the Company concerning s 14F(3) of the Valuation of Land Act stands unchallenged.
6. The position advanced by Mr Ireland concerning s 14F(3) of the Valuation of Land Act was entirely misconceived and without merit.

The smaller assessment parcel land‑use considerations

1. It will be necessary, later, to address the difficulties that arose in obtaining accurate GIS mapping information to enable a proper understanding of the boundaries of each of the assessment parcels in each of the assessment years. It is sufficient, for the purpose of this consideration as to whether making Order 1 would be appropriate, that I note that defining with precision the boundaries of the smaller assessment parcel and the changes made to those boundaries between the 2016 assessment year and the 2017 assessment year were of some significance in my determination that the "mining" classification for the smaller assessment parcel should be maintained for each of the 2016 and 2017 assessment years.
2. As can be seen from [91] to [95] of my original judgment, the movement of portions of the 2016 smaller assessment parcel from that assessment parcel into the operational mining area was a matter of some importance and arose in the context of the progressive evolving of the multiple (many inaccurate) versions of the GIS mapping necessary before making this position completely clear.

Conclusion on proposed Order 1

1. There are two separate factors concerning proposed Order 1 which render it inappropriate to be made.
2. The first is that the misplaced argument advanced by Mr Ireland concerning s 14F of the Valuation of Land Act (noting that this matter was not the subject of appellate consideration as my determination concerning the smaller assessment parcel was not appealed) means that, if required to make a specific order concerning costs of the hearing concerning the smaller assessment parcel, I would have considered it "fair and reasonable" that the Company pay the Council's costs of that proportion of the hearing engaged in addressing the question of whether or not s 14F of the Valuation of Land Act was to be applied in the fashion advocated by Mr Ireland. This, I consider, falls squarely within the scope of r 3.7(f)(i) of the Court Rules and, consistent with what was discussed by the Court of Appeal in James v Surf Road, could have been the subject to an apportionment order in favour of the Council.
3. However, against the possibility that this specific conclusion concerning the application of that precise and confined element of r 3.7 of the Court Rules might not be well‑founded, I am satisfied that the combination of the running of the misplaced argument concerning s 14F of the Valuation of Land Act when added to the inadequacies of the GIS mapping evidence as it evolved during the hearing might well have provided a proper "fair and reasonable" basis for a general costs order in favour of the Council for the smaller assessment parcel proceedings.
4. Had the classification of the smaller assessment parcel been the subject of standalone proceedings and determination (rather than being intermingled, necessarily, with consideration of matters relating to the larger assessment parcel), it would have been appropriate to consider whether, under such circumstances, it might have been "fair and reasonable" to make a costs order in the Council's favour in such circumstances for all the smaller assessment parcel proceedings.
5. It would certainly be unfair and unreasonable to make the Company's proposed Order 1. Having reached that conclusion, with respect to proposed Order 1, it is unnecessary to consider the Company's proposed Order 2.

Proposed Order 3 ‑ apportionment of the composite costs of the proceedings

Introduction

1. Given that I have rejected the appropriateness of making Orders 1 and 2 of the orders sought in the Company's costs motion, it is now necessary that I turn to address proposed Order 3 in the Company's motion, this being that the Council should pay 90% of the Company's costs of the entirety of the substantive proceedings.
2. Before turning to the submissions on behalf of the Company and the Council on matters of apportionment in the fashion proposed, it is sufficient, presently, to note that apportionment is permissible (James v Surf Road). It is, in this regard, also necessary to consider this proposed apportionment through the lens of whether it is "fair and reasonable" to make any costs order concerning the substantive proceedings.
3. In this context, there are a number of matters which I am satisfied are required to be addressed. These require consideration prior to my determination of what proportion of the proceedings might appropriately be regarded as allocated (doing as best I can with respect to both the evidence ‑ written, oral, or given, informally, during the course of the site inspection) related to matters to be split between the smaller and larger assessment parcels; elements in the proceedings which constituted unnecessary wastes of time which can be attributed to the Company's conduct of elements taking up time in the hearing; matters requiring to be noted arising from the judgment of the Court of Appeal; and the unresolved issues arising from s 515 of the Local Government Act.
4. It is also necessary to consider correspondence (said to be Calderbank offers) from the Company's legal representatives to the Council's legal representatives.
5. Only after considering all of those matters will I have a proper basis to consider whether it would be "fair and reasonable" to order that the Council pay any proportion of the Company's costs of the substantive hearing and, if so (after having regard to a composite consideration of all the above factors), what such proportion should be, if such an order is to be made.
6. With respect to apportionment and how the company derived the 90%, which it said should be attributed to, and form the basis of, a costs order with respect to the larger assessment parcel, this was said to reflect the extent to which the original hearing addressed matters relating to that assessment parcel and the overall role that that assessment parcel played in the original hearing (Transcript 22 March 2022, page 18, line 39 to page 19, line 4).
7. In the present context, the submission by the Company that is the approach taken to the question of costs should be a simplistic one of apportioning, on a separated basis, between matters requiring to be addressed that related to the larger assessment parcel and those which required to be addressed concerning the smaller assessment parcel. To do this, in my view, would be an entirely inappropriate and facile basis upon which to undertake any assessment at a high and general discretionary and impressionistic level of how events fell during the course of the original proceedings.
8. In using the term "events" in this context, I am not talking about the more precise use of that term as discussed by Gleeson JA in Sze Tu v Lowe (No 2) [2015] NSWCA 91, at [39], but more concerning the nature of individual elements which arose for consideration during the course of the totality of the hearing involving both the larger assessment parcel and the smaller assessment parcel.
9. Having examined what I consider are appropriate matters in this regard, it is appropriate, and only then appropriate, to consider how that mix of impressions should inform my decision‑making on this costs application, when the test for making any costs order (of whatever apportioned percentage if that point is reached) must be considered through the special lens mandated by r 3.7 of the Court Rules that it must be "fair and reasonable" under all circumstances associated with the matters requiring to be determined that some costs order should be made.
10. I now turn to set out those matters which inform my consideration as to whether any costs order would be "fair and reasonable" on that impressionistic and discretionary basis.

Consideration as to whether apportionment is "fair and reasonable"

Introduction

1. Although the test for costs consideration in these proceedings is that set by r 3.7 of the Court Rules, rather than a simple consideration of how the various subsidiary events on particular topics are to be balanced, I accept, as did Mr Galasso, that the process I am here undertaking is an impressionistic one and is not one given over to mathematical precision.
2. The Company's written submissions addressed matters set out in the Council's Statement of Facts and Contentions in the original proceedings, suggesting that relevant elements were founded on legal errors (as identified by the Court of Appeal) concerning the categorising of the offset areas as "mining" on the basis that that was mandated as a condition of the mine's development approval. It was submitted that this reasoning was contrary to the Chief Judge's judgment in Peabody.
3. Mr Galasso, in effect, summed up the outcome of the combination of my determination, and that of the Court of Appeal, as being ones where I made factual findings and the Court of Appeal adopted what can be described as a corrective approach to those factual findings as to matters of law.
4. In this context, Mr Galasso referred to paragraph 35 of the Company's written costs submissions as to the extent of the legal errors in my finding of facts based on the submissions of the Council in the original proceedings. It is, here, convenient to set out paragraph 35 of those written submissions. This paragraph was in the following terms: 35. The Court of Appeal decision in the present case (that is, Mangoola's case) establishes that Council's approach to recategorising the land was affected by multiple legal errors. It is clear that both Council's submissions to the LEC at trial (accepted by the LEC) and its earlier recategorisation decision were affected by (at least) the following errors of law: (a) erred in regarding the drought affectation of the farm during the rating years as a reason for recategorisation as mining, rather than looking at the farming operation as an ongoing operation and taking into account grazing in prior years; (b) by not requiring mining activity on areas categorised as mining, as distinct from reasoning that the areas were of importance to the mine; (c) regarding Aboriginal heritage and biodiversity offset areas as areas used for mining because they were required to be set aside by the mine pursuant to the conditions of the mine's project approval; and (d) arriving at an unreasonable conclusion in relation to the significance of the environmental monitoring and exploration activities on the land, when these were physically confined, limited and transient.
5. Mr Galasso submitted that, as with the judgment of Preston CJ in Peabody, the necessary position was that these circumstances made it appropriate for me to conclude that it would be fair and reasonable to make a costs order in the Company's favour.
6. The written costs submissions for the Company set out, at paragraphs 38 and 39, what the Company submitted were the unreasonable positions (based on legal and factual errors) that founded the Council's recategorisation decisions that were challenged in the original proceedings. Mr Galasso addressed these paragraphs during the course of his oral submissions saying that the Council's conduct in its recategorisation decision‑making process was infected by legal error in a fashion which resulted in the Company needing to litigate to correct those legal errors. Because the Company had needed to expend considerable sums in incurring the costs of that litigation, it was fair and reasonable that it be recompensed, on a compensatory basis, for the necessity to do so, he submitted.

The Company's analysis of time allocation for the original hearing

1. In that context, it is to be noted that a five‑page appendix to the Company's written costs submissions purported to provide a dissected analysis of the 12 days (including the site inspection days) of the original hearing in order to seek to attribute how a wide range of topics should be regarded as appropriate to appear "in the ledger column" for the Company or that of the Council for the purposes of this costs judgment.
2. There are four observations to be made concerning this five‑page analysis.
3. The first is that it is completely contrary to the impressionistic approach that I am to take in reaching my conclusion as to whether (and, if so, how) any costs order, if fair and reasonable to be made, is to be framed through the apportionment process endorsed by James v Surf Road.
4. Second, I have not attempted to undertake any check of all the series of attributions as to whether or not, in some mathematical sense, I would accept that that which is proposed is accurate. I have taken that approach, not only because it is contrary to that which I have set out immediately above, but also because it would have required a monstrously inappropriate allocation of my time to undertake such a task. In this regard, I observe that, had I been minded to conclude that it was fair and reasonable to make a costs order of the original hearing in favour of the Company, and, as a consequence it would also be fair and reasonable to make a costs order of some nature in favour of the Company for the preparation and conduct of the costs hearing, I would have expressly excluded any costs associated with the preparation of this mathematical analysis as being recoverable pursuant to such an order.
5. Third, it is to be noted that this analysis asserts that 80% of the time taken for the site visit should be regarded as being allocated to the larger assessment parcel. This assumes, as I understand this analysis, that 80% of the costs associated with travelling to and from Muswellbrook were appropriate to be attributed to the larger assessment parcel. However, travelling to and from Muswellbrook for the purposes of the site inspection would have been necessary had such an inspection been confined to the smaller assessment parcel alone or to the larger assessment parcel alone. When it was a combined site inspection for both assessment parcels, it seems to me only logical that there be an equal attribution of such travelling time and, hence, costs to each of the assessment parcels. This is but a small example of why I do not propose to waste my time undertaking any detailed analysis of the accuracy or otherwise of this document.
6. Finally, in at least one further respect, I am satisfied that the analysis process undertaken is, at best, disingenuous and, at worst, intellectually dishonest. I have, elsewhere, explained why much of the time taken during the original hearing that was devoted to endeavouring to obtaining, first, and understanding, second, accurate GIS mapping of the various component elements of each of the assessment parcels in each of the assessment years with precision was time wasted. Had the GIS mapping been undertaken accurately prior to the commencement of the hearing, all this aspect of the hearing would not have been needed. To suggest that, in anything more than a perfunctory fashion, any of the time and effort expended on those endeavours should be weighed in favour of the Company is, I repeat, disingenuous at best and intellectually dishonest at worst. I deal with the GIS evidentiary deficiencies later in more detail
7. These four reasons, taken together, demonstrate why I should pay no heed whatsoever to this purported mathematical analysis for attribution and apportionment purposes had that been necessary.

Time spent on s 14F(3) of the Valuation of Land Act

1. In my substantive judgment, I considered and rejected this proposition on the basis that s 14F(3) of the Valuation of Land Act addressed the basis upon which the Valuer General was to strike a land value for the smaller assessment parcel. The Valuer General's function in this regard, for reasons I explained in my substantive judgment, played no role in the classification determination to be undertaken by the Council with respect to that assessment parcel.
2. Whilst, as described in my substantive judgment, the Valuer General had acceded to submissions on behalf of the Company that the smaller assessment parcel should be valued as "farmland", such a valuation process under the Valuation of Land Act had no relationship with, or causal consequence for, the Council's responsibilities to classify the land under the Local Government Act.

The GIS evidence during the substantive hearing

1. The GIS evidence in the substantive proceedings was addressed by me in my primary judgment at [86] to [95]. For the purposes of this costs application, I made the following observation to the parties concerning the GIS evidence during the substantive hearing (Transcript 22 March 2022, page 5, line 46 to page 6, line 13): HIS HONOUR: ... The second matter I wanted to raise specifically relates to the GIS mapping in Ms Angela Moore's evidence. That's the evidence that is adverted to in para 33.4 of the primary judgment and paras 86 to 95 of the judgment. It is my recollection that my description of the nature of Ms Moore's evidence and the necessity for multiple mapping was dealt with comparatively gently by me in the judgment, without the necessity to refer in detail to the inadequacy or incompetence of various elements of the mapping that she undertook. To the extent that considerable period of time on my recollection ‑ but I'm not endeavouring to quantify ‑ and it may be that I don't need to come to quantification, but I'm flagging this to you both, particularly you, Mr Galasso, because you weren't there, that a considerable period of time was taken up during the hearing because of the multiple attempts by Ms Moore ‑ until she was finally able to provide maps that adequately reflected the nature of the lands encompassed within each of the larger and smaller assessment areas for each of the rating years, because the land included in the assessment areas changed from the first to the second year.
2. The GIS evidence was given by Ms Angela Moore, a GIS specialist employed by Glencore, the then parent entity for the Company. Ms Moore gave oral and affidavit evidence. During the course of the proceedings, she produced a number of different maps showing evolving and changing aspects of the boundaries of the larger assessment parcel and the smaller assessment parcel.
3. It is my recollection that a significant number (if not the dominant number) of those maps were deficient in relevant material respects. It was these deficiencies that resulted in a number of differing versions of the maps being produced until the parties and I were satisfied that accurate maps were produced for each of the relevant rating years. The necessity for accurate maps arose because, for the interrelationship between the larger assessment parcel and the smaller assessment parcel, the allocation of land in the vicinity of the power supply corridor and the pipeline from the Hunter River to the mine was shifted from the larger assessment parcel (in the first rating year under appeal) and into the smaller assessment parcel (for the second rating year under appeal).
4. In addition, land in the north‑eastern portion of the smaller assessment parcel for the first of the rating years under appeal was shifted from that assessment parcel into the mine site proper for the second of the rating years under appeal.
5. Understanding these matters were of importance, as to the first of them, concerning the extent to which the transfer of the power supply corridor and the pipeline from the Hunter River to the mine might alter the balance between the two assessment parcels for the purposes of my classification judgment.
6. Second, the shifting of elements of the north‑eastern portion of the smaller assessment parcel into the mine site proper also had potential implications for the classification of the smaller assessment parcel for the second rating year under appeal. This arose as portion of the land encompassed in that transfer was open grassland (observed from, and subject to limited identifying discussion at, observation point 26 on the site inspection). These transferred lands were not able to be visited during the course of the site inspection because their transfer to being within the identified mine site precluded entry upon them without appropriate site safety induction being undertaken (such safety induction being entirely impractical for the purposes of a single day site inspection as programmed ‑ a site inspection that needed to cover significant distances by vehicle with stops involving a deal of walking and informal evidence being given by the expert agronomists for each of the parties).
7. In light of this, for the purposes of understanding the boundaries of the smaller assessment parcel for the purposes of each of the rating years under appeal, agreed and accurate mapping was an essential evidentiary element for the purposes of my determinations. Wasted time in getting accurate GIS mapping evidence weighs against the Company's costs application ‑ the Company having accepted the responsibility for providing accurate mapping information to enable determination of matters relevant to its recategorisation applications.

The tests in s 515(1)(a) and (b) of the Local Government Act

The Company's position

1. It is to be observed that, with respect to the aspect of the judgment of the Court of Appeal where Macfarlan JA determined that consideration of matters concerning the rating years the subject of the appeals, it was also necessary to view those years in the fashion earlier set out in the extract from his Honour's judgment, at [40[ to [45] quoted by me earlier, Mr Galasso said (Transcript 22 March 2022, page 9, lines 14 to 36): GALASSO: ….. Before I do deal with it in that way, can I just say this, that that passage is irrelevant to a decision to not prosecute those two aspects or those two elements of s 515 because (a) they focused upon the two years that were at hand and even within those two years, the allegation was not for significant commercial purpose and absence of profit. Whether you closed the spotlight in on the two years or whether you go wider makes no difference. Secondly, but most importantly, the Court of Appeal decision dealt with the farmland aspect that in many respects is separate from the aspects of commercial purpose and profitability. Particularly when your Honour recognises that within s 515, the question of profitability does not depend upon profitability, but rather intention and that's the critical matter. When it came back for a remitter, a remitter that was occasioned by those elements not being determined, what the council did was capitulate, abandon, not press, whatever, but the point for the costs question is that at the time of abandonment, the applicant had already wasted two days of the hearing and countless amount of money dealing with an aspect that ex post facto was being abandoned. That is straight up and down compensatory conduct. That is in the circumstances of an abandonment of a case straight up and down fair and unreasonable to make the costs order and we would submit that at the very least, that is an aspect that generates a costs order for that component of the hearing.
2. After a short exchange with me (not presently relevant), Mr Galasso addressed the question of the Council's abandonment of the necessity for me to determine matters arising pursuant to s 515(1)(a) and (b) of the Local Government Act, saying that there were two reasons why the Company's position with respect to apportionment of costs relating to the larger assessment parcel was appropriate (Transcript 22 March 2022, page 10, lines 6 to 19): GALASSO: The answer is, no and the reason for that is twofold. Firstly, there was an abandonment of what I'll call the two elements of s 515. That's the fundamental proposition on which we depend. Secondly, to infect the submission that we make about the powerful nature of the abandonment point is really ‑ if I can say with respect ‑ to put it around the wrong way. As a matter of proportion, both area but also financial contribution, it was always the case that the larger parcel had a more significant contribution on every integer. To throw a position on the lion's share of the case or to dissolve a position on the lion's share of the case because it happens to have ‑ for want of a better metaphor ‑ a slight aspect of contamination on an appeal that didn't occur, that is, it didn't go to the Court of Appeal on the smaller parcel, in my respectful submission is to undo the clear proposition that the abandonment should bring with it a costs implication
3. Mr Galasso submitted that, having regard to the relative dimensions of the larger assessment parcel compared to the smaller assessment parcel, there were a number of metrics, such as land area; land value; and time taken in addressing the issues, where there was an appropriate basis upon which apportionment could be founded.
4. He also submitted that the approach which the Company had taken, in having the two appeals heard together, was consistent with the overriding objective of Civil Procedure Act 2005 for litigation such as this, but that this should not prejudice the Company by having this practical efficiency be reflected in an adverse position for the Company in its costs application.
5. I had raised with Mr Galasso the fact that Mr Ireland had spent considerable time advancing a submission on behalf of the Company at the original hearing founded on s 14F of the Valuation of Land Act. In that context, I proposed to Mr Galasso that the value or area of the land involved was irrelevant for the purposes of considering what proportion of the hearing might have been devoted to listening to Mr Ireland advancing submissions on that point.
6. In response, Mr Galasso suggested that, for example, on his reading of the transcript of the original hearing, the amount of time spent by Mr Ireland on the s 14F point was less than the amount of time devoted to the evidence of the forensic accountants. He summarised the position advanced on behalf of the Company, comparing the two elements of the proceedings, whilst accepting that my determination of this costs application was appropriate to be impressionistic, saying (Transcript 22 March 2022, page 15, lines 12 to 19): We say that it is an unfortunately head on collision between policy and apportionment on costs and things like s 56 of the Civil Procedure Act. To say on one hand, we should all have a hearing together that blends two different parcels, because we've all got to go out there anyway, but when it comes to costs, if there should otherwise be an order for costs for the larger parcel, that that gets eroded or contaminated by the position on the smaller amount.

The Council's position

1. The position advanced by Mr Tomasetti for the Council on whether or not the Council surrendered was set out succinctly in his written submissions in the following terms: 15. The Council did not surrender [on] a principal contested issue and capitulate. What it did was to consider the Court of Appeal's judgment particularly paragraphs [42] ‑ [44] and in light of the judgment take a realistic view that it was unlikely to succeed in relation to the further factual enquiries in s 515. 16. The issue in s 515 was whether the farming had a significant or commercial purpose or character and was carried on for the purpose of profit on a continuous or repetitive basis whether or not a profit was made. The Council's primary position was that in the relevant years the dominant use was not farmland but was for a mine. 17. Before this Court, the Applicant relied on the evidence of Mr Mullins, a forensic accountant, Mr Hinze and Mr Adamski, a financial controller. Their collective evidence was very difficult to unpick, and it was impossible to identify exactly where stock grazed, and whether a profit had been made in either of the relevant years from farming activities carried on specifically on the SAP or the LAP when only consolidated accounts were tendered. The financial evidence adduced by the Applicant comprised consolidated accounts making it impossible to determine whether or not in the relevant years the assessment parcels generated income or profit from any farming activity and if it was generated what that income was. All of Colinta's financial records were consolidated and it ran grazing enterprises at a number of different locations in Australia. 18. The Council and this Court proceeded on the basis discussed above, that timing focussed on the relevant years only and that intention as to the future years was irrelevant. The Court looked at the manifest physical activities being carried out on each assessment parcel in each of the assessment years. Little weight was given to activities in preceding years and consideration of what the landowner's intentions were in subsequent years was irrelevant.

Consideration

1. It is next necessary to consider whether or not, in light of the earlier reproduced passages of the judgment of Macfarlan JA in the Court of Appeal, whether the state of the evidence concerning Colinta's grazing activities in years other than the 2016 and 2017 rating years would have been sufficient to provide me with a proper evidentiary basis to address the matters raised by s 515(1)(a) and (b) of the Local Government Act, matters which I had considered were unnecessary to be traversed given the conclusions which I had reached concerning primary issues of how the accumulated classification of the land should be regarded for the larger assessment parcel in each of the rating years (noting that my conclusion on this basis concerning the smaller assessment parcel was not challenged by the Company for either of the rating years).
2. During the course of the costs hearing, I made the following observation (Transcript 22 March 2022, page 10, lines 43 to 45): HIS HONOUR: There wouldn't have been a remitter hearing had the matter required a determination because in my view it had been fully argued and I could've simply produced a judgment had I been required to do so.
3. Whilst preparing this judgment, particularly the necessity to reread extensive portions of the written and oral evidence of the original hearing and view them in detail through the lens of the reasoning in the judgment of the Court of Appeal, I have concluded that the above observation made during the costs hearing was not correct and, for reasons explained below, a further hearing was likely to have been necessary had I needed to determine whether or not Colinta's activities satisfied the two tests set by s 515(1)(a) and (b) of the Local Government Act.
4. However, I accept that, had the matters arising under s 515(1)(a) and (b) of the Local Government Act arising on remitter required to be determined, I would have needed to raise with the advocates for the parties the question of whether or not the parties considered that a further hearing was necessary in order to address the contextual timing matters arising out of the matters discussed in the judgment of the Court of Appeal set out earlier.
5. I observe that my close reading, several times, of the transcript of the costs hearing on 22 March 2022 does not disclose that the above observation by me appears to have influenced, in any way, the submissions made for either the Company or the Council on that occasion.
6. In addition, the written submissions on behalf of the Company and the Council for the costs hearing were founded on the proposition that a further hearing, had I been required to determine the residual matters, would not have been necessary.
7. Given that, for reasons I explain, a supplementary hearing (albeit one, I accept, of more modest duration than that of the original hearing) was likely to have been necessary for the purposes of enabling me to consider and determine the issues remaining on remitter arising out of s 515(1)(a) and (b) of the Local Government Act, it is necessary that I consider how this might have needed to be taken into account in having regard to the consent order resolution rendering such hearing unnecessary.
8. I have reread the evidence given by the agronomists and by the accountants both in their individual and joint expert reports and in their concurrent oral evidence during the course of the proceedings.
9. I have also, in this context, reread the evidence of Mr Hinze and Mr Adamski.
10. I am satisfied that, for present purposes, it is not necessary to set out any matters of detail concerning any of that evidence.
11. I have, as best I am able to do just over three years after undertaking the site inspection, considered whether, had the matter proceeded in a fashion which required me to determine the issues arising under s 515 of the Local Government Act, any further hearing would have been needed. Such a hearing could have involved, at least, further evidence from all those witnesses noted above to address past and subsequent years of Colinta's grazing activities in more detail. This would have included the broader issues of the extent of the drought and its impact on regional grazing activities, not merely of Colinta's activities on the larger assessment parcel.
12. It is sufficient that I record that I am satisfied that, taking all of that evidence from all the witnesses nominated above into account, a further hearing was likely to have been necessary to enable me to address those matters. Such a hearing would have likely been required before I could have determined whether Colinta's grazing activities on the larger assessment parcel, in the 2016 and 2017 rating years, satisfied those additional statutory prerequisites before that parcel could be classified as "farmland" rather than reverting to the default classification of "business" pursuant to s 518 of the Local Government Act.
13. It is not now appropriate that I express any view as to what might have been my determination had I been required to deliver a considered decision on the undetermined s 515 issues on the basis of the evidence incomplete given. To do so in some theoretical fashion would be to fall into error (Re Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6). In addition, as explained above, I would not likely have had a proper evidentiary basis to do so had it been permissible.
14. In Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681; [2018] NSWCA 84 (Nichols v NFS Agribusiness), Payne JA (with whom Meagher JA agreed) said, at [30], that, when applying Lai Qin: 30 If both parties to a proceeding which has been settled without a hearing on the merits 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.
15. In light of the extract I have set out immediately above, it seems to me that it is not appropriate to conclude that, in light of the Court of Appeal's judgment, the Council should be regarded as having capitulated by not proceeding to require me to determine the s 515 Local Government Act issues. The position outlined above would seem to me to be more appropriate, by analogy, on this point.
16. However, if I am wrong in this regard, and capitulation is the appropriate conclusion to be drawn, in the balancing process necessary for r 3.7 of the Court Rules test analysis, it is but one factor requiring to be weighed along with all the other matters I am here considering.

The Company's objection to the evidence of Mr Michael White

1. It is to be noted that the Council sought to (and was granted leave to) rely on the evidence of Mr Michael White as its expert on mine management issues. Mr White's evidence was relevant in matters relating to both assessment parcels involved in those proceedings.
2. The Company objected to Mr White being permitted to give evidence. The basis for the objection and the process by which a voir dire examination was held to permit Mr Ireland to cross‑examine Mr White for the purposes of seeking to establish he should not be permitted to give expert evidence (written or oral) on behalf of the Council was dealt with at [38] to [68] of my substantive judgment. These passages from my substantive judgment make clear that there was, as noted at [43], an hour of the hearing devoted to the voir dire cross‑examination of Mr White and me giving my brief extempore judgment rejecting the Company's proposal that Mr White's evidence should be rejected.
3. It can also be seen, as also set out in [50] to [57] of my substantive judgment, a not insignificant degree of effort in Mr Ireland's closing submissions (both written and oral) was devoted to maintaining his attack on the reliability of Mr White's evidence. The time and effort expended on this was, in my assessment, irrelevant for both my consideration of the larger and smaller assessment parcels. It is also to be observed that the time and effort expended on these attacks on Mr White were entirely without success and were, for reasons I set out in [66] to [68] of my substantive judgment, without justification.
4. This is a factor to be weighed against it being fair and reasonable to make any costs order in favour of the Company.

Introduction

1. Exhibit A on this costs motion was a bundle of documents which had been exhibited to the first of Ms Daly's affidavits. Four documents in Exhibit A are relied upon by the Company as offers of compromise for the purposes of this costs application. The four letters were dated: 1. 31 July 2018 ‑ first offer letter (Exhibit A, folios 69 to 75); 2. 3 August 2018 ‑ second offer letter (Exhibit A, folios 76 to 78); 3. 5 September 2018 ‑ third offer letter (Exhibit A, folios 97 to 99); and 4. 10 September 2018 ‑ fourth offer letter (Exhibit A, folios 102 to 104).
2. It is necessary to consider whether or not any of these offer letters provides any significant support for the Company's claim to be entitled to its costs of the proceedings on a "fair and reasonable" basis.

The Company's written submissions on the offers

1. The written submissions on behalf of the Company addressed these offers at paragraphs 49 to 60. It is appropriate to set these out in full: The without prejudice offers 49. The Applicant submits that Council's rejection of several reasonable offers demonstrates its unreasonable conduct prior to trial. 50. The Court is not bound to consider the Calderbank offers, but is permitted to do so: Nadilo v Eagleton [2021] NSWCA 232 at [48] (Preston CJ of LEC). 51. The first without prejudice except as to costs offer was the Calderbank (without prejudice except as to costs) letter of 31 July 2018 from the Applicant's solicitors to Council (pages 69 to 75 of Ex SD‑1). It explained that Council had recategorised the land for reasons other than its actual use, contrary to the Peabody decision. The letter identified that pursuant to the Colinta licence the land was used for the carrying on of primary production business of agistment of cattle. 52. Council had contended in its solicitors' without prejudice letter of 3 August 2018 (page 76 of Ex SD‑1) that it had a concern that implementing the settlement agreement could be construed as an invalid fetter on Council's rating discretion and contrary to the reasoning and decision of the Court of Appeal in Peregrine Minerals Sands Pty Ltd v Wentworth Shire Council [2014] NSWCA 429. In response, Mangoola rejected this proposition in the without prejudice except as to costs letter of 3 August 2018 (pages 77 to 78 of Ex SD‑1) and explained that the agreement merely provided for a procedure allowing information to be provided to Council as to which areas were proposed to be used for coal mining operations in the coming year, on the basis of which information the land could be properly characterised. This correctly explained the operation of the settlement agreement, and that it provided a procedure for the provision of information rather than determining a rating outcome. 53. Although the agreement under consideration in Peregrine did indeed fetter the council's rating discretion (being an agreement to pay a particular amount of rates), that was obviously not the effect or terms of the settlement agreement between Mangoola and Council in which Council did not agree to the rates for any year being in a particular amount, and instead agreed, in accordance with its statutory obligations. 54. The Applicant's further without prejudice except as costs letter of 5 September 2018 (following the commencement of the proceedings), documents the results of a without prejudice meeting with Council of 28 August 2018 (pages 97 to 99 of Ex SD‑1). The flawed reasoning at that meeting was that the biodiversity offset areas were used for a coal mine as they were required to be set aside by the conditions of the planning approval, and that exploration activities resulted in the categorisation of grazing lands as coal mining land. The offer was expressly open for 14 days. Importantly, the letter offered to concede the mining categorisation of the smaller assessment parcel, and requested recategorisation of the larger assessment parcel as farming for each rating year, the refund of the amount of overpayment in rates, no interest, and payment of Mangoola's costs in the amount of $15,000. Council at this point was given the clear option of settling the larger assessment parcel dispute separately from that concerning the smaller assessment parcel. Inconsistently with the choice it made then not to do so, it now asserts that there should be no order as to costs as the cases were heard together ‑ a direct result of its own rejection of this offer to separate the two decisions. 55. The parties came extremely close to settling the matter. This is shown by the fact that in response, Council agreed to recategorise the properties as farmland for the then current rating year 2018‑2019, but not retrospectively, and agreed to pay Council an amount equal to the difference between the paid amounts for the properties as mining land and the applicable amount for farmland for the 2016/17 and 2017/18 rating years (pages 100 to 101 of Ex SD‑1). 56. Council advised that it had taken legal advice and advice from its auditors in respect of Council's offer. The auditing advice appears to have been that as Council's books were closed for the rating years in question there could be no retrospective recategorisation. The Applicant explained in its response of 10 September 2018 that continued the offer of 5 September 2018 to 19 September 2018, that the LG Act provides for retrospective recategorization and the consequential adjustment of rates (pages 102 to 104 of Ex SD‑1). That retrospective recategorization was proper and lawful was not open to doubt and Council's objection to that procedure was unreasonable and misconceived. Its unreasonableness is highlighted by the fact that Council has never advanced the proposition subsequently in these proceedings asserting that retrospective recategorization was unlawful, and ultimately agreed to consent orders doing exactly that. Council's legal error at this point resulted in a settlement not being achieved. 57. Council's response was unreasonable in objecting to retrospective recategorisation and also in refusing to agree that biodiversity offset land was not the use of land as a coal mine. This disagreement was in relation to point (d) in Mangoola's offer of 5 September 2018. Council asserted that this was potentially beyond power. However, this was a flawed legal position as point (d) merely reflected the correct legal position, as later found in the Court of Appeal: "Council agrees that biodiversity offset land required to be provided as a condition of a planning approval, including any management activities carried out on that land , is not a use of land for a coal mine for the purposes of s517 of the LG Act." 58. The Applicant expressed concerns as to the legalities and propriety of a refund amount being paid without recategorisation in its response of 10 September 2018. There was no response by Council. Council was in obvious error in taking the view that there was a legal bar to retrospectively giving effect to an agreement that the larger assessment parcel should have been categorised as farmland in the relevant years. That was, of course, at the cost of this litigation. 59. Council's rejection of Mangoola's 5 September 2018 offer (and subsequent 10 September 2018 offer) was unreasonable and Council imposed a number of legally flawed requirements on its acceptance, which may have caused material prejudice to Mangoola, if Mangoola had simply chosen to ignore them and accept the offered refund. 60. First, Mangoola had a proper commercial concern that the proposed ex gratia payment (without recategorization of the land) would be ultra vires and vulnerable to later legal challenge, restitutionary or regulatory action by Council or third party and explained these concerns in its letter of 10 September 2018. It would have rendered the agreement useless from Mangoola's perspective should the payment later be ordered to be refunded as having been a payment made by Council as a public authority of public funds in excess of its statutory power. Council does not set out any legal basis for such a payment absent a recategorization in its letter of 10 September 2018. Second, there was Council's unjustified refusal to concede the proper categorisation of the offset areas, that was a material matter to Mangoola as it indicated that Council would likely take a legally flawed approach to such areas going forward.

The Company's oral submissions concerning the offers

1. Mr Galasso, in his oral submissions, deferred any response on the letters of offer until after he had heard Mr Tomasetti's oral submissions on this point.

The Council's written submissions concerning the offers

1. The written submissions on behalf of the Council addressing these offer letters also warrant being reproduced in full. These written submissions responded specifically to what was contained in each of the four offer letters. The written submissions addressed these letters at paragraphs 60 to 76. It is appropriate to reproduce these paragraphs in full: The "Calderbank" letters 60. In SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 Giles JA said at [37]: The making of an offer of compromise in the form of a Calderbank letter (from Calderbank v Calderbank (1976) Fam 93), where the offeree does not accept the offer but ends up worse off than if the offer had been accepted, is a matter to which the court may have regard when deciding whether to otherwise order, but it does not automatically bring a different order as to costs. All the circumstances must be considered, and while the policy informing the regard had to a Calderbank letter is promotion of settlement of disputes an offeree can reasonably fail to accept an offer without suffering in costs. In the end the question is whether the offeree's failure to accept the offer, in all the circumstances, warrants departure from the ordinary rule as to costs, and that the offeree ends up worse off than if the offer had been accepted does not of itself warrant departure: see for example, John S Hayes & Associates Pty Ltd v Kimberley‑Clarke Australia Pty Ltd (1994) 52 FLR 201; MGICA (1992) Pty Ltd v Kenny & Good Pty Ltd (1996) 70 FLR 235. 61. There are four alleged Calderbank letters relied upon by the Applicant. None of the letters relied upon are Calderbank letters. 62. The first so called Calderbank letter referred relied upon by the Applicant is that of the 31 July 2018 commencing at Exhibit SD‑1 page 69. The letter is not identified as an offer pursuant to Calderbank v Calderbank and by its nature does not comply with the requirements of a Calderbank offer. 63. A Calderbank offer should contain the following: (a) be marked without prejudice save as to costs; (b) be clear, precise and certain in its terms; (c) state clearly the time in which the offer must be accepted; (d) refer to the offer being one in accordance with the principles enunciated in the decision of Calderbank v Calderbank; (e) make some provision for costs separate from the principal offer; (f) state clearly that the offeror reserves its right to tender the offer on an application for costs if the offer is rejected; (g) state the costs advantage i.e. indemnity costs or party/party costs that the offeror has in mind to achieve; and (h) provide reasons why the offer should be accepted. 64. The first letter contains no compromise. It asserts incorrectly as events transpired that "Mangoola would have strong prospects of success should it appeal MSC's categorisation of the properties". It requests MSC to re‑categorise both the properties as farmland by close of business Monday 6 August 2018 and then states that the letter will be relied upon in any costs orders. The Council did not re‑categorise either the LAP or the SAP and in terms of the SAP was correct in so doing. 65. The applicant did not succeed to a better case than it offered by its letter. Normally a party having made an offer, succeeds to an even better position. That is a matter that can be considered when ordering costs. 66. Merely demanding that both properties be re‑categorised and drawing attention to the possibility that costs may be sought in any proceedings is not a Calderbank offer. The letter contained no compromise. 67. The second so called Calderbank letter is that of 3 August 2018 (Exhibit SD‑1 page 77). Again the demand was made for the Council to re‑categorise both properties by 6 September 2018. It contains no compromise and simply threatens that if Class 3 proceedings are commenced council was on notice that any settlement would only be on the basis that Council pays Mangoola's costs. 68. The third so called Calderbank letter is that of 6 August 2018 and contains no more than a demand to avoid proceedings by re‑ categorising both assessment areas and then stating that the Applicant would be looking to Council to pay its costs of any proceedings. 69. The fourth so called Calderbank letter is that of 5 September 2018 (Exhibit SD‑1 page 97). In that letter it is alleged that the categorisation of both parcels by Council was flawed and inconsistent with Peabody and Ulan. That last proposition is incorrect. The investigation was of the mining activity on the assessment areas. It did not involve any of the flaws identified in Peabody and the methodology adopted was consistent with the methodology applied in both Peabody and Ulan. The SAP was correctly categorised by the Council. 70. The letter does not contain any compromise. 71. Secondly, the Applicant demanded that Council had to agree to categorisation of the LAP as farmland for the rating years the subject of the proceedings and the following rating year. Council could not agree to that without being in dereliction of its statutory obligation. 72. Thirdly, the Applicant also demanded that Council refund rates to the Applicant for the LAP. This was not a claim the subject of these proceedings. 73. Fourthly, the Applicant demanded that Council had to agree that the biodiversity offset land was not a use of land for a coal mine where that land has been demonstrated to not be used as farmland either. 74. Lastly, the Applicant demanded that Council pays Mangoola's legal costs completely unsubstantiated in amount of $15,000 plus GST and noted that Mangoola would agree to waive a claim for interest in respect of rates to be refunded in circumstances where there is no entitlement to that refund. It is also noteworthy that the offer appears not to be an offer to enter into an agreement capable of simple acceptance. It is an offer to enter into another agreement thus making the offer incapable of acceptance. 75. The Council responded to the last mentioned so called offer with a counter offer on 10 September 2018 (Exhibit SD‑1 page 100). The counter offer was rejected on 10 September 2018 by the making of another counter offer. The counter offer of 10 September 2018 was not a Calderbank offer and it was impliedly rejected by non‑response. 76. Importantly the demand that Council re‑categorise both parcels as farmland was a demand which was justified in being rejected given the outcome of the proceedings.

The Council's oral submissions concerning the offer letters

1. During the course of the costs hearing, Mr Tomasetti addressed the four offer letters which had been sent by the Company's legal representatives. Mr Tomasetti, in his oral submissions, briefly summarised the material set out above from his written submissions. He primarily addressed the form of the correspondence in the fashion set out in the eight points in paragraph 63 of his written submissions set out above.

The oral reply submissions for the Company

1. Mr Galasso, in his oral reply submissions concerning the offer correspondence, also addressed, in some detail, the matters concerning the form of the correspondence as had been advanced by Mr Tomasetti in his oral submissions.

Consideration

1. For reasons which can be seen from the discussion below, I am satisfied that it is not necessary to address the issues of form arising concerning this correspondence nor to consider the authorities cited by either Mr Tomasetti or Mr Galasso in response to their respective positions.
2. In paragraph 50 of the Company's written costs submissions reproduced above, reference is made to the comments of Preston CJ, at [48], in Nadilo v Eagleton [2021] NSWCA 232 (Nadilo v Eagleton). It is appropriate to set out what his Honour actually said: 48 I find that neither the Calderbank offer nor the respondents' non‑response to the Calderbank offer were relevant matters that the primary judge was bound to consider in exercising the costs discretion under r 42.20(1). In order to establish that the primary judge's exercise of the costs discretion miscarried on some error of principle, in this instance failure to consider a relevant matter, the applicant had to establish that the Calderbank offer and respondents' non‑response to the offer were in law matters that r 42.20(1) expressly or impliedly obliged the primary judge to take into account in exercising the costs discretion under the rule. The applicant cannot establish that these are such relevant matters. The Calderbank offer and the respondents' non‑response to the offer were facts that the primary judge was permitted to consider, but the primary judge was not bound to consider them.
3. There are two observations to be made concerning his Honour's comments. The first is that the proceedings giving rise to that appeal dealt with in that case were in Class 4 of the Court's jurisdiction, a class in which the special costs rule, r 3.7 of the Court Rules, did not apply. The usual costs rules, in those proceedings, were those contained in r 42.20 of the UCPR, a provision in the following terms: 42.20 Dismissal of proceedings etc (1) If the court makes an order for the dismissal of proceedings, either generally or in relation to a particular cause of action or in relation to the whole or part of any claim, then, unless the court orders otherwise, the plaintiff must pay the defendant's costs of the proceedings to the extent to which they have been dismissed.
4. However, r 42.20 of the UCPR is a provision expressly excluded from application, here, relevantly, in Class 3, by Sch 1 of the UCPR. This, in the context of his Honour's remarks, renders them less potentially relevant for present purposes where the special costs rule applies.
5. The first letter for the Company (31 July 2018) seeks simply to have the Council agree to the re-categorisation of both the larger and the smaller assessment parcels as "farmland". It contains no compromise whatsoever and can, thus, provide no assistance to the Company on this costs application.
6. The Council's second offer letter (5 September 2018) did accept that the smaller assessment parcel could retain its "mining" categorisation for the rating years challenged in the proceedings.
7. However, this proposal also sought a concession from the Council outside the scope of the proceedings which I determined (being the concession that the categorisation should also apply to the 2018‑2019 rating year for the larger assessment parcel). It also sought a refund to be paid to the Company for the larger assessment parcel for the difference between the "mining" and "farmland" rating categorisations. To the extent that such a refund was sought for the 2018‑2019 rating year for the larger assessment parcel, that was outside the scope of the proceedings. The Company therefore sought something which was not justiciable before me as an element of the offer. This position was repeated in the later letters.
8. In addition, the Company proposed that the use of the biodiversity offset areas should be acknowledged by the Council as being "farmland" for rating categorisation purposes.
9. Although the Court of Appeal held that the appropriate dominant use of the larger assessment parcel was not mining, the Court of Appeal remitted to me the question of tests required to be addressed by s 515(1)(a) and (b) of the Local Government Act. Whilst the Court of Appeal determined that the biodiversity and Aboriginal cultural heritage offset areas were not appropriate to be regarded as "mining" for the purposes of rating classification, the Court of Appeal made no positive determination as to how those areas should be regarded as part of the various categorisation elements requiring to be weighed to work out what the dominant use of the land in the larger assessment parcel was for each of the rating years.
10. As a result of the parties settling the matter and, thus, not requiring me to determine the s 515(1)(a) and (b) issues, the question of whether the two categories of offset area would, between them, contribute to a "business" categorisation (being the default position pursuant to s 518 of the Local Government Act if the s 515(1)(a) and (b) tests were not satisfied), the need to consider this did not arise. Given the express barring of these offset areas to be used for grazing purposes, and the potential necessity to consider the scope and extent of Colinta's grazing activities on the grazing portions of the larger assessment parcel, the proposal by the Company that the Council should acknowledge that the offset areas were, themselves, specifically to be categorised as "farmland" was misplaced.
11. For completeness, I note that the Company's demand for recategorisation of the smaller assessment parcel as "farmland" was only an element of the earliest letter and was not pressed for the totality of the correspondence. I only rely on that recategorisation demand as a basis for concluding that the first of the Company's offers should play no part in this consideration of the Company's costs application.

The 2011 agreement between the Council and the Company

1. At paragraphs 43 to 48, the Company's written submissions set out a history concerning an agreement entered into between the parties in July 2011 (a copy of which was in Exhibit A on the costs application). The process established by that agreement, the Company submitted, was one designed to reduce the possibilities of miscategorisation of land owned by the Company, and thus avoid the necessity for litigation as had arisen in these proceedings. The failure of the Council to follow this process had unnecessarily resulted in this litigation. The written submissions expressly explained, in paragraph 47, why the settlement agreement had not fettered the Council's decision‑making in a fashion contrary to the judgment in Peregrine Minerals Sands Pty Ltd v Wentworth Shire Council [2014] NSWCA 429 (Peregrine Mineral Sands).
2. In his oral submissions, Mr Galasso said, concerning this agreed process and matters raised on behalf of the Council in the offer correspondence exchanges (Transcript 22 March 2022, page 16, lines 40 to 46): We don't accept for a moment the submission from the council that that regime was a fetter of discretion, quite the contrary. What the regime set out was pure and simple an information provision exercise in order to arm the council with the facts to determine the matter, facts in terms of the first element that I demonstrated they got wrong anyway. That regime should have, in our respectful submission, yielded the proper categorisation, as it turns out, in the correct way according to the Court of Appeal.
3. Proper following of this agreed process would have led, in the Company's submission, to the Council reaching the correct conclusion concerning the larger assessment parcel in the fashion that followed from the Court of Appeal's judgment.
4. Mr Tomasetti's response to these submissions were initially summarised by him (Transcript 22 March 2022, page 28, lines 4 to 11): Our case is that the 2011 agreement was not a deed and it set out a regime but the final step in the process was that council had to perform its statutory duty and for the reasons set out in our submissions, we followed the regime and then we exercised our statutory duty and nothing in that document precluded or could preclude the council from recategorizing the land in these two relevant years if it formed the relevant view. There's been performance of the spirit and intent of that agreement and I'll come back to that in more detail.
5. Although Mr Tomasetti noted that he intended to return to the topic, it is unnecessary to address his submissions further, as I am satisfied that what was set out in the Council's written submissions on this point (at paragraphs 37 to 45) accurately reflect the process obligation imposed on the Council to consider matters of categorisation of the Company's land and that the Council had, for the two years that were challenged, in fact, done so. This process, for the disputed years, led to the recategorisations that were the subject of the Company's legal challenges.
6. Had the Council been mandated, after going through such a process, to reach a preordained outcome, that would have constituted a fettering of the Council's decision‑making in the fashion held to be inappropriate in Peregrine Mineral Sands. However, that was not here the position and questions of fettering of the Council's decision‑making processes do not arise.
7. This aspect of the Company's complaint about the Council's conduct as part of the pre‑litigation processes cannot provide any basis for providing a foundation for concluding that it would be fair and reasonable to award costs in these proceedings to the Company.

Overall conclusion on apportionment of costs

1. In the present context, the submission by the Company that the approach taken to the question of costs by apportioning, on a separated basis, between matters requiring to be addressed that related to the larger assessment parcel and those which required to be addressed concerning the smaller assessment parcel, is a simplistic one. To do this, in my view, would be an entirely inappropriate and facile basis upon which to undertake any assessment to seek an understanding of whether or not, at a high and general discretionary and impressionistic evaluation, how events fell during the course of the proceedings.
2. Having examined what I consider are appropriate matters in this regard, it is appropriate, and only now appropriate, to consider how that mix of impressions should inform my decision‑making on this costs application when the test for making any costs order (of whatever apportioned percentage if that point is reached) must be considered through the special lens mandated by r 3.7 of the Court Rules - that it must be "fair and reasonable" under all circumstances associated with the matters requiring to be determined that some costs order should be made.
3. I now turn to summarise those matters which inform my consideration as to whether any costs order would be "fair and reasonable" on that impressionistic and discretionary basis.
4. Determining whether apportionment is appropriate involves matters of discretion, impression and evaluation (James v Surf Road at [36]).
5. As I have earlier indicated, the judgment which I must reach concerning this costs application, is one where the threshold test is not that of costs following the event (Latoudis v Casey (1990) 170 CLR 534; [1990] HCA 59 and r 42.1 of the UCPR) but is, with a higher threshold set by r 3.7 of the Court Rules, namely, that it is fair and reasonable that a costs order is warranted on some basis (whether in whole or in part). Reaching a conclusion based on the Company's application is necessarily an evaluative, impressionistic process and not one of mathematical precision.
6. For reasons earlier outlined, the primary basis upon which the Company founds its case is the fact that, on remitter, the Council did not wish to pursue further whether or not Colinta's grazing activities satisfied the necessary tests set by s 515(1)(a) and (b) of the Local Government Act. The Company's position is that this failure constituted capitulation on those questions, questions which had been factually contested by the Council during the course of my original hearing.
7. On this basis, the Company proposes that I should make a costs order in its favour for 90% of the costs of the original hearing. This numerical proposition is derived from the Company's analysis of how the issues requiring to be addressed during the original hearing and the amount of time spent on them should be calculated when comparing what was required for the larger assessment parcel with what had been required for the smaller assessment parcel. On this assumption, the entirety of the costs to be apportioned to addressing the larger assessment parcel should be the subject of a costs award in the Company's favour ‑ the Company conceding that the costs appropriate to be apportioned to matters relating to the smaller assessment parcel should be excluded in their entirety.
8. I am unable to accept such a broad and sweeping assertion, even on the impressionistic and imprecise basis necessary for determining this costs application.
9. I have concluded that there are a number of factors that lead me to reject the proposition that it is fair and reasonable to make any apportioned costs order in favour of the Company. The factors weighing against doing so are those which I have addressed in some detail in my analysis earlier set out. In summary, the factors weighing against the making of any costs order in favour of the Company, when the original hearing is viewed through the filtering lens provided by r 3.7 of the Court Rules, are those set out below: 1. All matters from the elements of the hearing relating to the smaller assessment parcel are not to be set aside in the fashion proposed for the Company. Although the Council has not, itself, proposed that any costs order should be made in its favour, nonetheless, the time devoted during the hearing to Mr Ireland's misplaced submissions concerning s 14F in of the Valuation of Land Act would have made it appropriate, on a proper apportionment basis, to make a costs order in favour of the Council for that element of the hearing. Certainly, had the hearings been separate (and I am not, in making this observation, to be rejecting the position advocated for the Company that separate hearings would have been contrary to the overriding objective for civil litigation), I would have considered it fair and reasonable to make at least an apportioned costs order in favour of the Council to reflect the time spent on the advancing of this incorrect statutory construction point put by Mr Ireland; 2. The extent to which time and energy was wasted during the hearing because the Company's GIS mapping expert was unable to provide, almost until the end of the hearing, mapping of the boundaries of both the larger assessment parcel and the smaller assessment parcel for each of the rating years meant that not only the hearing time necessary to try to resolve those matters, but also the extra‑curial time necessary to consider the fine (and inaccurate) detail of the various intermediate iterations of the mapping, was wasted and weighs against any suggestion that the entirety of the larger assessment parcel issues ought be seen to favour the costs outcome sought by the Company. On any apportionment basis, that time and effort should be regarded as weighing in favour of the Council and not the Company; 3. The Company's pursuit of its objection to Mr White giving expert mining operational evidence on behalf of the Council was wasted time (across both assessment parcels) and, given the nature of the almost (but not complete) agreement between Mr White and the Company's own mining expert concerning mining operational issues, the time taken in that endeavour by Mr Ireland was wasted (as was any time taken by the legal representatives of the Council in preparing to respond to that objection); 4. For reasons earlier explained, a proper consideration of the observations of Macfarlan JA in the Court of Appeal's judgment justified the Council considering that the analytic framework within which the s 515(1)(a) and (b) of the Local Government Act issues arising for consideration concerning Colinta's activities on the larger assessment parcel differed from the basis which the parties had approached the matter at the original hearing, and upon which the relevant experts had approached the preparation of the evidence, had handed the potential, at least, for the necessity of a further merit hearing. That was a legitimate risk assessment on behalf of the Council, given the shift mandated by the Court of Appeal's judgment as to how consideration of the s 515 tests were to be assessed and determined. That position does not, on my assessment, amount to capitulation in the classic sense, but is more akin to that which was addressed in Nichols v NFS Agribusiness as tending to support the proposition that each party should bear its own costs of the proceedings; 5. For reasons also earlier explained, the correspondence between the legal representatives of the parties relied upon by the Company as constituting Calderbank offers weighing in favour of costs being awarded to the Company fails for two reasons: First, the deficiencies in the offer documents themselves; and, second, the fact that the proposition that such offers are appropriate to be weighed in favour of the Company on the basis of the obiter dicta remarks of Preston CJ in Nadilo v Eagleton, Class 4 proceedings, is misplaced as to the potential weight to be accorded to that correspondence. In making this observation, I am not to be saying that properly framed offers of compromise cannot potentially be given weight for the purposes of an assessment made pursuant to r 3.7 of the Court Rules, merely that, in this instance, little weight should be accorded to the specific documents here relied upon by the Company; 6. The Company's position concerning the allocation of travel time to and from the site inspection is incorrect. Quite apart from the inappropriate mathematical basis in the Company's attribution of travel time, there can be no possible suggestion that the necessity for a site inspection was not required to address the issues that were in dispute concerning the two assessment parcels. Whether errors made by me in my reasoning, as found by the Court of Appeal, led to the different outcome of categorisation of the larger assessment parcel, that did not impact on the necessity for; travel time taken in carrying out; and attribution for present purposes of travel time and associated expenses (of time and accommodation) incurred for that election. This time is attributable equally between the assessment parcels; and 7. The Company's proposition that the Council acted in bad faith prior to the challenged reclassifications is rejected for the reasons earlier set out.
10. As a consequence of all of the above, I am satisfied that the inevitable outcome must be that the Company's costs application, in any of the forms proposed in the orders sought in its Notice of Motion, must fail.

Costs of the costs hearing

1. Conventionally, the costs of costs contests are paid by the party whose position has not prevailed in the costs' contest (see Peabody at [103]). There is no reason, in this instance, why that position should not apply. The Company is, therefore, to be ordered to pay the Council's costs arising from this costs contest.

Orders

1. The orders of the Court, therefore, are: 1. The Applicant's costs application is rejected; 2. The Applicant's Notice of Motion is dismissed; 3. The Applicant is to pay the Respondent's costs of the Applicant's costs motion as agreed or assessed; and 4. The exhibits for the hearing, and for the costs motion, 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: 07 November 2022