Maules Creek Community Council Incorporated v Environment Protection Authority

Land and Environment Court (NSW)|2024-10-03|Before: Preston CJ

JUDGMENT

A community group, Maules Creek Community Council Inc (Community Council), has been unsuccessful in civil enforcement proceedings to remedy or restrain claimed breaches by the Environment Protection Authority (EPA) of s 45 of the Protection of the Environment Operations Act 1997 (NSW) (POEO Act): Maules Creek Community Council Incorporated v Environment Protection Authority [2024] NSWLEC 71. The Community Council claimed that the EPA breached s 45 by failing to consider the matters it was obliged to consider under that section in undertaking a review under s 78 of the POEO Act of the environment protection licence (EPL) issued to Maules Creek Coal Pty Ltd (MCC) for the scheduled activities it carries out at the Maules Creek Coal mine. The Community Council sought a declaration that the EPA had exercised its function to review the EPL in breach of s 45 of the POEO Act and an order that the EPA re-exercise that function to review the EPL having regard to the matters required by s 45 of the POEO Act to be considered.
The EPA entered a submitting appearance and did not defend its exercise of the function to review the EPL. MCC was left to defend the EPA's review of the EPL, notwithstanding that there was no allegation that MCC had contributed in any way to the claimed breach of the POEO Act by the EPA and that the claimed relief that the EPA re-exercise the function to review the EPL would not interfere with the EPL or any other right of MCC.

The rules governing orders as to costs

I have summarised the rules governing orders as to costs in proceedings in Class 4 of the Court's jurisdiction that have been brought in the public interest in Mullaley Gas and Pipeline Accord Inc v Santos NSW (Eastern) Pty Ltd (No 2) (2021) 252 LGERA 261; [2021] NSWLEC 147 at [3]-[12] and Friends of Gardiner Park Inc v Bayside Council (No 2) [2022] NSWLEC 61 at [4]-[10] and Pritchard J added to those summaries in South East Forest Rescue Inc v Forestry Corporation of New South Wales (No 2) [2024] NSWLEC 36 at [36]-[46]. I adopt those summaries.
Whilst the usual order for costs in proceedings in Class 4 of the Court's jurisdiction is "to order that the costs follow the event" (r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR)), that rule is subject to the local rule in r 4.2(1) of the LEC Rules, as the latter prevails over the former (UCPR r 1.7). Rule 4.2(1) of the LEC Rules provides: "(1) The Court may decide not to make an order for the payment of costs against an unsuccessful applicant in any proceedings if it is satisfied that the proceedings have been brought in the public interest."
Application of r 4.2(1) involves the Court making two decisions. The first is to decide whether "it is satisfied that the proceedings have been brought in the public interest." The second is to decide whether to exercise the discretion "not to make an order for the payment of costs against an unsuccessful applicant."
In making the first decision of whether the proceedings have been brought in the public interest, the Court may be assisted by having regard to the five considerations identified by Lloyd J in Engadine Area Traffic Action Group Inc v Sutherland Shire Council (No 2) (2024) 136 LGERA 365; [2004] NSWLEC 434 (Engadine) at [15] and the five factors I identified in Caroona Coal Action Group Inc v Coal Mines Australia Pty Ltd (No 3) (2010) 173 LGERA 280; [2010] NSWLEC 59 (Caroona Coal) at [60].
In making the second decision of whether to exercise the discretion not to make an order for costs against the unsuccessful applicant, the Court may have regard to any countervailing considerations, including the unsuccessful applicant's conduct of the litigation: see Caroona Coal at [61].

The Community Council's argument that no order as to costs should be made

The Community Council submitted that the proceedings should be characterised as having been brought in the public interest and there are no countervailing considerations that would support the Court not exercising its discretion not to make an order for costs against the Community Council. The Community Council submitted the considerations identified in Engadine and the factors identified in Caroona Coal, although recognising that these should not be regarded as fixed criteria or exhaustive, assist in characterising the proceedings as having been brought in the public interest.
As to the first and third considerations in Engadine, the Community Council submitted the public interest served by the litigation was the EPA's compliance with its public law obligations under the POEO Act to review environment protection licences in accordance with law. The EPA is obliged under s 78 of the POEO Act to review environment protection licences every five years. Under s 45 of the POEO Act, the EPA is obliged to exercise that function to review environment protection licences by taking into consideration the matters in s 45. Three of the matters the EPA is obliged to consider are the pollution caused or likely to be caused by the carrying out of the activity authorised by the environment protection licence and the likely impact of that pollution on the environment (s 45(c)); the practical measures that could be taken to prevent, control, abate or mitigate that pollution and to protect the environment from harm as a result of that pollution (s 45(d)); and whether the holder of the environment protection licence is a fit and proper person (s 45(f)). Consideration of the third matter is assisted by consideration of the matters in s 83 of the POEO Act.
The Community Council claimed that the EPA had failed to discharge these public law obligations in its review of MCC's EPL by failing to consider the matters in s 45(c), (d) and (f) of the POEO Act. The claimed relief was for the EPA to re-exercise its function to review the EPL by considering these matters as required by s 45 of the POEO Act.
The Community Council submitted that proper consideration of these matters in the review of MCC's EPL was important because: 1. the Maules Creek Coal mine emits the air pollutants of PM2.5, ozone, metals and metalloids, carbon monoxide, nitrous oxide and sulphur dioxide, all of which cause harm to the environment and human health, and none of which are regulated directly by the EPL; 2. proper consideration of whether a licensee is a fit and proper person to hold an environment protection licence is important for licence-holders in high-risk activities such as coal mining, which have an extensive history of non-compliance with environmental protection legislation, as is the case for MCC; and 3. the Maules Creek Coal mine emits greenhouse gases (including carbon dioxide, methane and nitrous oxide) that contribute to anthropogenic climate change, but which are not regulated directly by the EPL.
The Community Council submitted the proceedings sought to enforce the public law obligations on the EPA to consider these matters so as to ensure protection of the environment. Although the enforcement of the public law obligations was sought to be achieved through the vehicle of these proceedings challenging the EPA's review of MCC's EPL, the issues raised and the Court's determination of the issues would have broader implications, including for the proper exercise of public administration of the POEO Act.
As to the fourth consideration in Engadine, the prime motivation of the litigation was to uphold the public interest in the proper regulation of pollutants harmful to the environment and to uphold the rule of law by ensuring that the EPA undertakes its statutory function of reviewing the EPL in accordance with law.
Addressing the first and second factors in Caroona Coal, the Community Council submitted that the litigation raised novel issues of general importance and contributed, in a material way, to the proper understanding, development and administration of the law. The litigation clarified the statutory duties of the EPA in conducting reviews of environment protection licences, thus providing important guidance to the EPA in undertaking future reviews of environment protection licences. The litigation provided the Court with an opportunity to decide the interpretation and application of: 1. the matters in s 45 of the POEO Act to be considered in undertaking a review of an environment protection licence; 2. s 78 of the POEO Act, including whether the privative clause in s 78(5) operated to preclude the bringing of proceedings under s 252 of the POEO Act for an order to remedy or restrain a breach of s 45 of the POEO Act; and 3. s 252 of the POEO Act, including the standing to bring and the jurisdiction of the Court to determine proceedings to remedy or restrain a breach of the POEO Act by the EPA in the exercise of its statutory functions under the POEO Act.
The Community Council submitted these arguments had not received judicial consideration prior to these proceedings.
As to the second consideration in Engadine and the fourth factor in Caroona Coal, the Community Council submitted the interest served by the proceedings is not confined to the private amenity of those members of the Community Council that live in the immediate vicinity of Maules Creek Coal mine. Rather, the proceedings raised important issues concerning the proper administration of the POEO Act in the review of environment protection licences generally and MCC's EPL particularly, and in the adequate regulation of air pollutants emitted from coal mines generally and the Maules Creek Coal mine particularly. It is of broad public importance that licence reviews are undertaken by the EPA in accordance with the POEO Act and with a proper understanding of the statutory function.
That the Community Council was motivated primarily by the public interest and not private interests was demonstrated by the evidence of Ms Druce, the public officer of the Community Council, in her affidavit of 28 August 2024, which was read on the costs application.
As to the fifth consideration identified in both Engadine and Caroona Coal, the Community Council submitted that Ms Druce's evidence establishes that the Community Council has no pecuniary interest in the outcome of the proceedings and there was no financial gain for it in bringing the proceedings.
Finally, as to the third factor in Caroona Coal, the Community Council submitted that the proceedings, if successful, had the potential to lead to better protection of the environment and public health. If the Court had found that the EPA had failed in its review of the EPL to consider the matters in s 45(c) and (d) of the POEO Act concerning the pollution caused by the activities at the Maules Creek Coal mine, the likely impact of that pollution and the practical measures to mitigate that pollution and to protect the environment from harm as a result of that pollution, and the Court had ordered the EPA to re-exercise the statutory function to review the EPL taking into consideration these matters, the EPA may have decided to recommend the variation of the EPL to impose conditions requiring the taking of practical measures to mitigate that pollution and to protect the environment from harm as a result of that pollution. The Community Council noted that the harmful effects of the air pollutants alleged not to have been considered on human health and of greenhouse gases in causing climate change, were not contested. In this way, the Community Council submitted, the proceedings can be seen to have been brought to protect the environment.
The Community Council submitted that the claimed breach of s 45(f) of the POEO Act can also be seen to have as its purpose the protection of the environment. The requirement for the EPA to consider whether a licence-holder is a fit and proper person to hold an environment protection licence has a protective purpose - to protect the environment by not licensing persons who are not fit and proper persons. A failure by the EPA to consider this matter in reviewing environment protection licences hinders achieving this purpose. The proceedings sought to further this purpose by enforcing compliance with the duty to consider whether MCC was a fit and proper person to hold the EPL.
Having regard to the considerations in Engadine and the factors in Caroona Coal, the Community Council submitted that the Court would be satisfied that the proceedings have been brought in the public interest.
The Community Council submitted there were no countervailing considerations that weigh against the Court exercising its discretion under r 4.2(1) of the LEC Rules not to make an order for the payment of costs against the Community Council. The Community Council responded to the countervailing considerations raised by MCC. These were in two categories: first, the Community Council unreasonably raised and persisted with grounds that were unmeritorious or not eminently arguable and, second, there was disentitling conduct in the unreasonableness of the Community Council's conduct of the litigation.
As to the first category, Community Council contested that the three grounds it raised in the proceedings were unmeritorious or not eminently arguable. The Court found the grounds not to be made out, but merely being unsuccessful does not equate with being unmeritorious or not eminently arguable. Whilst the Court found that the Licence Review Record was not the equivalent of a statement of reasons, the Community Council's argument that it did represent a statement of the EPA's reasons or represented the fullness of the EPA's consideration was a reasonable one, supported by the evidence in the form of the EPA's Regulatory Procedure: Undertaking Licence Reviews (excluding Waste Transport Licences) (RP-04).
As to the second category, the Community Council contested MCC's submission that the Community Council acted unreasonably in the conduct of the litigation by changing its claim as to the jurisdictional basis of the proceedings between the civil enforcement and judicial review jurisdictions; seeking to rely on but then not adducing expert evidence; and including more documents in its tender bundle than it finally tendered. The Community Council submitted that this conduct was nothing different to what is usual in litigation of this kind. It certainly could not be characterised as being so unreasonable as to be disentitling conduct.
As to the first procedural aspect, the Community Council submitted it was responding, at short notice, to an issue raised by MCC on the second day of the hearing. The Community Council had pleaded that the proceedings were civil enforcement proceedings brought under s 252 of the POEO Act. In response to the particular issue raised by MCC that such civil enforcement proceedings were precluded by the privative clause in s 78(5), but would not be precluded if the proceedings had been brought under the Court's judicial review jurisdiction under s 20(2) of the Land and Environment Court Act 1979 (NSW) (the Court Act), the Community Council contended that the proceedings could alternatively be viewed as judicial review proceedings as well as civil enforcement proceedings. The jurisdictional basis for the proceedings did not materially change the substance of the Community Council's claim. The three grounds of challenge remained. The Community Council claimed the EPA failed to consider the matters in s 45(c), (d) and (f) of the POEO Act. That failure resulted in a breach of s 45 of the POEO Act, amenable to be remedied or restrained by civil enforcement proceedings under s 252 of the POEO Act. The failure also resulted in the invalidity of the EPA's licence review decision, amenable to be reviewed by judicial review proceedings under s 20(2) of the Court Act.
The Community Council also responded to MCC's reliance on the privative clause in s 78(5) of the POEO Act by claiming that the privative clause was ineffective to preclude judicial review of the EPA's decision, relying on the High Court's decision in Kirk v Industrial Court (NSW) (2010) 239 CLR 531; [2010] HCA 1. MCC contended that raised a constitutional issue, requiring notices to be served under s 78B of the Judiciary Act 1903 (Cth). This was not realised until the second day of the hearing.
The Community Council submitted that its dynamic responses in the course of the hearing to MCC's arguments on jurisdiction were part and parcel of the ordinary course of litigation. There was no unreasonableness in the Community Council's conduct in doing so.
As to the expert evidence, the Community Council submitted that its initial decision to prepare expert evidence but later decision not to tender the expert evidence were both reasonable. The Community Council submitted that: 1. expert evidence was sought to prove facts that were not apparent in the administrative record and, because the EPA had entered a submitting appearance, not admitted by the EPA, as well as initially not being admitted by MCC; 2. as required by r 31.19 of the UCPR, the Community Council sought and obtained directions from the Court permitting it to adduce expert evidence from Dr da Silva; 3. MCC did not oppose the Court giving leave for the Community Council to rely on expert evidence, although it did flag that it might contest the relevance of the evidence at the hearing; 4. in response, MCC elected also to seek and obtain directions from the Court permitting it to adduce expert evidence from Mr Todoroski; 5. the later decision not to adduce either party's expert evidence at the hearing was consensual, the parties communicating to the Court before the hearing commenced as follows: "…the parties wish to inform his Honour that the Applicant and Second Respondent have reached agreement that it would be in the interest of the just, quick and cheap resolution of the proceedings for the parties not to rely on expert evidence, but instead to rely on additional documentary evidence in these proceedings. Accordingly, the parties will not tender the reports of Dr da Silva and Mr Todoroski, and the experts will not be called for cross-examination. The parties, are of the view that this proposal would narrow the issues in dispute and remove the need for cross-examination of the experts, thus shortening the time for hearing and allowing for a more efficient resolution of these proceedings."; and 1. the consensual decision not to adduce expert evidence at the hearing facilitated, not impeded, the just, quick and cheap resolution of the real issues in dispute and shortened, not prolonged, the time for hearing.
As to the tender bundle, the Community Council submitted that its conduct in initially including more documents, but later narrowing down the evidence to focus on the salient documents, is an ordinary course of responsible litigation. The Community Council proposed its tender bundle, considered MCC's objections to the tender bundle, responded to the Court's suggestion at the pre-trial mention to be "brutal" in addressing the objections to reduce the documents in the tender bundle to only those that are necessary for the applicant's case, and reached agreement on MCC's objections so as to reduce the time spent at the hearing in dealing with objections to the tender of documents. The forensic decision about the tender bundle made by the Community Council and agreed to by MCC through the course of the proceedings resulted in a more efficient hearing than would otherwise have been the case.

MCC's argument that costs should be ordered against the Community Council

MCC submitted that the Court would not be satisfied that the proceedings have been brought in the public interest, but even if it were, it should not exercise its discretion not to make an order for the payment of costs against the Community Council. In the alternative, MCC submitted that the Community Council's disentitling conduct in relation to expert evidence and the tender bundle justified an order that MCC be paid its costs associated with the expert evidence and the tender bundle.
MCC also structured its submissions on the public interest nature of the proceedings using the considerations in Engadine and the factors in Caroona Coal. In respect of the first and second factors in Caroona Coal, MCC submitted that the Community Council's case neither raised any novel issues of general importance nor contributed in a material way to the proper understanding, development and administration of the law. MCC submitted that each of the three grounds concerning the EPA's consideration of the matters in s 45(c), (d) and (f) of the POEO Act were straightforward and were resolved by the Court applying established principles of statutory interpretation and fact finding. MCC acknowledged that the proceedings did result in the meaning of the privative clause in s 78(5) of the POEO Act being determined for the first time. But this was an issue raised by MCC, not by the Community Council, in response to the way in which the Community Council had brought the proceedings under s 252 of the POEO Act. In this circumstance, the Community Council cannot characterise its litigation as being for the purpose of providing an opportunity for the Court to clarify the proper construction of s 78(5) or the standing provision in s 252 of the POEO Act.
In respect of the third factor in Caroona Coal, MCC submitted the proceedings did not raise as a substantive issue the protection of the environment, or seek injunctive relief to prevent harm to the environment, in areas proximate to the Maules Creek Coal mine. The first two grounds alleged that the EPA breached s 45(f) of the POEO Act by failing to consider whether MCC was a fit and proper person to hold the EPL. MCC submitted that those grounds did not directly concern the objective of environmental protection and were not directed to environmental protection as a substantive issue. The third ground alleged that the EPA breached s 45(c) and (d) of the POEO Act by failing to consider the pollution the Maules Creek Coal mine is causing or likely to cause, the likely impact of that pollution, and the practical measures to mitigate that pollution and to protect the environment from harm as a result of that pollution. MCC submitted that while the third ground referenced issues of environmental protection, the arguments were not directed to environmental protection as a substantive issue. The Court was not required to, and did not, consider or resolve any issue relating to the environmental impacts of the mine or environmental protection more generally.
In respect of the fourth factor in Caroona Coal (and the second consideration in Engadine), MCC submitted that there is no evidence to demonstrate that this litigation affects a significant section of the public. The important issues claimed by the Community Council about the appropriate conduct of licence reviews by the EPA and the adequate regulation of pollutants are merit considerations that did not strictly arise for the Court's consideration in this case.
In respect of the fifth factor in Caroona Coal (and also in Engadine), MCC accepted that the Community Council was not acting for financial gain in bringing the proceedings, but submitted this does not establish the converse that the proceedings were brought in the public interest.
In these circumstances, MCC submitted the Court would not be satisfied that the proceedings were brought in the public interest. But even if the Court were to be so satisfied, MCC submitted that there are countervailing considerations that support the Court not exercising its discretion not to make a costs order against the Community Council. MCC grouped these considerations in two categories: first, the Community Council unreasonably raised and persisted with grounds that had no merit or were not eminently arguable and, second, there is disentitling conduct in the unreasonableness of the Community Council's conduct of the litigation.
As to the first category, MCC submitted that the Community Council's arguments on the three grounds were "fundamentally flawed." MCC submitted this was evidenced by the Court being able to dismiss the grounds through reasons occupying a limited number of paragraphs. The three grounds of failure to consider relevant matters were premised on the Licence Review Record completed by the EPA's reviewing officer being a statement of reasons, so as to be able to draw an inference of what the officer considered from what was or was not stated in it. Once the Court found that the Licence Review Record was not a statement of reasons, the applicant's arguments foundered.
As to the second category, MCC submitted that the Community Council's conduct of the litigation was unreasonable in three respects. The first concerned the jurisdiction of the Court that the Community Council claimed it was invoking. MCC submitted the Community Council alternatively claimed the proceedings invoked the Court's civil enforcement jurisdiction under s 20(1) of the Court Act, by reason of the proceedings being brought under s 252 of the POEO Act to remedy or restrain a breach of the POEO Act, or invoked the Court's judicial review jurisdiction under s 20(2) of the Court Act, by reason of seeking to review the licence review decision of the EPA under s 78 of the POEO Act. Those alternative claims demanded different responses by MCC. If the jurisdiction was under s 20(1) of the Court Act, MCC raised as a defence to the proceedings under s 252 of the POEO Act, the privative clause in s 78(5) of the POEO Act. If the jurisdiction was under s 20(2) of the Court Act, MCC raised the issue of the standing of the Community Council to bring judicial review proceedings, as the Community Council would not be relying on the open standing provision of s 252 but would need to establish common law standing. MCC noted that the Community Council also raised as an issue at the hearing the ineffectiveness of the privative clause in s 78(5) of the POEO Act, relying on Kirk v Industrial Commission (NSW). The raising of this issue necessitated the service of notices under s 78B of the Judiciary Act. MCC submitted that the Community Council's alternative reliance on the different jurisdictions of the Court throughout the hearing, and its raising of the constitutional issue, led to MCC having to incur costs in responding to the changing arguments.
The second aspect of the procedural history MCC submitted was unreasonable was the Community Council's change of position on the need for expert evidence. The Community Council sought directions to be permitted to adduce expert evidence of an air pollution expert, Dr da Silva. MCC submitted that it had made it clear all along that it regarded the expert evidence to be unnecessary and irrelevant to the determination of the proceedings. MCC stated this at the directions hearings, including when directions were made for expert evidence, and at the pre-trial mention on 8 May 2024, a week before the hearing. MCC accepted that it did not oppose the grant of leave for the Community Council to rely on the expert evidence of Dr da Silva. MCC submitted that this was not done because MCC accepted the relevance of that evidence, but rather in recognition of the fact that the Court would likely grant leave and deal with the question of relevance at trial. MCC submitted that this is also the explanation for MCC seeking directions permitting it to adduce expert evidence from Mr Todoroski responding to Dr da Silva's expert evidence. That was done to preserve MCC's ability to rely on expert evidence if the Court found it to be relevant or wished to deal with the question of relevance in its final reasons after hearing the evidence.
In the week following the pre-trial mention on 8 May 2024 and before the hearing commenced on 14 May 2024, the Community Council discussed with MCC a proposal that the parties agree that the parties' respective expert reports not be tendered and that the experts not be called for cross-examination. After a few days, MCC ultimately agreed to this course, although reserving its right to seek orders for costs thrown away as a result of the expert evidence not being tendered.
MCC submitted that the Community Council's belated abandonment of its expert evidence after initially seeking leave to rely on such evidence resulted in MCC incurring costs in obtaining expert evidence when it had clearly communicated to the Community Council its view that expert evidence was unnecessary. MCC submitted that whilst the parties' agreement not to tender their respective expert reports and not to cross-examine the experts saved MCC the costs of having its expert available for a three-day hearing, MCC still incurred costs associated with its expert preparing his expert report and preparing for the hearing in the period from 8 May to 10 May 2024 before the parties' agreement was reached.
The third aspect of the procedural history MCC submitted was unreasonable was the Community Council's approach to its tender bundle. Initially, the Community Council included 52 documents in the tender bundle. MCC objected to 26 documents. MCC submitted it incurred costs in considering and preparing objections to these documents. After the pre-trial mention on 8 May 2024, the Community Council advised MCC that it no longer pressed 24 of the 26 documents MCC had objected to. Further, MCC submitted, the Community Council relied at the hearing on only two of the 37 documents in its ultimate tender bundle. MCC noted, however, that several of the documents were proposed for tender as a result of the parties' agreement not to rely on expert evidence.
MCC submitted that in light of these countervailing considerations, the Court should not depart from the usual order that costs follow the event. Alternatively, MCC submitted that it should be paid its costs associated with the expert evidence and the tender bundle, either wholly or in part.

The proceedings have been brought in the public interest

In the circumstances of this case, I am satisfied for the purposes of r 4.2(1) of the LEC Rules that the proceedings have been brought in the public interest. Although the considerations identified in Engadine and the factors identified in Caroona Coal should not be regarded as fixed criteria, or as exhaustive, they do assist in characterising the nature of the proceedings and the purpose for which the proceedings have been brought.
Starting with the first and third considerations in Engadine, the aspect of the public interest sought to be enforced by the proceedings was the public law obligations of the EPA to review MCC's EPL according to law. The statutory duty on the EPA to regularly review environment protection licences issued under the POEO Act is an important means of ensuring the proper administration of the statutory scheme for the protection of the environment. The POEO Act regulates how that review of environment protection licences is to be undertaken. One statutory requirement is that the EPA take into consideration the matters in s 45 in exercising the function to review environment protection licences. The Community Council's proceedings challenged whether the EPA had taken into consideration the matters in s 45(c), (d) and (f) in the review of MCC's EPL and hence exercised its statutory function in accordance with law. Although the proceedings were directed towards the particular exercise of the statutory function in the review of MCC's EPL, the proceedings necessarily raised more general issues about the proper interpretation and application of the public law obligations in s 78 to review environment protection licences and in s 45 to take into consideration relevant matters in that review. The Court's decision on the interpretation and application of ss 45 and 78 of the POEO Act will assist the EPA in the future exercise of its statutory function of reviewing environment protection licences.
A distinctive aspect of the proceedings is that the Court's review of the EPA's exercise of the function to review MCC's EPL had no direct legal consequence for the EPL. Unlike a decision to issue or vary an environment protection licence, the EPA's review of the EPL, in itself, could not effect any revocation or variation of the EPL. The Court's review of the EPA's review of the EPL could not, therefore, affect the legal validity or efficacy of the EPL. This underscores the purpose of the proceedings in ensuring the proper exercise of public powers and administration under the POEO Act.
This leads to the fourth consideration in Engadine. The prime motivation of the Community Council in bringing the proceedings was to uphold the public interest and the rule of law by enforcing compliance with the public law obligations under the POEO Act. This role of community organisations in bringing litigation to enforce the proper exercise of public powers and administration was recognised by Mortimer CJ in Environment Council of Central Queensland Inc v Minister for the Environment and Water (No 2) [2024] FCAFC 97. A community organisation sought judicial review of the federal Minister for the Environment and Water's exercise of statutory powers under the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act) to approve an extended operation of a coal mine, the greenhouse gases from which would contribute to climate change. Mortimer CJ noted at [56] that "the reality is that it is only organisations such as the appellant which might consider taking the risk, in an adversarial costs jurisdiction, of reviewing the exercise of public power, where that exercise has permitted an action to proceed." Mortimer CJ continued at [57] and [58]: "Community organisations such as the appellant play, in my opinion, a legitimate public interest role in holding the repositories of significant public powers to account, in presenting competing views about what the appropriate exercise of power might be, and then in seeking to test the lawfulness of the exercise of those public powers. Provided the litigation is conducted efficiently, responsibly and without attributes of vexatiousness or hopeless in terms of arguments, the role played in litigation under a legislative scheme such as the EPBC Act by organisations such as the appellant is in my view an important consideration for the exercise of the costs discretion at the appellate level in particular."
Those comments are equally applicable to the role of community organisations, such as the Community Council in this case, in litigation under a legislative scheme such as the POEO Act with the objective of the protection of the environment. Litigation by such community organisations seeking to test the lawfulness of the exercise of public powers and duties under such legislation assists in ensuring the proper administration of the legislative scheme. The proceedings brought by the Community Council serves this legitimate public interest role.
Turning to the first two factors in Caroona Coal, the litigation raised one or more novel issues of general importance and has contributed in a material way to the proper understanding, development or administration of the law.
The first two grounds raised by the proceedings contended that the EPA breached s 45(f) of the POEO Act by failing to take into consideration whether MCC was a fit and proper person to hold an environment protection licence. The third ground contended that the EPA breached s 45(c) and (d) of the POEO Act by failing to take into consideration the pollution caused or likely to be caused by the Maules Creek Coal mine, the likely impact of that pollution and the practical measures to mitigate that pollution and to protect the environment from harm as a result of that pollution.
Although determination of whether the EPA breached s 45(c), (d) and (f) in the exercise of the licence review function under s 78 of the POEO Act necessarily was fact-focused, an essential preliminary task involved interpretation of the statutory provisions of ss 45 and 78 of the POEO Act regulating the exercise of the function and application of that interpretation to the facts found. Those questions had not arisen for judicial determination before these proceedings. The Court's explanation of how the statutory function of reviewing environment protection licences is to be exercised will assist the EPA in its future exercise of the function. The litigation thereby has contributed to a proper understanding of the law regulating the review of environment protection licences and will contribute to the proper administration of that law.
The proceedings also contributed to the proper understanding and development of the law in relation to the scope and application of the privative clause in s 78(5) of the POEO Act. MCC raised as an issue that the privative clause precluded the Community Council from bringing the proceedings. Whilst this was an issue raised by MCC in its case, once raised, the Community Council needed to respond to it. The issue thereby became an issue raised by the proceedings. That issue was a novel one of general importance. The Court's resolution of the issue has contributed to the proper understanding and development of the law.
Turning to the second consideration in Engadine and the fourth factor in Caroona Coal, the interest served by the litigation is not confined to the members of the Community Council who live in the vicinity of the Maules Creek Coal mine. Of course, if the litigation had been successful and the EPA, in its subsequent review of the EPL, had recommended variation of the EPL to impose conditions mitigating the pollution caused or likely to be caused by the mine and to protect the environment, the members of the Community Council in the vicinity of the mine would benefit. But that was an incidental benefit of the litigation. As earlier noted, the primary motivation was to enforce the proper exercise of public powers and administration under the POEO Act. The beneficiaries of such proper exercise of public powers and administration are all of the public of New South Wales. The lessons learnt from this particular exercise of the function of reviewing the EPL can be applied to the future exercise of the function of reviewing other environment protection licences. Insofar as this might lead to the issue and variation of environment protection licences so as to better mitigate pollution and protect the environment, the public at large will benefit.
The final consideration, identified in the fifth consideration and factor in Engadine and Caroona Coal, is the absence of any pecuniary interest of the Community Council or its members in a positive outcome of the proceedings. This is a factor supportive of the litigation having been brought in the public interest: Muswellbrook Shire Council v Hunter Valley Energy Pty Ltd (2019) 238 LGERA 295; [2019] NSWCA 216 at [87].
Having regard to these considerations and factors, I am satisfied that the proceedings have been brought in the public interest.

No countervailing considerations

My satisfaction that the Community Council brought the proceedings in the public interest engages r 4.2(1) of the LEC Rules. The rule confers power on the Court to decline to make the usual costs order under UCPR r 42.1 against an unsuccessful applicant: Muswellbrook Shire Council v Hunter Valley Energy Pty Ltd at [90]. This involves the exercise of a discretion. There may be countervailing considerations that support the Court not exercising the power to decline to make the usual costs order.
MCC raised two categories of countervailing considerations, one concerning the lack of merit of the grounds of challenge to the EPA's review of the EPL and the other concerning the unreasonableness of the Community Council's conduct of the litigation. I find neither to be established.
As to the first category of countervailing considerations, I do not accept that the three grounds raised by the Community Council were without merit or not eminently arguable. The fact that the Court found that the Community Council had not established on the evidence that the EPA had breached s 45(c), (d) and (f) of the POEO Act, does not make the Community Council's argument that the EPA had breached those provisions without merit or not eminently arguable. The arguments demanded detailed responses from MCC and careful analysis by the Court of both the law and the facts to reach a decision that the breaches had not been established.
As to the second category of countervailing considerations, the Community Council's conduct in responding to the various arguments of MCC at the hearing concerning the jurisdictional basis of the proceedings was appropriate and not out of the ordinary course of litigation of this kind. The substantive grounds of challenge remained the same, regardless of whether the proceedings were in the civil enforcement or judicial review jurisdiction of the Court. These were that the EPA failed to consider the matters in s 45(c), (d) and (f) of the POEO Act in its review of the EPL. The remedy might differ between the two jurisdictions - a declaration of breach of s 45 of the POEO Act and an order to re-exercise the function to review the EPL in the case of the civil enforcement jurisdiction, and a declaration of invalidity of the exercise of the function to review the EPL and an order to re-exercise the function to review the EPL in the case of the judicial review jurisdiction. But common to both jurisdictions is that the orders would remedy the failure to consider the matters in s 45(c), (d) and (f) of the POEO Act.
The Community Council's raising defensively the issue that the privative clause in s 78(5), relied on by MCC, was ineffective to preclude proceedings brought under s 252 of the POEO Act, was an appropriate response to MCC's argument and not out of the ordinary course of litigation.
Certainly, the Community Council's conduct in responding to MCC's arguments on jurisdiction and the privative clause cannot be characterised as being so unreasonable as to be disentitling conduct.
The Community Council's conduct in initially relying on expert evidence but later agreeing with MCC not to adduce expert evidence at the trial was not unreasonable. The Community Council advanced sound reasons for its forensic decision to rely on expert evidence. I have summarised those reasons earlier. The Community Council sought and obtained directions from the Court to adduce that expert evidence. MCC did not oppose that course and indeed sought and obtained directions for it too to adduce expert evidence. MCC's flagging that it might object to the relevance of the expert evidence did not make the Community Council's forensic decision to rely on expert evidence unreasonable.
The Community Council's later decision, shortly before the hearing commenced, not to adduce the expert evidence was consensual. MCC agreed with the Community Council that the just, quick and cheap resolution of the proceedings would be facilitated by both parties not tendering their respective expert reports or cross-examining the other party's expert. That indeed was a sensible course of action which saved considerable time and cost at the hearing. The Community Council's decision not to adduce expert evidence cannot, therefore, be characterised as being so unreasonable as to be disentitling conduct.
The Community Council's conduct in initially proposing to include more documents in the tender bundle but later deciding to include a more limited set of documents was nothing out of the ordinary course of litigation. That is the purpose of the usual case management direction that an applicant prepare a bundle of documents, the respondent indicate its objection to any documents in that bundle, and the applicant refine its bundle taking into account the respondent's objections. That is what occurred in this case. Furthermore, the fact that the Community Council relied in submissions on only some and not all of the documents in the tender bundle is again nothing out of the ordinary course of litigation. It is almost invariably the case that parties tender more evidence than they ultimately rely upon. Certainly, the Community Council's conduct in relation to the tender bundle cannot be characterised as being so unreasonable as to be disentitling conduct.
In these circumstances, I find there are no countervailing circumstances that would disentitle the Community Council to a favourable exercise of the discretion in r 4.2(1) of the LEC Rules not to make an order for the payment of costs against the Community Council.

No order for costs to be made

As I am satisfied that the proceedings have been brought in the public interest, and there are no countervailing considerations regarding the Community Council's conduct of the proceedings, I consider it is appropriate not to make an order for the payment of costs against the Community Council, notwithstanding it was unsuccessful in the proceedings.
There should also be no order for costs in relation to the question of the appropriate costs order to be made. The Community Council sought for the Court not to make the usual order that costs follow the event, exercising the discretionary power in s 4.2(1) of the LEC Rules. It has been successful in obtaining this dispensation from the usual costs order. MCC should not be ordered to pay the Community Council's costs of obtaining this dispensation.
To ensure there is no doubt as to the outcome of the costs question, I will make an order that there be no order as to costs, although I recognise the incongruity in doing so.
The Court orders: 1. There be no order as to the costs of the proceedings, including the application for costs of the proceedings, with the intention that each party pays their own costs of the proceedings.

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: 21 November 2024

Environment Operations Act 1997(NSW)

(2010) 173 LGERA 280

(2024) 136 LGERA 365

(2021) 252 LGERA 261

(2019) 238 LGERA 295

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