Supreme Court of WA|2009-09-07|Before: Beech J

McCLURE -v- THE MAYOR AND COUNCILLORS OF THE CITY OF STIRLING [No 3] [2009] WASC 247 (7 September 2009)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : McCLURE -v- THE MAYOR AND COUNCILLORS OF THE CITY OF STIRLING [No 3] [2009] WASC 247

DEPARTMENT OF PLANNING AND INFRASTRUCTURE (ABN 61 313 082 730)

Costs - Plaintiffs seek leave to discontinue - Appropriate terms as to costs - Whether 'public interest' nature of litigation justifies departure from usual approach - Whether supervening event rendered litigation futile - Turns on own facts

Plaintiffs granted leave to discontinue on terms that they pay the first to fourth defendants' costs

Australian Conservation Foundation v Forestry Commission (1988) 81 ALR 166

Australian Securities Commission v Aust-Home Investments Ltd [1993] FCA 585; (1993) 44 FCR 194

Buddhist Society of Western Australia Inc v Shire of Serpentine-Jarrahdale [1999] WASCA 55

Heartlink Ltd v Jones [2007] WASC 254; (2007) 35 WAR 190

McClure v The Mayor and Councillors of the City of Stirling [2008] WASC 164

McClure v The Mayor and Councillors of the City of Stirling [No 2] [2008] WASC 286

Naidoo v Williamson [2008] WASCA 179

ONE.TEL Ltd v Deputy Commissioner of Taxation [2000] FCA 270; (2000) 101 FCR 548

O'Neil v Mann [2000] FCA 1680

Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72

Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622

Real Estate and Business Agents Supervisory Board v Espanol Holdings Pty Ltd (in liq) [No 2] [2008] WASCA 109 (S)

Ruddock v Vadarlis [No 2] [2001] FCA 1865; (2001) 115 FCR 229

South-West Forests Defence Foundation (Inc) v Lands and Forest Commission [No 2] (1995) 86 LGERA 382

1 In 2007, the plaintiffs commenced these proceedings against seven named defendants. On 10 December 2008 I ordered that the seventh defendant be removed as a defendant in the proceedings. On 12 May 2009 orders were made by consent discontinuing the proceedings against the fifth and sixth defendants with no order as to costs. The plaintiffs now seek leave to discontinue the proceedings against the first to fourth defendants (the City of Stirling defendants).

2 The plaintiffs accept that leave is required for them to discontinue the proceedings: Heartlink Ltd v Jones [2007] WASC 254; (2007) 35 WAR 190.

3 It is not in dispute that leave to discontinue should be granted. The question is on what terms relating to costs. The plaintiffs seek an order that they be granted leave to discontinue on terms that there be no order as to costs. The City of Stirling defendants say that the plaintiffs should pay their costs of the action.

4 Order 23 r 2(3) of the Rules of the Supreme Court 1971 (WA) provides that the court may order an action to be discontinued 'upon such terms as to costs ... as may be just'. The court can exercise its discretion to make any costs order which is required by the justice of the case. The conduct of the parties in the proceedings and the reasons for the discontinuance can bear heavily on the exercise of the discretion as to costs: O'Neil v Mann [2000] FCA 1680 [13]. The court's discretion as to costs is very wide. See, in the context of s 37 of the Supreme Court Act 1935 (WA) and O 66 r 1, Naidoo v Williamson [2008] WASCA 179 [39].

5 It is convenient to outline the history of the proceedings before turning to the plaintiffs' contentions about the appropriate costs orders.

6 The plaintiffs commenced the proceedings in June 2007. They applied for ex parte interlocutory injunctions. On 27 June 2007 I declined to make any ex parte interlocutory orders.

7 After June 2007, the plaintiffs did not serve any papers or take any further steps in the proceedings until 11 April 2008 when they filed a notice of amended originating motion. The claims made in the amended notice of originating motion dated 10 April 2008 may be summarised as follows:

(1) Many of the plaintiffs are members of an association known as The Voice of Australia. They opposed an amendment to the Town Planning Scheme proposed by the City of Stirling. The amendment is referred to as amendment 458. Through the association, the plaintiffs sought to conduct a poll of constituents of the coastal ward of the City of Stirling in relation to the proposed amendment. From March 2007 to June 2007 they took steps to conduct this poll. By applications 1 - 3 of the notice of originating motion, the plaintiffs claimed:

(a) that officers and rangers of the City of Stirling threatened to seize the tent, signs and banners used by the association for the poll and, on one occasion seized the tent;

(b) injunctions restraining the rangers and officers of the City of Stirling, and various other defendants, from threatening to seize or seizing the polling tent or signs and banners, placed on Crown land for the purpose of a community consultative process, on the ground that the association The Voice of Australia does not have a permit to erect the polling tent or display the signs and banners;

(c) an injunction restraining the defendants from entering within 12 m of a polling booth while the community consultative process is being conducted.

Interlocutory injunctions in similar terms were also sought.

(2) Application 4 sought a finding that the plaintiffs had suffered damage by the wrongful conduct of the rangers and officers of the City of Stirling.

(3) Applications 5, 6 and 7 are of a different character. Applications 5 and 6 complain of the placing of amendment 458 on the agenda of the council meeting of 19 June 2007, and the passing of the resolution in respect of that amendment on that day, in the face of assertions and objections by two counsellors that the community consultative process regarding the amendment was flawed. Application 7 complains of the exercise by the Mayor of his casting vote in favour of the resolution. By application 7 the plaintiffs contend that the Mayor was not entitled to exercise a casting vote because s 5.21(3) of the Local Government Act 1995 (WA) is invalid; alternatively the plaintiffs say the Mayor was required to exercise his casting vote in favour of the status quo.

(4) Application 8 sought interlocutory injunctions restraining the Western Australian Planning Commission (the WAPC) and the Minister for Planning and Infrastructure (the Minister) from taking any further steps in relation to the amendment, pending the determination of applications 5, 6 and 7.

(5) Application 9 sought, in effect, a permanent injunction restraining the WAPC from dealing with amendment 458.

8 The plaintiffs' application for interlocutory injunctions first came before the court on 2 May 2008. Prior to that hearing, the written submissions of the fifth, sixth and seventh defendants made it clear that consideration of amendment 458 by the Minister was or was likely to be imminent. Paragraph 2 of the submissions dated 1 May 2008 stated that subject to any order of the court the Minister may consider the amendment on 6 May 2008. At the hearing on 2 May 2008 counsel for the fifth to seventh defendants stated that now he was instructed that the Minister's consideration of the amendment was likely to be later in May. Counsel made it clear that the defendants did not give any undertaking.

9 Over the following seven weeks the matter came before me several times, on 5 May 2008, 23 May 2008 and 19 June 2008.

10 On 5 May 2008 I ordered that the plaintiffs file and serve by 20 May 2008 all affidavits upon which they intended to rely. The plaintiffs did not comply with that order.

11 On 23 May 2008 I ordered that the plaintiffs file and serve by 6 June 2008 all affidavits upon which they intended to rely. The plaintiffs filed their affidavits on 9 and 10 June 2008.

12 At the directions hearing on 19 June 2008 it emerged that the plaintiffs wished to call witnesses to give oral evidence at the hearing of their application for interlocutory injunctions. It also emerged that the plaintiffs wished to apply to amend the application. On 19 June 2008 I made orders (among others) that the plaintiffs file and serve by 3 July 2008 any application to amend with submissions in support and that the plaintiffs file and serve by 26 June 2008 a list of witnesses from whom they proposed to adduce oral evidence with a statement setting out in detail the substance of the evidence proposed to be adduced. I ordered that the matter be adjourned to 24 July 2008 for the hearing of any application to amend and for further directions.

13 On 17 July 2008 the plaintiffs applied to amend the originating motion.

14 On 24 July 2008 the plaintiffs sought an adjournment of the hearing of the application to amend. I granted leave for the plaintiffs to file submissions in reply to the defendants' written submissions opposing the amendment application.

15 On 8 August 2008 I gave reasons refusing the application to amend and directing that all evidence on the plaintiffs' application for an interlocutory injunction be by affidavit: McClure v The Mayor and Councillors of the City of Stirling [2008] WASC 164. On 29 August 2008 I made orders to that effect and listed the plaintiffs' application for interlocutory injunctions for hearing on 12 November 2008.

16 On 28 October 2008 I heard and refused the plaintiffs' application for an adjournment of the hearing of the application for interlocutory injunctions listed on 12 November 2008.

17 On 12 November 2008 I heard the plaintiffs' application for interlocutory injunctions. I reserved my decision.

18 On 28 November 2008, after I reserved my decision on the application for interlocutory injunctions, the Minister approved the amendment with stated required modifications pursuant to s 87(2)(b) of the Planning and Development Act 2005 (WA). The effect of that decision was that the next step, in order to complete the amendment process, was that the City of Stirling make the modifications required. Once that occurred, the WAPC would then confirm that the required modifications had been made and submit the amendment (in its final modified form) to the Minister for approval.

19 On 10 December 2008 I delivered my reasons for refusing to grant the interlocutory injunctions: McClure v The Mayor and Councillors of the City of Stirling [No 2] [2008] WASC 286. I ordered that the applications for interlocutory injunctions be dismissed and that the costs of the application for interlocutory injunctions be reserved to the trial judge.

20 I declined to grant interlocutory relief under application 8 (restraining the Minister and the WAPC from dealing with amendment 458) on the ground that the plaintiffs' case was without merit and had not raised any arguable case to support applications 5, 6 and 7. I declined to grant any interlocutory injunctions against the City of Stirling defendants because I considered that:

(a) the plaintiffs' constitutional arguments, based on the implied freedom of communication on government and political matters, faced considerable difficulties; and

(b) an interlocutory injunction should not be granted on the basis of the constitutional arguments because the general approach - that the enactment of legislation should be respected until the legislation is declared invalid - applied, and the balance of convenience did not favour the grant of the interlocutory injunctions sought.

21 Following my decision and orders on 10 December 2008, the plaintiffs took no further steps to progress the hearing of these proceedings.

22 By letter dated 17 March 2009 the solicitors for the fifth and sixth defendants notified the Court that the Minister had given final approval of amendment 458.

23 Thereafter, the plaintiffs foreshadowed an application to discontinue with no order as to costs. On 12 May 2009 I ordered that the application be determined on the papers.

24 In essence, the plaintiffs put forward two primary grounds for the costs order that they seek. First, they say that they represented a public interest rather than a private interest in the litigation, and that this affords a justification to depart from the usual rule that costs should follow the event. Secondly, the plaintiffs say that, in any case, the rule that costs follow the event does not affect this case because there was no determination on the merits. The central object of the proceedings was to prevent what was then proposed as amendment 458 of the City of Stirling Town Planning Scheme from coming into effect. The amendment came into effect in March 2009. That meant, the submission continued, that a supervening event had substantially removed a central part of the subject matter of the proceedings.

25 I begin by outlining some relevant legal principles.

26 In Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622, McHugh J dealt with a question of costs in the context of a discontinuance in materially different circumstances. He set out principles 'which govern an application for costs when a party elects not to pursue an action because he or she has achieved the relief sought in the action either by settlement or by extra-curial means' (624). That is not the category in which the present case falls. Nonetheless, some of his Honour's observations may assist by analogy. McHugh J said as follows:

In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs: Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order: Latoudis v Casey (543, 566 - 568). When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.

In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between parties: Australian Securities Commission v Aust-Home Investments Ltd [1993] FCA 585; (1993) 44 FCR 194, 201. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action: Australian Securities Commission v Aust-Home Investments (201). ...

Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. ... But such cases are likely to be rare.

If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings (624 - 625).

27 In ONE.TEL Ltd v Deputy Commissioner of Taxation [2000] FCA 270; (2000) 101 FCR 548, Burchett J said as follows:

It is accepted that, in a case which terminates before there has been a hearing, the Court should not resolve the issue of costs by engaging in something in the nature of a hypothetical trial ... But this does not mean that the Court can never make an order for costs. Often, it will be unable to do so; but in other cases an examination of the reasonableness of the conduct of the parties, respectively, may provide the basis of an order ...

...

... What is well established is that frequently the determining factor will be the reasonableness of the conduct of the parties ...

...

In my opinion, it is important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event or settlement so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the Court's discretion otherwise than by an award of costs to the successful party. It is the latter type of case which more often creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs [5] - [6].

28 In Australian Securities Commission v Aust-Home Investments Ltd [1993] FCA 585; (1993) 44 FCR 194, 201, Hill J held that where proceedings terminate after the grant of interlocutory relief, the court may take into account the fact that interlocutory relief has been granted. In taking that into account, the fact that interlocutory relief was granted does not imply anything about the ultimate merits of the case apart from the existence of an arguable issue to be tried.

29 In my opinion, an analogous approach is to be taken to the converse case - where interlocutory relief has been refused. The refusal of interlocutory relief is to be taken into account in determining the appropriate costs order when a plaintiff subsequently seeks leave to discontinue. Moreover, the grounds of that refusal may be relevant.

30 The plaintiffs submitted that in these proceedings they represented a public interest rather than a private interest and that this gives rise to special circumstances justifying a departure from the usual approach to the exercise of the costs discretion.

31 The courts have 'emphasised ... that litigants espousing the public interest are not thereby granted an immunity from costs or a "free kick" in litigation': Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 [134].

32 If a body is set up to pursue causes, which its founders consider to be in the public interest, and which generally may be in the public interest, by means including court proceedings against others, it does not follow that those proceeded against should be deprived of the ordinary protection of a right to an order in respect of their costs in the event that claims made against them prove unfounded: Australian Conservation Foundation v Forestry Commission (1988) 81 ALR 166, 171; South-West Forests Defence Foundation (Inc) v Lands and Forest Commission [No 2] (1995) 86 LGERA 382, 384.

33 The High Court decision in Oshlack v Richmond River Council did not espouse a generally different approach to costs in 'public interest' litigation. The decision turned on its particular circumstances. The effect of that decision was explained by the Full Court in Buddhist Society of Western Australia (Inc) v Shire of Serpentine-Jarrahdale [1999] WASCA 55 as follows:

The matter was considered by the High Court in the context of legislation providing an unfettered discretion to the court in relation to an award of costs in Oshlack v Richmond River Council [1998] HCA 11; (1998) 72 ALJR 578. The court reaffirmed that the ordinary rule would always be that a successful defendant should be awarded its costs, but in the case before the court, the majority concluded that there were special circumstances derived from the public interest character of the litigation sufficient to warrant the trial Judge exercising his discretion to decline to award costs to the successful party. At 588 Gaudron and Gummow JJ were persuaded to that view by the fact that the unsuccessful party pursued the litigation to secure the observance of legislation enacted for the benefit of the public or a section of the public, for the preservation of endangered fauna, in circumstances where there was an identifiable public interest in the outcome of the litigation and no identifiable private interest in its success. In addition a significant factor was said to be the identification and resolution of important issues concerning the interpretation and future administration of the relevant statutory provisions. Kirby J expressed a similar view [9].

34 Further, as the Court of Appeal explained in Real Estate and Business Agents Supervisory Board v Espanol Holdings Pty Ltd (in liq) [No 2] [2008] WASCA 109 (S) [3], Mr Oshlack had proceeded under s 123 of the Environmental Planning and Assessment Act 1979 (WA) which provided that any person might bring proceedings for an order to remedy or restrain breaches of that Act. That statutory conferral of standing on a member of the public was an important factor in the decision of the majority in Oshlack.

35 As Black CJ and French J said in Ruddock v Vadarlis [No 2] [2001] FCA 1865; (2001) 115 FCR 229 [21], there is no general principle emerging from Oshlack that the usual order as to costs should not apply if the subject matter of the litigation is a matter of 'public interest'.

36 In Buddhist Society of Western Australia v Shire of Serpentine-Jarrahdale the Full Court expressed the view that 'great care must be taken with the concept of public interest litigation that it does not become an umbrella for the exercise of discretion with respect to costs in an unprincipled, haphazard and unjudicial manner' [11]. The Full Court said that the denial of costs to successful litigants upon the ground that the litigation bears a public interest character should continue to be a rarity [11].

37 Moreover, to say that a case was of a 'public interest' character does not identify the particular circumstances which might lead to a departure from the usual approach to the exercise of the costs discretion: see Ruddock v Vadarlis [14] and [19].

38 That a proceeding was brought otherwise than for the personal or financial gain of the plaintiff, and in that sense in the public interest, does not detract from the general proposition that ordinarily costs follow the event and that the primary factor in deciding on the award of costs is the outcome of the litigation: Ruddock v Vadarlis [18].

39 In Ruddock v Vadarlis, Black CJ and French J considered recommendation 45 of the Australian Law Reform Commission Report Costs Shifting - Who Pays for Litigation (Report No 75). The ALRC recommended that statutory provision be made for public interest costs orders by federal courts and tribunals. It sought to define public interest by setting out as conditions for the making of such orders that the court or tribunal be satisfied that:

the proceedings will determine, enforce or clarify an important right or obligation affecting the community or a significant sector of the community;
the proceedings will affect the development of the law generally and may reduce the need for further litigation;
the proceedings otherwise have the character of public interest or test case proceedings.

40 The plaintiffs' submissions in the present case sought to invoke that recommendation. Black CJ and French J held that those conditions are unlikely to lead to the refusal of an award of costs to a successful party [20].

41 Some of these statements of principle are couched in terms of departure from the usual approach that costs follow the event. Nevertheless, the statements seem to me to provide valuable guidance as to whether and in what circumstances the 'public interest' character of a case warrants a departure from the usual approach to costs generally (even where there has been no determination on the merits).

42 As to costs in 'public interest' cases, see, generally, Dal Pont GE, Law of Costs (2nd ed, 2009) ch 9.

43 In my opinion, the history of the proceedings reveals the following:

(a) From the beginning of these proceedings, a decision by the Minister to approve the amendment, thereby bringing it into legal effect, was always in prospect.

(b) When the matter was first before the court in May 2008, counsel for the Minister and WAPC made it clear that the Minister's consideration of amendment 458 was likely to be imminent. That position never changed.

(c) Consequently, the plaintiffs commenced and prosecuted these proceedings in circumstances where it was always in prospect that the Minister could approve the amendments, thereby rendering part of the proceedings futile, unless the plaintiffs were successful in obtaining the interlocutory injunctions.

(d) Notwithstanding that, the plaintiffs failed to progress the proceedings with any reasonable degree of expedition.

(e) The plaintiffs sought interlocutory relief restraining the Minister and the WAPC from taking any further steps in relation to the amendment. They failed in that application.

(f) Moreover, the proceedings against the City of Stirling defendants also included other claims not directly affected by the Minister's approval of the amendment.

44 In those circumstances, I do not consider that the fact that the Minister approved amendment 458 (in a modified form) prior to the hearing and determination of the proceedings affords a ground to make no order as to costs. Rather, in my opinion, the plaintiffs' commencement and conduct of the proceedings, in substance, took the risk that the application for interlocutory relief might fail and that the Minister might approve the amendment before the substantive proceedings were heard and determined. In the circumstances it seems to me that the appropriate costs orders are that the plaintiffs pay the first to fourth defendants' costs.

45 The plaintiffs have filed affidavits, statements and other material in support of their application for leave to discontinue with no order as to costs. I have considered all of this material, although I do not propose to summarise all of it.

46 The material includes evidence to the effect that the plaintiffs' motives in instituting the proceedings were not personal financial gain, but to allow further public consultation before any amendment occurred; to seek a fair cross-section of the public's opinion on high-rise development by referendum; and to identify a flawed community consultation process. In determining the appropriate costs orders, attention must be directed primarily to the character of the litigation rather than the subjective motivation of the litigants: Oshlack v Richmond River Council [140].

47 In the circumstances, I am not persuaded that the character of the claims made by the plaintiffs justifies a departure from the usual or general approach to the exercise of the costs discretion.

48 The material filed by the plaintiffs in relation to costs includes facts about the background to the involvement of the plaintiffs in these proceedings. I refer in particular to the 'background statement' attached to the affirmation of Janet Pearce dated 24 July 2009.

49 Among the matters contained in the background statement are facts and evidence relating to what one of the plaintiffs, Mr Malcolm McClure, is said to have said and done (and not done). Any legitimate grievances which the other plaintiffs may have with Mr McClure in relation to his conduct of the proceedings on behalf of the plaintiffs are not significant to the proper exercise of the cost discretion as between the plaintiffs and the first to fourth defendants. Any such grievances must be dealt with as between Mr McClure and the other plaintiffs.

50 For the reasons I have given, I make the following orders:

The plaintiffs have leave to discontinue the proceedings.
The plaintiffs pay the first to fourth defendants' costs of the proceedings, such costs to be taxed if not agreed.

Development Act 2005

Planning and Assessment Act 1979

McCLURE -v- THE MAYOR AND COUNCILLORS OF THE CITY OF STIRLING [No 3] [2009] WASC 247 (7 September 2009)

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Judgment (92 paragraphs)

McCLURE -v- THE MAYOR AND COUNCILLORS OF THE CITY OF STIRLING [No 3] [2009] WASC 247 (7 September 2009)

Legislation Cited (4)

Cases Cited (10)