Millers Point Fund Incorporated v Lendlease

The power of the Court to grant costs

1. The general rule is that costs are to follow the event, as set out in r 42.1 of the Uniform Civil Procedures Rules 2005 (NSW) ('UCPR') as follows: Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs.
2. The power of the Court to make orders as to costs is provided for in s 98(1) of the Civil Procedure Act 2005 (NSW), which states: (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 (c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis.
3. Rule 4.2(1) of the LEC Rules, which applies to proceedings in Class 4 of the Court's jurisdiction, states as follows: (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.
4. Rule 1.7 of the UCPR, read in conjunction with Sch 2, provides that rules of the Land and Environment Court are to prevail over the UCPR.
5. Accordingly, the proper basis for making the orders sought in this matter is, as identified by the applicant, r 4.2(1) of the LEC Rules.

Applicant's submissions

1. The applicant submits that the Court should exercise its discretion under r 4.2(1) of the LEC Rules to decline to make an order of costs against it, as the Proceedings were brought in the public interest.
2. The applicant relies on the three step approach formulated by Preston CJ of LEC in Caroona Coal Action Group Inc v Coal Mines Australia Pty Ltd (No 3) (2010) 173 LGERA 280; [2010] NSWLEC 59 ('Caroona Coal') at [13] to demonstrate that the matter is one to which r 4.2(1) of the LEC Rules applies. The three steps, as summarised by the applicant, are: 1. whether the litigation can be characterised as having been brought in the public interest; 2. whether there is "something more" than a mere characterisation of the litigation as having been brought in the public interest; and 3. whether there are "countervailing circumstances" that speak against departure from the usual rule on costs.

Characterisation as public interest litigation

1. In relation to whether the Proceedings were brought in the public interest, the applicant submits that it is a community association formed for the public interest of protecting natural and built environment, and supporting public recreational space. By way of further background, the applicant submits that it was formed by a long-standing community group that had been concerned with preservation in the local area since 1969. The applicant submits that the Proceedings were brought to challenge what the applicant believed were unlawful planning decisions, and reflect the applicant's belief that the public interest was best served in retaining the space as a public park.
2. The applicant submits that the 'public' who would benefit from the Proceedings extends beyond the local residents to include potential workers and visitors to Barangaroo, who would also be affected by the loss of the park. The applicant further submits that the Proceedings were brought to enforce public law obligations in the sense of ensuring proper decision-making by statutory bodies, and noted that this is a matter of public interest particularly in circumstances where private development rights were granted in respect of land previously set aside as public open space.
3. Finally, the applicant submits that it had no pecuniary interest in the outcome of the Proceedings.

Circumstances in addition to mere characterisation

1. The applicant submits, relying on Caroona Coal at [56], that "something more" than mere characterisation of proceedings as being in the public interest is not always necessary, but may in the circumstances be required. The applicant also notes, relying on Anderson on behalf of Numbahjing Clan within Bundjalung Nation v NSW Minister for Planning & Ors (No 2) [2008] NSWLEC 272; (2008) 163 LGERA 132 at [10], that the magnitude of the public interest alone may be sufficient to warrant departure from the usual rules as to costs.
2. In any case, the applicant submits that there are five categories of circumstances set out in Caroona Coal at [60] that warrant departure from the usual costs rule, and that the Proceedings fall within all five categories. The categories are: 1. the litigation raises one or more novel issues of general importance; 2. the litigation has contributed, in a material way, to the proper understanding, development or administration of the law; 3. where litigation is brought to protect the environment or some component of it, the environment or component is of significant value and importance; 4. the litigation affects a significant section of the public; and 5. there was no financial gain for the applicant in bringing the proceedings.

Countervailing considerations

1. The applicant submits that the countervailing circumstances that speak against departing from the usual rule on costs are set out in Caroona Coal at [61], and include situations where: 1. the applicant is seeking to vindicate rights of a commercial character and stands to benefit from the litigation; 2. the applicant is an incorporated association and the litigation would legally or financially affect the private interests of members of the association; 3. the applicant is supported financially by persons or bodies who would benefit from, or would have their legal or financial interests affected by, the outcome of the litigation; 4. the public interest raised is narrow, such as involving only a discrete point of interpretation without broad ramifications; or 5. the applicant has conducted the litigation with impropriety or unreasonableness.
2. The applicant submits that none of these circumstances apply to the Proceedings, and that the applicant "…conducted itself reasonably throughout the litigation and has pursued only issues that were eminently arguable…".

Consideration

1. It is in the interests of justice that members of the public have access to the courts to remedy or restrain breaches of public law; see Oshlack v Richmond River Shire Council (1994) 82 LGERA 236 at 238 per Stein J; Anderson (on behalf of Numbahjing Clan within Bundjalung Nation) v NSW Minister for Planning (No 2) (2008) 163 LGERA 132 at [19]-[20]. The cost of litigation is however often prohibitive, particularly in cases such as the present matter, where the respondents are corporations and government departments who are better resourced than the applicant. It is important, particularly for environmental matters, that cost is not a barrier in pursuing environmental justice and that important questions of law are able to be resolved by the Court. Rule 4.2(1) of the LEC Rules is reflective of this principle, and allows for applicants to bring significant issues of public interest to the Court.
2. The 'public interest' is however a nebulous concept that is susceptible to competing interpretations. This is particularly apparent in the context of environmental law - where a development that requires clearing of land might be construed as being against the public interest on one hand because of the destruction of the natural environment, but in favour of the public interest on the other hand because of the jobs created by the development; see for example Bridgetown/Greenbushes Friends of the Forest Inc v Executive Director, Department of Conservation and Land Management (1997) 18 WAR 102 at 106-107.
3. In the context of this ambiguity, it is important that the Court abide by established principles in determining whether a matter falls within the 'public interest' so as to ensure consistency. As stated by McHugh J in Oshalck v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [72]: If discretions concerning costs are to be exercised consistently and rationally, it is essential that the courts formulate principles and guidelines that can be applied with precision in most cases. If characterisation as "public interest litigation" is a factor to be considered when making costs orders, courts must be able to define the term with precision. They must eschew any notion of the "I know it when I see it" type of reasoning [Jacobellis v Ohio (1964) 378 US 184 at 197 per Stewart J concurring]. If courts are to retain the confidence of litigants and the wider community, they must continually reaffirm and demonstrate that their decisions are based on objective reasons that are articulated and can be defended…
4. To that end, I adopt the three step approach set out in Caroona Coal.

Characterisation as public interest litigation

1. In the present circumstances, it is clear that there is a public interest in preserving park area for recreation and enjoyment, as contrasted against a privately owned casino. Further, while the applicant was formed by representatives from the Millers Point area, as submitted by the applicant, the public park area would have been accessible to the general public. As such, the proceedings concerned a broad sector of community beyond local residents - extending to those working in and visiting what is envisaged to be a major Sydney landmark; see Darlinghurst Residents' Association v Elarosa Investments Pty Ltd (No 3) (1992) 75 LGRA 214 at 215.
2. The Proceedings involved public law obligations, as the primary issue in contention was whether the PAC, a statutory body, had properly exercised its powers under statute.
3. The applicant submits and has filed evidence in the form of an affidavit sworn on 10 February 2017 by John McInerny, President and Chairperson of the applicant, that its prime motivation in initiating the Proceedings was to "…enforce public law obligations regarding the development of public land." The applicant further submits that it has no pecuniary interest in the outcome of the Proceedings, and that there is no evidence before the Court that any member of the applicant had such an interest.
4. I take into account the fact that the respondents did not rely on any evidence or submissions in relation to this Motion, and in the circumstances I accept the applicant's submission and find that the Proceedings can be characterised as being brought in the public interest.

Circumstances in addition to mere characterisation

1. I adopt the applicant's submission that the Proceedings raised novel issues with regard to: 1. the extent to which the Director-General (or Secretary's) requirements are mandatory considerations; 2. the interpretation of the Casino Control Act 1992 (NSW); 3. contemporary interpretation as to the interplay between gaming/licensing and planning laws; and 4. the scope of s 75W of the EPA Act.
2. The applicant raised four separate grounds in the Proceedings, which were each complex and involved sophisticated legal argument. The claim concerned complicated questions of statutory construction and required detailed consideration regarding the nature of statutory powers and administrative decision-making. The evidence relied upon was extensive, and reflective of the complexity of the claim. The circumstances of this case are readily distinguishable from those of Caroona Coal, where Preston CJ of LEC accepted at [86] that: …the case turned on the application of well-known and undisputed principles of statutory construction…
3. Accordingly, I find that the claim made by the applicant in the Proceedings was established and arguable, and involved novel legal issues which contributed to the proper understanding of the law.
4. The fact that the Proceedings concerned a component of the environment that is of significant value and importance is demonstrated by the nature of Barangaroo - which is a significant development on the Sydney Harbour foreshore. The reservation of particular sections as public recreational space was a key aspect of the development of Barangaroo and should be considered as of significant value and importance. Further, as evidenced by the affidavit of Mr McInerney, the development the subject of the application generated significant controversy and public interest, a matter which can be taken into account in identifying the "something more" as per Stein J in Oshlack v Richmond River Shire Council (1994) 82 LGERA 236 at 245-246.
5. In the circumstances I am satisfied that the Proceedings contained "something more" than mere characterisation as being in the public interest.

Countervailing considerations

1. Having found that the Proceedings were properly initiated in the public interest, there is no evidence before me of any countervailing circumstances which speak against departing from the usual rule on costs. There is no indication that the applicant or any of its members have sought to vindicate rights of a commercial character, nor that they would benefit legally or financially from the Proceedings.
2. I am satisfied that the applicant has conducted the Proceedings reasonably and with propriety.

Conclusion

1. I am satisfied that the Proceedings concerned matters of public interest of application to a broad section of the community. I accept that the applicant initiated the Proceedings primarily for the purpose of resolving complex legal questions concerning significant environmental issues. In the absence of countervailing circumstances warding against the departure from the usual order on costs, I find it is appropriate to exercise the discretion provided for under r 4.2(1) of the LEC Rules to not make an order for the payment of costs against the applicant, as I am satisfied that the Proceedings were brought in the public interest.

Orders

1. The Court orders that: 1. Pursuant to r 4.2(1) of the LEC Rules, each party is to pay its 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 March 2017