Mills and Ors V Department of Land and Water Conservation and Ors [1999] NSWLEC 254

Land and Environment Court (NSW)|1999-11-19|Before: Bignold J

The Applicant's claim to costs is based upon their success in the appeal proceedings in this Court.

It is conceded that the Court's statutory power in respect of costs extends to "the costs of the proceedings giving rise to the appeal, as well as the costs of the appeal" : vide the Land and Environment Court Act 1979 s 69(1)(b).

However, each Respondent asks the Court in the exercise of its broad discretion to refuse the Applicant's application for costs.

The nature of the proceedings before the Local Land Board should be noted. They involved the conduct of an inquiry into the determination of the Ministerial Corporation to grant the second Respondent's application for the controlled work, such inquiry being instigated by the Ministerial Corporation's mandatory reference to the Board "for inquiry and report" pursuant to the Water Act s 171(5) of its determination, together with each objection raised against the application.

At the inquiry conducted by the Board, the Applicants appeared as "local occupiers" (or as persons) "whose interests may be affected by any matter the subject of the inquiry", being entitled by the Water Act s 173(2) "to make submissions in relation to the determination".

The hearing of the proceedings before the Board occupied 15 days over a discontinuous period commencing on 26 September 1995 and concluding on 17 September 1997. The Board's decision which was announced on 24 November 1997 was to confirm the determination of the Ministerial Corporation to grant approval to the second Respondent's application for the controlled work.

The Board made no order as to costs in respect of the inquiry that it had conducted.

On 17 December 1997, the present Applicants appealed to this Court against the Board's decision, pursuant to the Water Act s 174(4).

The hearing of the appeal was originally fixed for four days (26-29 October 1998). However, on 12 October 1998, the Registrar upheld the second Respondent's Motion to vacate the hearing on the ground that expert evidence in reply filed by the Applicants had raised fresh issues which the second Respondent wished to answer by filing further expert evidence. The Registrar gave further directions for the filing of additional expert evidence.

On 12 October 1998, fresh hearing dates (11, 14, 15 and 16 December 1998) were fixed for the hearing of the appeal.

It is clear from the history of the appeal that up to this point at least, the parties were preparing their respective cases on the basis (assumed or deliberate) that the hearing by this Court would involve consideration of the case afresh by this Court.

However, on 30 November 1998, the second Respondent filed a Notice of Motion seeking the reduction of the hearing from four to two days and for further directions. That Motion, which came before Talbot J on 2 December 1998, was supported by an affidavit sworn by the second Respondent's Solicitor stating inter alia that the four days allocated for the hearing would not be sufficient if the hearing were to proceed de novo with all of the witnesses being examined, and expressing the opinion based upon my decision in Tandou Ltd v Western Lands Commissioner (1996) 92 LGERA 16 that it was appropriate that the appeal proceed by way of re-hearing on the basis of the transcript of evidence before the Board.

Talbot J delivered judgment on the second Respondent's Motion on 4 December 1998 holding that the appeal, pursuant to the Water Act s 174(4) was an appeal by way of hearing de novo.

However, his Honour went on to express the following additional opinions:
Whether the Court relies on the record of the earlier proceedings, either in whole or in part, is a matter to be decided according to the circumstances of each case. Hopefully in the majority of cases, this will be pursuant to an agreement reached by the parties.
Similarly, whether fresh evidence or different evidence or additional evidence is given must be decided on a case by case basis.
It is open for the Court to rely on evidence which is a combination of the above.

At the commencement of the hearing of the appeal, the second Respondent (supported by the first Respondent) urged me to reconsider the question of the true nature of the appeal submitting that it did not involve a hearing de novo.

Over the Applicants' objection, I heard argument on the question and decided that the appeal did not involve a hearing de novo, but was an appeal by way of re-hearing - see pars 3 to 7 of my reasons for judgment delivered on 5 August 1999.

It was after I had announced my decision on that matter (and reserved as a separate issue the question whether the Court would receive fresh evidence) that the parties agreed that in the first instance the Court should determine, on the basis of the evidence received by the Board, whether the Board had fallen into material legal or factual error such that its decision could not be allowed to stand - see pars 8 to 12 of my earlier judgment.

Thereafter, the competing cases were presented by the parties (i) taking the Court to the transcript of the proceedings before the Board and to the documentary evidence that was received by the Board and (ii) advancing their submissions.

In my reasons for judgment, delivered on 5 August 1999, I concluded that the appeal must be allowed. The following orders were made:
Appeal be allowed.
Decision of the Local Land Board dated 24 November 1997 be set aside.
Determination of Ministerial Corporation dated 26 July 1995, granting approval under the Water Act 1912 s 171 be cancelled.
Exhibits be returned.
Question of costs be reserved.

In my reasons for judgment, I dealt with the following issues which had been raised and debated before me - (i.) The disputed question of statutory construction (ii.) The true meaning of the statutory provisions for the determination of an application for approval for a controlled work. (iii.) The Applicants' attack on the Local Land Board's decision. (iv.) The Respondents' reliance upon the Water Act s 4A

It is important to note the disputed question of statutory construction which was raised by both Respondents had not been raised in the proceedings before the Board. However, the matter goes beyond that point because the proceedings before the Board had been conducted on the common assumption that the issue for determination was whether the controlled work for which approval had been granted "is likely to affect, materially and prejudicially, the distribution of flood waters in the vicinity of the work" and that the objectors bore the onus of establishing that would be the effect of the approved controlled work - see par 13 to par 18 of my earlier judgment.

Before this Court, the Respondents disavowed that common assumption, contending that it "betrayed a serious misunderstanding of the relevant provisions of Pt 8 of the Water Act governing the determination of an application for approval of a controlled work" (par 19 of my earlier judgment).

Instead, the Respondents submitted that the relevant statutory phrase in the relevant sections of the Water Act "only operated to limit the statutory discretion conferred upon the Ministerial Corporation to (i) impose conditions on the grant of approval or (ii) to refuse to grant approval" (par 20 of my earlier judgment).

The Respondents' submissions raised the very important question:

whether the Water Act confers upon (i) the Ministerial Corporation (at first instance); (ii) the Local Land Board (on a referred determination); and (iii) this Court (on appeal from the decision of the Local Land Board) a discretion to grant approval to an application for approval for a " controlled work " in circumstances where it is satisfied that the controlled work " is likely to affect, materially or prejudicially, the distribution of flood waters in the vicinity of the work ". ( par 24 of my earlier judgment )

In the result, I upheld the Applicant's argument on the disputed question of statutory consideration by holding:

that the Water Act s 171 and s 174 do not confer the power to grant approval to an application for a controlled work in circumstances where the statutory condition applies. Rather, in such circumstances, there is the duty imposed on both the Ministerial Corporation and the prescribed tribunal to refuse to grant approval unless it is satisfied that by imposing appropriate conditions on the grant of approval, the compliance with those conditions would avoid breach of the statutory condition. : par 52 of my earlier judgment

Ultimately, the Applicants entirely succeeded on each of the issues that had been raised and debated before me. I need not repeat my reasons for so holding or finding, but merely adopt by reference, the reasons for my earlier judgment.

D. HOW SHOULD THE COURT EXERCISE ITS STATUTORY DISCRETION IN RELATION TO COSTS?

As earlier noted, the Applicant's claim for costs is based upon the fact that it was entirely successful in the proceedings before this Court and that it would likewise have been successful before the Board (but for the Board falling into material error in its understanding and application of the statutory test to the evidence before the Board).

However, concerning their claim to costs of the proceedings before the Board, the Applicants acknowledge not only that the Board did not make any costs order in the proceedings but that the practice of the Board is generally not to make costs orders in proceedings conducted before the Board.

There is no doubt that the Board is vested with the power to make a costs order: vide Crown Lands Act 1989 cl 5 of Schedule 2 (which in s 20 constitutes a local land board for every land district) providing as follows:

A local land board may order any party to proceedings before the local land board under this or any other Act to pay the whole or part of the costs of the proceedings.

(In passing, it is to be noted that local land boards previously existing under the Crown Lands Consolidation Act 1913 were not vested with a general costs power, the only costs power being limited to proceedings, by way of complaint, enumerated in that Act s 16(1) ).

Because the question involves a matter of practice and procedure, I have inquired of the Board's practice and am satisfied that ordinarily, the Board does not make costs orders in proceedings conducted before it, and more particularly, in proceedings under the Water Act 1912.

In these circumstances, I do not think it appropriate that any costs order should be made in respect of the proceedings before the Board. This result is supported by principle, and by the practice of the Court of Appeal in hearing appeals from this Court in proceedings falling within classes 1 and 2 of this Court's jurisdiction where the long established practice of this Court is not to order costs, save for exceptional circumstances: vide par 10 of the Court's Practice Direction 1996.

This leaves for decision the question whether the successful Applicants should be awarded their costs of the proceedings in this Court.

As noted earlier, each Respondent opposes the order. The first Respondent submits that it did not participate in the proceedings as a protagonist, and submits that the Court would assimilate its participation to that of an amicus curiae.

The position and role of an amicus curiae is described in the judgment of Hutley JA in Corporate Affairs Commission v. Bradley (1974) 1 NSWLR 391 at 398 to 399 where his Honour quotes the definition contained in Jowitt's Dictionary of English Law:

A friend of the Court, that is to say a person, whether a member of the Bar not engaged in the case or any other bystander, who calls attention of the Court to some decision, whether reported or unreported, or some point of law which would appear to have been overlooked.

In my judgment, it would be entirely inappropriate to liken the participation in the proceedings of the first Respondent to that of amicus curiae. Clearly, the first Respondent was a party to the proceedings and its participation was in no way confined to that conventionally discharged by an amicus curiae. Indeed, as I have pointed out, the first Respondent joined with the second Respondent in agitating the disputed question of statutory construction.

The second Respondent, in resisting a costs order, also relies upon the history of the proceedings in this Court, including the time spent on the question of the true nature of an appeal pursuant to s 174(4) of the Water Act.

However, as I have already pointed out, it was the second Respondent that belatedly (ie just a few weeks prior to the fixed hearing date) raised the question of the true nature of the appeal and before Talbot J, the second Respondent failed on that issue.

I do not think anything turns upon the fact that as the trial Judge, I entertained the Respondents' joint submission to revisit that question at the outset of the hearing and ultimately accepted their joint submission. Revisiting the question only occupied two hours of the hearing and the result was to considerably reduce the amount of hearing time than would otherwise have been required, had the appeal proceeded as a hearing de novo.

In short, there can be no criticism of the Applicant's conduct of the appeal, which was undertaken with commendable efficiency and despatch.

In the result, the determination of the question of costs must be undertaken against the background facts of the Applicants (i) being entirely successful in the proceedings; and (ii) not being guilty of any disentitling misconduct in the litigation.

How should the Court exercise its statutory discretion in the present case?

The Court is vested with a very broad discretion in relation to costs by the Land and Environment Court Act 1979 s 69 (the LEC Act) subsection (2) providing as follows:

the Court may determine by whom and to what extent costs are to be paid.

This statutory provision is substantially the same as that contained in of the Supreme Court Act 1970 s 76(1)(a) and (b) , and both provisions can be traced back to O 55 of the Rules of Court contained in the Supreme Court of Judicature Act 1875 (UK): see Oshlack v Richmond River Council (1998) 193 CLR 72 at 95 - 96 per McHugh J.

In Oshlack, the High Court divided in its opinion on the factors that were relevant to the judicial exercise of the statutory costs power and in particular, upon the questions (i) whether the characterisation of the relevant proceedings as "public interest litigation" was a relevant factor, and (ii) whether the "costs follow the event" approach had become so universal as to supplant the exercise of discretion.

The majority judgments were given by the Gaudron and Gummow JJ (jointly) and Kirby J. The minority judgments were given by Brennan CJ and McHugh J.

There is no need in the present case to pursue the High Court's consideration of the concept of "public interest litigation" because it has not been suggested that the present proceedings should be characterised as public interest litigation.

In respect of the place in the exercise of the Court's discretion of the "costs follow the event" approach, the majority held:

(T)here is no absolute rule with respect to the exercise of the power conferred by a provision such as s69 of the Court Act that, in the absence of disentitling conduct, a successful party is to be compensated by the unsuccessful party…at 88 per Gaudron and Gumow JJ,

But the compensatory principle cannot be treated as an absolute principle: at 121 per Kirby J

Earlier, Gaudron and Gummow JJ had held at 86 and 87:

At bottom in the present case is the question whether rules of practice with respect to similarly expressed provisions in legislation applicable in other species of litigation have so hardened `that they look like rules of law' ( McDermott v The King (1948) 76 CLR 501 at 514 .), which render irrelevant to the exercise of the discretion conferred by s 69 those considerations to which the Council successfully objected in the Court of Appeal.

Implicit in the submissions for the Council is the proposition that, so strongly determinative of a discretion conferred in broad terms by a provision such as s 69 of the Court Act are the considerations (i) that the court must determine the matter from the perspective of the successful party, (ii) that the successful party ordinarily should be compensated by the unsuccessful party for the expense of the litigation, and (iii) that the successful party will be deprived of costs only by disentitling conduct, that they are to be displaced only by specific legislative provision. Examples of such legislation would include that construed in Gray v Lord Ashburton ([1917] AC 26.) and Tekmat Investments Pty Ltd v Ward ((1988) 65 LGRA 444) so as to permit an order which burdened a successful party with the costs of others. The Council's proposition should not be accepted.

The minority judgment of McHugh J (concurred in by the Chief Justice) analyses (at 96 and 97) the jurisprudential basis for the important principle commonly referred to as the " usual order as to costs " which his Honour expounds in the following passage at 97:

The expression the usual order as to costs embodies the important principle that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour. The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party ( Latoudis (1990) 170 CLR 534 at 543, per Mason CJ; at 562-563, per Toohey J; at 566-567, per McHugh J; Cachia v Hanes (1994) 179 CLR 403 at 410, per Mason CJ, Brennan, Deane, Dawson and McHugh JJ.). If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation.

Ultimately, and with respect, I would understand the different judgments in Oshlack to diverge on the question of the status or place of the " costs follow the event " approach to the exercise of judicial discretion on costs, as a consequence of their divergence on the question of the relevance in the exercise of discretion of the trial judge's classification of the proceedings as involving " public interest litigation ".

The significance of such an understanding of the different judgments in Oshlack is that in a case such as the present which involves no element of "public interest litigation", the exercise of the Court's costs power will ordinarily give effect to "the usual costs order" or the "compensatory principle", namely, that subject to certain limited exceptions, the successful party to litigation is entitled to an award of costs in its favour

Obviously, Oshlack must now be regarded as the definitive exposition of the nature of the Court's discretion as to costs conferred by s 69 of the LEC Act, and accordingly, it provides the foundation for the determination of the present disputed Motion for costs.

Application of the Oshlack principle to the present case inevitably leads, in my opinion, to the conclusion that the successful Applicants are entitled to an award of costs against the Respondents.

Is there any reason in the practice of the Court for departing from such a clear result in the present proceedings which fall within class 3 of the Court's jurisdiction : vide the LEC Act s 19(a)?

It must be recognised that before the High Court's judgment in Oshlack there were cases within class 3 jurisdiction where this Court had adopted different approaches to the exercise of the statutory costs discretion. However, it is not necessary to discuss the cases in any depth (other than to note that some of them are digested in the Law Book Company's Court Practice at par 2.6025) because of the subsequent introduction into the Court's Practice Direction 1996 of par 10A which states:

The practice of the Court is that no order for costs is made in valuation appeals, farmland rating appeals (and other rating appeals), and subdivision appeals in class 3 of the Court's jurisdiction, unless the circumstances are exceptional.

Clearly, this paragraph extended to the certain specified Class 3 proceedings, the long established Court practice generally of not awarding costs in proceedings in classes 1 and 2. However, it is also clear that the practice was not extended to apply to all proceedings in class 3 (as to which see the LEC Act s 19) and in particular, to proceedings such as the present proceedings.

Accordingly, there being no established practice of the Court against awarding costs in proceedings such as the present, save for exceptional circumstances, there is no reason why in the present case, the Court should not exercise its statutory discretion in accordance with the principle that costs should follow the event.

In so concluding, there is no reason to distinguish between the Respondents concerning their liability for such a costs order because each of them fully participated in the proceedings in resisting the Applicants' appeal.

For the foregoing reasons, I order the Respondents to pay the Applicants' costs of the proceedings in this Court in the sum agreed, or failing agreement, as assessed.

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.

Land and Environment Court of New South Wales CITATION: Mills and Ors V Department of Land and Water Conservation and Ors [1999] NSWLEC 254

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