Muswellbrook Shire Council v Hunter Valley Energy Coal Pty Ltd

Background

1. The proceedings related to the Mt Arthur Coal Rehabilitation Strategy ('Rehabilitation Strategy') prepared by HVEC and approved by the Secretary.
2. I do not repeat the background facts and findings detailed in the primary judgment except to record that in summary, Council contended that the Rehabilitation Strategy did not comply with the objective requirements of a condition in the Modified Project Approval for the Mt Arthur Coal Mine. The condition required, inter alia, that the proponent prepare a rehabilitation strategy to the satisfaction of the Secretary. Council submitted that in the circumstances, the Secretary was not able to form a valid state of satisfaction.
3. Council further contended that the rehabilitation works being undertaken in reliance upon the Rehabilitation Strategy were thus being conducted unlawfully and should be restrained.
4. In the primary judgment, I found that Council had not made out any grounds of its challenge, and on that basis dismissed the proceedings.

The power of the Court to order costs

1. 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) ('CPA'), 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.
2. The general rule is that costs 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.
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. Pursuant to s 11 of the CPA and r 1.7 and Sch 2 of the UCPR, the LEC Rules prevail over the UCPR only to the extent of any inconsistency between them. Briefly stated, the Court preserves its discretion to make an order other than "costs follow the event" if it considers it appropriate to do so.

Council's submissions in relation to both respondents

1. Council submits that the Court should exercise its discretion under r 4.2 of the LEC Rules to decline to make an order for costs against it as the proceedings were brought in the public interest. Council adopts the three-step approach considered by Preston CJ of LEC in Caroona Coal Action Group Inc v Coal Mines Australia Pty Ltd (No 3) [2010] NSWLEC 59; (2010) 173 LGERA 280 ('Caroona Coal') at [13] to justify a departure from the usual costs rule. This approach involves: first, characterisation of the litigation as public interest litigation; second, consideration of whether there are issues in addition to mere characterisation; and third, consideration of whether there are countervailing circumstances.

Characterisation as public interest litigation

1. In relation to whether the proceedings were brought in the public interest, Council addresses the five considerations espoused by Lloyd J in Engadine Area Traffic Action Group Inc v Sutherland Shire Council (No 2) [2004] NSWLEC 434; (2004) 136 LGERA 365 ('Engadine') at [15], being: 1. the public interest served by the litigation; 2. the width of the public interest; 3. the enforcement of public law obligations; 4. the motivation behind the litigation; and 5. the applicant's financial or proprietary interest in the outcome of the litigation.

The public interest served by the litigation

1. Council submits that because the proceedings concerned the rehabilitation of a sizeable area of land disturbed by coal mining, the following matters of public interest are affected: public safety; the stability of the closed mine site; the potential for pollution emanating from the closed mine site; the lasting visual amenity of the closed mine site; flood interaction risk with surrounding land; and, rehabilitation of aquatic habitats and native vegetation. Council further submits that minimising the adverse socio-economic effects associated with the closure of the mine is in the public interest.

The width of the public interest

1. To the extent the proceedings clarified the requirements of the Rehabilitation Strategy for the Mt Arthur Coal Mine in addition to similarly worded conditions of approval, Council submits that the public interest extends to present and future residents, visitors and passers-by of lands surrounding the mines to which such conditions apply. Further, as the Mt Arthur Coal Mine was designated as a State significant development and the approval conditions were formulated pursuant to Pt 3A (as it was at the material time) of the Environmental Planning and Assessment Act 1979 (NSW) ('EPA Act'), Council submits that the proceedings were significant to the State in its entirety.

The enforcement of public law obligations

1. Council contends that it was motivated to enforce the rule of law in respect of a power or discretion invested in a public authority and notes that the rule of law was explicitly referenced in its submissions.

The motivation behind the litigation

1. Council submits that despite consultation, it still harboured concerns in relation to the conduct of the rehabilitation, the legality of a condition of the Modified Project Approval, and the conduct of the regulator. In those circumstances, the only course available to Council was to commence proceedings.

Council's financial or proprietary interest in the outcome of the litigation

1. While Council acknowledges that it owns a small sliver of land at the far north-eastern boundary of the mine, as the land is outside the mining tenements and outside any emplacements, Council submits that it does not have a financial or proprietary interest in the proceedings.

Circumstances in addition to mere characterisation

1. Council submits that it is not necessary to find "something more" to justify a departure from the ordinary costs rule, and contends that when considered together, its submissions summarised above constitute "something more".
2. Further, Council submits that the proceedings provided "precedential guidance" on a range of complex issues of construction in relation to a common form of project approval (in submissions, the parties used the expressions "project approval" and "development consent" interchangeably. I consider that for present purposes, nothing turns upon this distinction) in NSW.

Countervailing circumstances

1. Council submits that there are no countervailing circumstances as identified in Caroona Coal at [61] which would affect the Court's discretion to depart from the usual costs rule. Council further submits that there was no unreasonableness in the way the case was prosecuted as aspects of the case were novel and the legal issues raised required clarification.

Council's submissions in relation to the second respondent

1. Council submits that it was obliged under r 59.3(4) of the UCPR and by the nature of the relief sought to join the Secretary to the proceedings.

The Hardiman principle

1. Council submits that the Secretary's involvement was not appropriate because the proceedings were not "exceptional" in the sense contemplated by the High Court in R v Australian Broadcasting Tribunal; Ex parte Hardiman (1980) 144 CLR 13; [1980] HCA 13 ('Hardiman') at 36. This is because, first, despite the fact that the proceedings went to the powers and procedures of the Secretary, most applications for judicial review go to the powers or procedures of the relevant decision-maker; and, second, the fact that the condition in question may have been used in other project approvals, or the possibility that the decision in the proceedings may inform the construction of other approvals, does not render the proceedings exceptional.
2. Council contends that the Secretary's evidence does not establish the extent or degree of any consequence which the proceedings may have on any, let alone all, of the other 13 mines.

The Secretary's participation in the proceedings

1. Council submits that the Secretary's active participation in the proceedings was not necessary as: first, HVEC was a competent and ably represented contradictor; second, the Secretary did not disclose a rationale for her active participation; and, third, the Secretary's participation did not add any substance to the arguments but instead merely added to the costs.
2. In the alternative, Council submits that the Secretary's participation went beyond what was permitted as: first, the Secretary was an active protagonist in the proceedings and allowed herself to be seen to be actively aligned with HVEC; and, second, the Secretary expressly denied aspects of Council's case which should have been uncontroversial.

Extrinsic evidence arguments

1. Council submits that the Secretary was overruled in relation to the use of extrinsic evidence in the construction of the Modified Project Approval. These arguments added to the complexity of the litigation, were contrary to well-established authority and should not have been made.

Characterisation as public interest litigation

1. HVEC submits that the proceedings could not properly be characterised as public interest litigation. Rather, the proceedings concerned the construction of a development consent for the Mt Arthur Coal Mine according to well-established principles. According to HVEC, Council led no evidence in support of its public interest claims and instead seeks to rely entirely on the character of the proceedings.
2. HVEC contends that there is no general principle that when a council is an applicant, it is taken to be acting in the public interest for the purpose of determining an application for costs. Further, in the proceedings, Council set itself against the considered opinion and position of the Secretary, a senior officer of the executive government of the State.
3. HVEC submits that the proceedings were brought by a public body with financial resources and Council must be taken to have chosen to pursue the litigation, conscious that there is no general principle that a council might avoid paying costs merely because it is a council.
4. HVEC claims that the issues raised in the case turned heavily on the facts of the case, and the specific terms of the condition and the Rehabilitation Strategy.
5. Further, the fact that the proceedings related to a "state significant development", being the Mt Arthur Coal Mine, that the subject matter of the conditions in issue concerned rehabilitation of that mine or that the conditions were made pursuant to Pt 3A of the EPA Act does not necessarily mean the proceedings were public interest proceedings.
6. The fact that legislation enables a person to challenge the approval of a rehabilitation strategy under a development consent cannot automatically render the proceedings public interest proceedings, nor can it excuse the applicant from the cost consequences that flow from an unsuccessful case: Hastings Point Progress Association Inc v Tweed Shire Council (No 3) [2010] NSWCA 39; (2010) 172 LGERA 157 ('Hastings Point Progress') at [45] and Caroona Coal at [26]-[27], [36].
7. While acknowledging that the proceedings may be seen to clarify that similarly worded consent conditions do not impose objective jurisdictional facts, HVEC cites Botany Bay City Council v Minister for Local Government (No 2) [2016] NSWCA 127 at [17] to suggest that when a party succeeds, there will often be a clarification of the law to some extent, however, this cannot be a rationale for departing from the usual rule as to costs.
8. HVEC challenges the proposition that the public interest in the proceedings extends to present and future residents, visitors and passers-by of lands surrounding the mines, and submits that it is difficult to reconcile the issues in the case, specifically in relation to whether the requirements in the condition were objective and whether the Secretary failed to take into account mandatory considerations or whether her state of satisfaction with the Rehabilitation Strategy was unreasonable, with the general public.
9. HVEC submits that because the Court was not asked to adjudicate the merits of the rehabilitation scheme or the appropriate standard of mining rehabilitation, Council's concerns that the rehabilitation was not being conducted appropriately and that the Secretary was not regulating the mine in the public interest were not relevant. Where the Court found that it was for the Secretary to reach a state of satisfaction about whether the Rehabilitation Strategy met the requirements in the condition, HVEC submits that it would be inappropriate for the Court to find that Council's conception of the public interest should guide the Court as to how it should exercise its costs discretion: Shellharbour City Council v Minister for Planning (No 2) [2012] NSWLEC 96 ('Shellharbour') at [22]-[23].

Circumstances in addition to mere characterisation

1. HVEC submits that it is indeed necessary to find "something more" to justify a departure from the usual costs rule: People for the Plains Incorporated v Santos NSW (Eastern) Pty Ltd (No 2) [2017] NSWCA 157 ('Santos') at [40].
2. HVEC denies Council's claim that the proceedings offered authoritative and precedential guidance in relation to the construction of a common form of development consent in NSW.

Countervailing circumstances

1. HVEC submits that conducting ordinary judicial review proceedings like a "full-blown merits review" despite the confined nature of the issues amounts to disentitling conduct, which militates against departure from the general rule as to costs. HVEC asserts that Council amended the summons three times and tendered expert evidence in support of its position, much of which depended on its expert's own construction of the consent. HVEC contends that it expended resources responding to this expert evidence, including a further report which was served by Council but not tendered, a decision made on the second day of the hearing. The Court found this evidence to be unhelpful in determining the proper construction of the condition.
2. An important purpose underpinning the usual order as to costs is fairness, and HVEC submits that this purpose should not be glossed over in circumstances where the Court dismissed each of Council's claims: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [67].

Characterisation as public interest litigation

1. The Secretary contends that the considerations in Engadine relating to public interest are not determinative: Caroona Coal at [41].
2. The Secretary notes that a judicial finding has implications which extend beyond the immediate parties and that this is merely a consequence of the role of courts in interpreting statutes or instruments. It does not necessarily warrant a departure from the usual costs rule. The Secretary submits that this is particularly so in cases heard in this Court as the public has an interest in ensuring government decision-makers are accountable, that their decisions are made pursuant to law, and that legislation creating public rights and duties is adhered to: Anderson on behalf of Numbahjing Clan within the Bundjalung Nation v NSW Minister for Planning (No 2) [2008] NSWLEC 272; (2008) 163 LGERA 132 ('Anderson') at [18]-[19].
3. The Secretary contends that the fact that litigation is commenced in Class 4 of the Court's jurisdiction is insufficient to conclude that the proceedings were brought in the public interest: Shellharbour at [13].
4. Further, the Secretary maintains that a mere general public interest in the matters litigated is insufficient to justify a departure from the usual costs rule: Caroona Coal at [13], [56] and Anderson at [11]. The Secretary submits that the public interest as articulated by Council is expressed at a high level of generality and is insufficient to enliven the Court's discretion under r 4.2(1) of the LEC Rules.
5. Despite acknowledging that the proceedings may be relevant to the construction of other, similarly worded consents, the Secretary contends that Council's claim ultimately turned on a narrow and discrete question of interpretation.
6. The Secretary relies on the reasoning of Craig J in Shellharbour at [22]-[23] to illustrate that different bodies, both exercising their powers in the public interest, may find themselves opposed in certain circumstances. If the Court determines that the Secretary's participation in the proceedings is consistent with the Hardiman principle, the Court should not seek to determine which of the public interests represented by Council and the Secretary should prevail.
7. The Secretary submits that her role in the proceedings was confined to the construction of the conditions of the Modified Project Approval.

The Hardiman principle

1. The Secretary submits that her participation in the proceedings was appropriate and consistent with the Hardiman principle given that: first, the Hardiman principle does not prevent a decision-maker from appearing in any proceedings relating to their decision; second, decision-makers can make submissions about their powers and procedures albeit in exceptional circumstances; third, it was appropriate for the Secretary to appear in the proceedings to assist the Court in a manner consistent with the Hardiman principle by making submissions confined to her powers and procedures; and fourth, the Secretary made no submissions as to the content of the revised Rehabilitation Strategy, or whether the decision to approve that Strategy was reasonable, so there are no grounds for suggesting the Secretary will not bring an open, unbiased mind to the approval of any future rehabilitation strategy.
2. The Secretary references Craig J in Shellharbour at [37], Preston J in Caroona Coal at [103] and Basten JA in Cunneen v Independent Commission Against Corruption [2014] NSWCA 421 at [45] to demonstrate that her participation in the proceedings, being limited to submissions relating to powers and procedures, has been affirmed in a number of other decisions.
3. Further, the Secretary contends that it cannot be correct to assert that she acted contrary to the principles established in Hardiman where another party to the litigation, that being HVEC, agreed with her submissions.

Extrinsic evidence arguments

1. Despite Council's submission that the Secretary was unsuccessful in her arguments relating to the principles applicable to the construction of the Modified Project Approval, the Secretary asserts that unless a particular issue or cluster of issues is clearly dominant or separable, courts ordinarily order costs to the successful party without attempting to differentiate between those issues on which it was successful and those on which it failed: Waters v P C Henderson (Aust) Pty Ltd [1994] NSWCA 338; (1994) 254 ALR 328, applied in Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38].
2. The Secretary submits that its submissions did not add any significant time or complexity to the proceedings.

Council's reply

1. In reply to HVEC's submissions, Council submits: 1. Council denies that it adduced no evidence in support of its public interest claims and rejects HVEC's position that it is relying "entirely on the character of the proceedings"; 2. HVEC has misunderstood the proposition proffered by Craig J in Shellharbour at [12]-[13] and the fact that the development is a State significant one is but one of many relevant factors that go towards characterising the proceedings as public interest proceedings (another factor being the precedential value of the proceedings). Further, the proceedings were novel and had utility which extended beyond the parties themselves. The Court determined matters (including ambiguities) for the first time in the relevant condition, which was also known to appear in at least 13 other project approvals; and 3. The fact that the summons was amended twice (not three times as alleged) is irrelevant. Council further contends that preparing its case in full by leading expert evidence is not a countervailing circumstance.
2. In reply to the Secretary's submissions, Council submits: 1. Council acknowledges that there are certain exceptions to the proposition that where a local government authority and a state instrumentality are on opposite sides of the record, it will generally be inappropriate for the Court to determine which interest should prevail in exercising its discretion as to costs; and 2. While Council has particularised the various public interests for which it brought the proceedings, the Secretary has not identified the public interest(s) in respect of which she defended the proceedings.

Consideration

1. Public interest is a multi-faceted concept and much judicial ink has been applied to its meaning. It is agreed between the parties, and I accept, that the three-step approach of Preston J in Caroona Coal, at [13] is of assistance. I consider the parties' submissions with that approach in mind.

Characterisation

1. Using the considerations of Lloyd J in Engadine noted at [14] above which provide some guidance in relation to whether the proceedings may properly be characterised as public interest proceedings, I find as follows.
2. First, I accept that the proceedings concerned a condition of a project approval that related to the rehabilitation of a sizeable area of land that had been disturbed by coal mining and there is no doubt that the purpose of the condition was to facilitate rehabilitation. However, I do not find this matter alone to be determinative of the public interest. Properly understood, the gravamen of the proceedings was whether the Secretary had jurisdiction to be satisfied that the rehabilitation strategy complied with the relevant condition (see pars [8] and [155] in the primary judgment for context).
3. Second, in relation to the "width" of the public interest, given that the proceedings primarily concerned the construction of a particular condition, I do not consider Council's submission that this determination extends to present and future residents, visitors and passers-by of lands surrounding the mines to which such conditions apply, to be compelling. The fact that the Mt Arthur Coal Mine was designated as a State significant development is a matter which I consider relates primarily to the process by which development proposals for coal mines are dealt with and no more. Further, whether litigation bears a public interest character is not determined by the degree of interest in it shown by members of the public, but objectively by the extent to which it serves the public interest: Jacob v Save Beeliar Wetlands (Inc) [2016] WASCA 126 (S); (2016) LGERA 201 at [39].
4. In relation to the third and fourth considerations, whilst there can be little doubt that Council was motivated to commence proceedings as it harboured a genuine concern that the rehabilitation of the mine was not being conducted appropriately, this is not sufficient, either on its own or in combination with the other considerations, given my findings below regarding the essential nature of the proceedings (i.e. the construction of a condition of approval in relation to a rehabilitation strategy). Further, I do not consider that the suggested "enforcement" of the rule of law is significant in these circumstances. Council has no regulatory function with respect to either the development itself and/or the manner of rehabilitation. Council's role was confined to consultation with the consent authority.
5. Fifth, I accept, although I do not consider it determinative, that Council had no financial or proprietary interest in the outcome of the litigation.
6. In light of my findings (using the Engadine considerations), I have doubts that the proceedings could properly be characterised as public interest proceedings. I have formed this view not simply for the reason that they "concern the construction of a development consent" as suggested by HVEC, however this is a matter which I consider to be of some importance. It can comfortably be said that the principles in relation to the proper construction of development consents (and conditions attached thereto) are now well-established.
7. There is no general principle that when a council is an applicant it is taken to be acting in the public interest. This is particularly so where, as in the present case, Council is challenging the position (referred to by HVEC as the "considered opinion") of the Secretary, a senior officer of the executive government of the State.
8. Further, while not determinative, I accept that the proceedings were brought by Council, a public body with financial resources that would have been well aware that there is no general principle that it might avoid paying costs associated with an unsuccessful case merely because it is a public body.

Additional matters

1. While there is debate between the parties as to whether "something more" either exists or is required to justify a departure from the usual costs rule, in this matter, even if I was of the view that Council established that the proceedings were public interest proceedings, I do not consider that Council has established that there is "something more" (being additional factors which would warrant a departure from the general rule).
2. Further, I do not find Council's contention that the proceedings provided "precedential guidance" to be persuasive. Accepting that not dissimilar conditions may have been imposed in relation to other coal mines, such conditions would need to be considered, should the need arise, on the facts and circumstances of those developments (and rehabilitation thereof). As such, I do not find Council's submission that the proceedings "clarified" which documents could be referred to when construing the Modified Project Approval to be of assistance. The manner and extent to which certain documents are to be referred to (and/or incorporated) in construing any such condition will depend upon the facts and circumstances of the particular case. Thus, I do not consider that any of the findings in the primary judgment will necessarily be of assistance, let alone determinative in relation to other approvals. The findings in the primary judgment concerned the construction of a specific project approval pursuant to orthodox principles of construction, and these findings were not novel, nor did they provide significant utility to miners and wider stakeholders.

Countervailing circumstances

1. I accept that Council was not seeking to vindicate rights of a commercial character; it did not have any financial interest in the outcome of the litigation; it did not unreasonably pursue or persist with points that had no merit; and, it did not otherwise conduct itself in a manner that could be considered disentitling.
2. As such, I do not accept HVEC's submission that the proceedings were conducted akin to a "full-blown merits review". While Council amended its pleadings on two occasions and sought to rely upon extensive expert evidence, a significant proportion of which was either not ultimately relied upon or to the extent that it was, found not to be relevant and/or determinative, these matters do not amount to disentitling conduct in the "countervailing" sense.

The second respondent

1. Council's primary position, as noted above, is that the proceedings were not exceptional in the Hardiman sense and the Secretary did not call evidence to establish the extent of any consequence which the proceedings may have on other mines with similar conditions.
2. I consider that the Secretary was properly joined by Council and I find that the Secretary's participation was necessary and generally limited to submissions relating to her powers and procedures: Caroona Coal at [103]. As she made no submissions in relation to the content of the Rehabilitation Strategy or whether the decision to approve the Strategy was reasonable, I find that her participation was consistent with the Hardiman principle due to the manner in which she conducted herself.
3. Finally, although the Secretary was unsuccessful in relation to certain evidentiary arguments relating to material that was relevant in construing the Modified Project Approval (for example, see primary judgment at [193]-[202]), these arguments did not materially add to the complexity or length of the litigation. Even if it were the case that the Secretary raised certain arguments that were not accepted, given my findings, I do not consider it appropriate to differentiate between certain issues where the Secretary succeeded and those where she did not. That is, it is not necessary to make a proportionate finding in relation to the order of costs.
4. I accept that the Secretary is the repository of planning obligations and that it could be said that between Council and the Secretary there are two "public interests". This does not dictate that one should necessarily prevail over the other in order to determine the appropriate exercise of the Court's discretion. Given my finding above that the Secretary's participation was consistent with the Hardiman principle, I do not consider that she conducted herself in a manner which warrants a departure from the usual rule.

Conclusion

1. As I have found above, the matter before me related to a relatively discrete point of interpretation involving the operation of the condition of consent in the sense considered by Basten JA in Hastings Point Progress at [11] and Craig J in Shellharbour at [25]. Adopting the familiar phrasing in similar matters, I find that the public interest in the determination of this "relatively discrete point of interpretation" was not of "such moment or magnitude" as to warrant the exercise of the Court's discretion to relieve Council of its obligation to pay costs: Caroona Coal at [59] and Shellharbour at [26].
2. The issues canvassed in the primary judgment and the resolution of those proceedings concerned the application of relatively orthodox principles of construction and judicial review. The finding that the subject condition did not impose objective jurisdictional facts necessary to enliven the Secretary's jurisdiction is a finding that may or may not apply to other consents and approvals.
3. Even if I be wrong, and that the primary judgment did assist to clarify that similarly worded project approval conditions do not impose objective jurisdictional facts, this matter alone would not necessarily dictate that when a party succeeds in litigation, there should be a departure from the usual rule as to costs (even if there be a clarification of the law).
4. In making my findings above, I am conscious that the purpose underpinning the usual rule as to costs is fairness. Each of HVEC and the Secretary conducted their cases in a manner that minimised overlap. As such, there is no reason to limit costs to be ordered to only one set of costs.

Orders

1. The orders of the Court are: 1. The applicant is to pay the costs of the first and second respondents, including the costs incurred in addressing the application for costs.

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: 18 April 2019