Randwick City Council v Minister for Local Government

The litigation history concerning the eastern suburbs amalgamation

1. On 15 December 2015, the (then) Premier and the Minister for Local Government (the Minister) announced a broad government policy of council amalgamations
2. Following the announcement, on 6 January 2016, the Minister referred various local council amalgamation proposals (including this proposed amalgamation involving Randwick Council) to the Acting Chief Executive of the Office of Local Government, pursuant to s 218F(1) of the Local Government Act 1993, to commence the necessary statutory process of their investigation.
3. On 1 April 2016, Woollahra Council commenced judicial review proceedings in this Court challenging the proposed amalgamation process then underway involving the three eastern suburbs councils.
4. Woollahra Council was the sole applicant in those proceedings.
5. The four respondents to those proceedings were: 1. The Minister for Local Government; 2. Dr Robert Lang, the delegate appointed by the Minister to enquire into and report upon the proposed amalgamation; 3. The Chief Executive, Office of Local Government; and 4. The Local Government Boundaries Commission.
6. Randwick Council did not seek to be joined as a party to these proceedings. Nor did any of the parties to the proceedings, themselves, seek to have Randwick Council joined.
7. These proceedings were heard by Preston CJ between 20 April and 28 June 2016. His Honour delivered his decision on 20 July 2016 (Woollahra Municipal Council v Minister for Local Government (2016) 218 LGERA 65; [2016] NSWLEC 86). In [4], his Honour recorded: 4 Two of the councils affected by the proposal, Randwick City Council ('Randwick Council') and Waverley Council support the proposal for amalgamation but the third council affected, Woollahra Municipal Council ('Woollahra Council') is opposed to the proposal.
8. In his decision, Preston CJ dismissed Woollahra Council's challenge to the proposed amalgamation.
9. Woollahra Council then appealed the Chief Judge's decision to the Court of Appeal. Randwick Council did not seek to take part in the appeal against the Chief Judge's decision. No application was made to join Randwick Council to those proceedings.
10. The appeal was dealt with expeditiously, being heard on 22 August 2016. On 22 December 2016, the Court of Appeal dismissed Woollahra Council's challenge to Preston CJ's decision (Woollahra Municipal Council v Minister for Local Government (2016) 219 LGERA 180; [2016] NSWCA 380).
11. Woollahra Council sought special leave to appeal to the High Court against the Court of Appeal's rejection. On 12 May 2017, Woollahra Council's application for special leave to appeal the Court of Appeal's decision was granted.
12. On 23 June 2017, Randwick Council filed written submissions with the High Court seeking leave to intervene in the Woollahra Council appeal to the High Court.

Commencement of these proceedings

1. On 15 June 2017, Randwick Council filed its Summons commencing these proceedings.
2. The Uniform Civil Procedure Rules 2005 (the UCPR) imposes a three-month time limit on the commencement of "proceedings for judicial review of a decision" (Pt 59 r 10(1)).
3. Randwick Council, self-evidently, needed an extension of time for its substantive challenge to its proposed amalgamation with Woollahra and Waverley Councils.

The abandonment of the challenged amalgamation proposals

1. On 27 July 2017, the New South Wales Premier, Hon Gladys Berejiklian MP, announced that all unconsummated local government amalgamations were to be abandoned. The announcement, on 27 July 2017, made by the Premier and the Minister for Local Government said, inter alia: Due to the protracted nature of current legal challenges and the uncertainty this is causing ratepayers, those council amalgamations currently before the courts will not proceed. Premier Gladys Berejiklian said while the amalgamation program had been successful and ratepayers and the merged councils were benefiting, the NSW Government had decided to end the uncertainty with the remaining proposed mergers. "The Government's merger policy has always been about putting ratepayers first and it is becoming increasingly clear that certain councils were happy to continue lengthy and costly legal proceedings", Ms Berejiklian said. We want to see councils focusing on delivering the best possible services and local infrastructure to their residents. That is why we are drawing a line under this issue today and ending the uncertainty."
2. The announcement, self-evidently, included the proposed amalgamation that was the subject of these proceedings. This abandonment, in addition to rendering these proceedings otiose, also rendered Woollahra Council's appeal to the High Court similarly otiose.

Introduction

1. This decision addresses where the burden of the legal costs should fall for the now-agreed-to-be-discontinued legal proceedings commenced by Randwick Council against the Minister, seeking to challenge the validity of the proposed amalgamation of the three councils. This decision to do so clearly had its genesis in a further political decision by Randwick Council. This new position of the Council was clearly a reversal of its earlier politically determined position.
2. Although Randwick Council and the Minister agree that the substantive proceedings sought to be commenced by Randwick Council should be discontinued, there is no such agreement as to how the costs burden for those proceedings to the time of the discontinuance should fall. I am, therefore, required to determine what is the appropriate costs order to be made (if any substantive costs order is to be made), and where that costs burden should fall.
3. Randwick Council seeks a costs order in its favour, whilst the Minister's primary position is that there should be no order for costs. Whilst the Minister had a fall-back position, given that I have concluded that the Minister's primary position is to be preferred, there is no need to address this contingent position.
4. Randwick Council and the Minister have, sensibly, agreed that a further contested hearing on the question of costs would incur unnecessary expense and have agreed that the determination should be made on the basis of submissions and material which had been filed with the Court.

Other relevant local government proceedings costs decisions

Introduction

1. There have been three other relevant decisions concerning costs applications arising in local government amalgamation proceedings that had not been determined, to finality, as at the date in July 2017 when the Premier announced the abandonment of the remaining contested local government amalgamations. Costs determinations were subsequently made: 1. in the High Court (concerning the Woollahra Council appeal for which special leave had been granted); 2. in the Court of Appeal (concerning Shellharbour City Council - where my first instance decision rejecting that Council's challenge to its proposed amalgamation with Wollongong City Council remained to be heard and determined in the Court of Appeal); and 3. in this Court (concerning the application by an organisation known as Local Democracy Matters Inc (Local Democracy), where that organisation had made a late application for an extension of time to commence proceedings. That application for an extension of time had been heard but not determined by Robson J as at the date of the government's political decision to abandon the undetermined amalgamations).
2. In each of those instances, there was a contest concerning what costs orders might be appropriate to be made. In each instance, the determination was that there should be no order for costs of costs incurred for the proceedings before the relevant decision-maker. In the two instances where the decision‑maker was at appellate level, the costs orders made below were not disturbed.
3. For the purposes of my consideration, it is appropriate to undertake some short consideration of each of these decisions.

The revocation of special leave in the High Court

1. On 29 November 2017, Gageler J heard an application to revoke the special leave granted to Woollahra Council. There was no contest on the substance but there was argument as to costs - costs in both the High Court and below. His Honour gave an extempore decision (Woollahra Municipal Council v Minister for Local Government & Ors [2017] HCATrans 244 (Woollahra)). It is appropriate to reproduce its terms in full: In this matter I have reached a clear view, and I do not think it would benefit from me reserving. I therefore propose to proceed directly to judgment. Pursuant to special leave to appeal granted on 12 May 2017, Woollahra Municipal Council commenced an appeal in this Court from the judgment of the Court of Appeal of the Supreme Court of New South Wales in Woollahra Municipal Council v Minister for Local Government [2016] NSWCA 380. The appeal was commenced by Woollahra Municipal Council filing a notice of appeal on 19 May 2017. At issue before the Court of Appeal, and at issue in the appeal to this Court, was the validity of processes purportedly undertaken pursuant to the Local Government Act 1993 (NSW) which led to the Minister for Local Government receiving a report which recommended implementation of a proposal that the Minister recommend to the Governor of New South Wales the making of a proclamation which would have had the effect of amalgamating the Woollahra local government area with the local government areas of Randwick and Waverley. The validity of those processes has become moot by reason of circumstances which occurred during the pendency of the appeal to this Court. On 27 July 2017, the Premier of New South Wales issued a media release in which she stated that "Due to the protracted nature of current legal challenges and the uncertainty [that was] causing to ratepayers, those council amalgamations [that were] currently before the courts [would] not proceed." Amongst the previously proposed amalgamations which the Premier indicated would not proceed was that of the Woollahra, Randwick and Waverley local government areas. On the same day, the Minister for Local Government wrote to Woollahra Municipal Council informing the Council that she had decided not to recommend to the Governor that the proposal to amalgamate those local government areas be implemented. Before me today is an application made by summons filed by the Minister on 20 October 2017 for an order that special leave to appeal be revoked. The Minister and the Council are the only active parties to the appeal. There is no issue between them that the Premier's announcement and the Minister's decision mean that the appeal now lacks utility and should not proceed. The only issue is as to costs. Neither the Minister nor the Council submits that determination of that issue of costs necessitates determination of the substantive issue in the appeal and neither party submits that sitting alone I do not have power to determine that issue of costs or that it is inappropriate for me to do so. Mr Hutley SC, who appears with Mr Free for the Minister, submits that the appropriate order for costs is limited to an order having the effect that each party bear its own costs of the appeal to this Court, save for costs incurred after 26 October when the Council refused an offer by the Minister to consent to the discontinuance of the appeal on the basis that each party bore its own costs in this Court. He submits that the existing orders for costs made in the Minister's favour in the Court of Appeal and in the Land and Environment Court from which the appeal to the Court of Appeal was brought cannot now be disturbed. Mr Birch SC, who appears with Ms Phillips for the Council, submits that the power, not only to order costs of the appeal to this Court but also to vary the orders for costs in the Court of Appeal and the Land and Environment Court, can be found in section 26 of the Judiciary Act 1903 (Cth). That section provides: The High Court and every Justice thereof sitting in Chambers shall have jurisdiction to award costs in all matters brought before the Court, including matters dismissed for want of jurisdiction. Mr Birch submits that the discretion conferred by section 26 should be exercised to produce the result that the Council gets the costs of the appeal to this Court as well as the costs of the proceedings in those other courts, or at the very least that each party should bear its own costs of the proceedings in those other courts. The Council, he submits, has at all times acted reasonably and expeditiously. The Minister, in contrast, he submits, has protracted the litigation between the parties by failing to accept offers of compromise made last year shortly before and during the course of the proceeding in the Land and Environment Court. Mr Birch submits that the Minister's change of position in July this year should be characterised as a total capitulation. The Minister has vacated the litigious arena, he submits, leaving the Council victorious. The Council, says Mr Birch, is "the clear winner". The Council is left in the same position as if it had obtained the declaratory and injunctive relief which it had originally sought from the Land and Environment Court. Section 26 of the Judiciary Act, the terms of which I have already quoted, is cast in the language of jurisdiction but it is really concerned to confer a power that is to be exercised if and to the extent that the Court has jurisdiction. That observation is not contradicted by its express application to matters dismissed for want of jurisdiction. The Court has jurisdiction to determine its own jurisdiction. The matter that is brought before the Court within the meaning of section 26 can be accepted to encompass so much of the justiciable controversy between the parties before the Court over which the Court has jurisdiction. The power to order costs conferred by the section, broad as it is, can only be exercised within the confines of that jurisdiction. That is the burden of the reasoning of Justice Hayne in Edwards v Santos Limited [2011] HCA 8; (2011) 242 CLR 421 at paragraphs 11 to 13, to which Mr Birch has drawn attention. An appeal to this Court where special leave is granted is an appeal in its appellate jurisdiction conferred on this Court by section 73 of the Constitution. As the consistent course of authority surveyed and applied by this Court, for example, in Eastman v The Queen (2000) 203 CLR 1 well establishes the jurisdiction conferred by section 73 is jurisdiction to determine an appeal in the strict sense. This Court has no power in the exercise of that appellate jurisdiction to disturb an order for costs made by the court from which the appeal is brought unless this Court concludes in the appeal that the court erred on the merits or otherwise in the exercise of its discretion. In circumstances such as the present, where the appeal to this Court is not to proceed, no such conclusion is capable of being drawn. I therefore reject Mr Birch's submission as to the ability of this Court in the circumstances of this appeal to disturb the costs orders that have been made in the Court of Appeal and in the Land and Environment Court. They cannot be disturbed in the exercise of the power conferred by section 26 of the Judiciary Act. Such an outcome does not, in my opinion, raise the prospect of the appellate processes of this Court being gained by a respondent, to use the terminology adopted by Mr Birch. He was referring in that reference to a respondent to an appeal who might choose to change position rather than to contest a losing case in this Court. The Court retains control over its own appellate processes through the control that it has over the grant and revocation of special leave and its ability in an appropriate and no doubt exceptional case to determine an appeal purely on the question of costs. The costs of the appeal to this Court are different. They are within the discretion conferred by section 26 of the Judiciary Act. The guiding principle to be applied, in my view, other than in exceptional circumstances, is that stated by Justice McHugh in Re Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622. The principle is that if it appears that both parties have acted reasonably until the litigation was settled, or its further prosecution became futile, the proper exercise of discretion as to costs will ordinarily mean that the Court will make no order as to the costs of the proceedings. I am unable to accept Mr Birch's submission that this is a case where that principle ought not to be applied. The Minister's change of position, following the Premier's announcement, cannot be characterised as a capitulation, or to use the language of Justice Burchett in One.Tel Limited v Deputy Commissioner of Taxation [2000] FCA 270; (2000) 101 FCR 548 at paragraph 6 as a surrender. The pendency of the appeal to this Court no doubt played some part in the considerations which informed the decision of the New South Wales Government which the Premier announced. The change of position, however, cannot be attributed to an acceptance on the part of the government, or more particularly of the Minister, that the processes in issue in the appeal were invalid or that the Council was entitled to the relief that it sought. The change of position, in other words, cannot be characterised as a concession. The change of position was rather the result of a change of political heart which removed the subject matter of the controversy. In the exercise of my discretion I do not accede to Mr Hutley's invitation to shave with a fine cut and to differentiate between the costs in this Court before and after 26 October. The orders that I make are as follows: 1 Special leave to appeal is revoked. 2 There is no order as to the costs of the proceedings in this Court.
2. As Gageler J observed above, the guiding principle to be applied was that to be derived from the decision of McHugh J in Re Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6 at 625 (Ex Parte Lai Qin) that: 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.

The Shellharbour costs dispute in the Court of Appeal

1. In Shellharbour City Council v Minister for Local Government [2017] NSWCA 256, there are several passages warranting consideration. First, the Court noted, at [5], that the Minister had submitted, based on Ex Parte Lai Qin "that the appropriate course was for the parties to bear their own costs in this Court, there having been no determination on the merits."
2. The Court observed, at [7], that: If the appellant made good its claim that, without addressing the merits, this Court could be satisfied that it would have succeeded in any event, it would also be appropriate to set aside the costs order made in the Land and Environment Court and allow the appellant its costs of the trial.
3. It is clear, from what followed at [9] to [13], that Shellharbour City Council had not satisfied the Court that this would be the position. The Court concluded, at [14]: In short, while the appellant obtained the result it sought in the litigation as a result of a political decision by the Government, the resistance by the Minister to the proceedings in the Land and Environment Court was not shown to be unreasonable. It follows that the bases upon which the appellant sought to have its costs, in the absence of a determination of the appeal on the merits, must be rejected.
4. The Court of Appeal made no order for costs in the proceedings before it.

The Local Democracy costs dispute in this Court

1. On 11 May 2017, Local Democracy commenced judicial review proceedings concerning the proposed eastern suburbs amalgamation the subject of these proceedings. As with these proceedings, Local Democracy required an extension of time pursuant to the UCPR to commence its proceedings.
2. On 29 May 2017, as the Duty Judge, I ordered that a separate question be determined prior to any substantive proceedings. That question was: Should the Applicant be granted the extension of time sought in prayer 1 of the Summons?
3. The hearing before Robson J on the separate question was held on 22 June 2017. His Honour reserved his decision. As earlier noted, on 27 July 2017, the proposed amalgamation was abandoned.
4. On 16 February 2018, Robson J delivered his decision in Local Democracy Matters Inc v Minister for Local Government [2018] NSWLEC 9. His Honour observed, at [4]: In light of the announcement, I requested further submissions in relation to the ongoing conduct of the matter as there appeared to be little utility in the determination of the separate question and the relief sought in the primary proceedings.
5. Further oral submissions were made on 18 September 2017, with written submissions following. As his Honour noted at [43], the parties had agreed that the proceedings should be dismissed. His Honour said, at [52], he was not prepared to express any "general view" as to the likely outcome of the separate question.
6. However, there remained for his determination a costs claim and counter‑claim in the Local Democracy proceedings. His Honour identified that the presumptive position was that arising from Ex parte Lai Qin. As a consequence, his Honour then proceeded, at [54] to [59], to consider whether the conduct of each party could be regarded as reasonable in the circumstances. As he concluded that neither had acted unreasonably to warrant a costs order against that party, he dismissed the proceedings with no order as to costs.

Consideration

1. As Gageler J observed, in Woollahra (above), those proceedings were no longer necessary as "the result of a change of political heart which removed the subject matter of the controversy."
2. There were a range of organisational political decisions which formed the backdrop to Randwick Council commencing these proceedings. Equally, the rendering of them as futile was also a political decision.
3. Fundamentally, the position adopted as appropriate concerning all three separate proceedings and the attendant political decisions was that enunciated by McHugh J in Ex parte Lai Qin.
4. In these proceedings, although extensive evidence had been filed, the proceedings before me had not even advanced as far as those before Robson J. I can see even less utility than did his Honour in any speculation of what might have been the outcome of the Randwick Council application for an extension of time to commence its proceedings.
5. Although the parties have each made comprehensive submissions on the question of costs, immersing myself in their detail is not necessary. It is sufficient to observe that neither party has acted entirely unreasonably in their conduct in these proceedings to the stage where it has become necessary for me to determine (post agreement for substantive dismissal) what should be the costs outcome.
6. As a consequence, I have concluded that the appropriate costs position is that there should be no order for costs concerning any aspect of these proceedings - with the result that Randwick Council and the Minister will each bear their own costs burden of their participation in these proceedings.
7. It follows that, overall, I am satisfied, on the question of the costs application, that it is appropriate to exercise the discretion given in s 98(1) of the Civil Procedure Act 2005 and make an "otherwise" order.

Orders

1. Noting that the parties have agreed that the proceedings are to be discontinued, the order of the Court is that: 1. Each party is to bear their own costs of the proceedings.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 26 April 2018