Costs
217 Tobias JA has proposed orders in relation to the costs of this appeal. In my view those orders are appropriate.
218 However, it has also been necessary in this appeal to consider whether this Court should make orders in relation to the costs of the hearing before Pain J and Commissioner Bly, and if so, the terms of those orders. This requires consideration of the principles by which orders for costs are made in Class 1 proceedings in the LEC.
219 When exercising jurisdiction in Classes 1, 2 and 3 the LEC is given power by the Court Act to inform itself in any manner it thinks fit, determine its own procedure, conduct informal hearings, dispense with the rules of evidence and dispose of proceedings expeditiously (s 38). These are the hallmarks of an inquisitorial process rather than an adversarial process (see the discussion in Creyke and Bedford: Inquisitorial Processes in Australian Tribunals (AIJA, Melbourne, 2006, at 15)). The proceedings are appropriately described as administrative review and are commonly referred to as merits review.
220 The nature of administrative review proceedings was considered by Brennan J in Bushell v Repatriation Commission (1992) 175 CLR 408 where his Honour said (424-425):
"Proceedings before the AAT may sometimes appear to be adversarial when the [Repatriation] Commission chooses to appear to defend its decision or to test a claimant's case but in substance the review is inquisitorial. Each of the Commission, the Board and the AAT is an administrative decision-maker, under a duty to arrive at the correct or preferable decision in the case before it accordingly to the material before it. If the material is inadequate, the Commission, the Board or the AAT may request or itself compel the production of further material."
221 In Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 222 ALR 411 at [26], Gleeson CJ, Gummow, Kirby, Hayne and Hayden JJ said:
"The [Refugee Review] Tribunal was not an independent arbiter charged with deciding an issue between adversaries. The Tribunal was required to review a decision of the Executive made under the [Migration] Act and for that purpose the Tribunal was bound to make its own inquiries and form its own views upon the claim which the appellant made."
222 When sitting as President of the Administrative Appeals Tribunal (rather than in his judicial capacity as a judge of the Federal Court), Downes J expressed the opinion that this statement relates "to merits review tribunals generally", not just to the Refugee Review Tribunal: see also Australian Prudential Regulation Authority v Administrative Appeals Tribunal [2005] FCA 1916 at [16].
223 I appreciate that for many years Class 1 proceedings in the LEC were apparently conducted in the form of conventional adversarial litigation. This no doubt explains the statements by Tobias JA in Segal v Waverley Council (2005) 64 NSWLR 177 especially at [42], [51] and [95]. However, the statutory framework has remained the same from the inception of the LEC and the assumption that proceedings in Class 1 of its jurisdiction were conventional adversarial litigation was contrary to the expectation of the legislature when the planning legislation was enacted. When the Court Bill was introduced into the Parliament the Minister said, inter alia:
"The court is a novel concept bringing together in one body the best attributes of a traditional system and of a lay tribunal system. In consequence, the court will be able to function with the benefits of procedural reform and lack of legal technicalities as the requirements of justice permit in accordance with clause 38" (Second Reading Speech, Legislative Assembly, 14 November 1979, p 3051).
224 In recent years the LEC has reformed a number of its previous practices and procedures have been implemented for the purpose of ensuring that its proceedings are conducted in a manner which reflects the original policy in the Court Act - (McClellan, "Recent Changes and Reforms at the Land and Environment Court", speech delivered to the Local Government Association of New South Wales, 27 July 2004; McClellan, "Amendments to the Court Rules and Practice Direction", speech delivered at the Local Government Executive Briefing Seminar on Amendments to the Court Rules and Practice Directions, 10 June 2004, McClellan, "Achieving the best outcome for the community", speech delivered at the EPLA Conference, Newcastle, 28-29 November 2003).
225 The jurisdiction which the LEC exercises in Classes 1 and 2 was formerly exercised by the Local Government Appeals Tribunal. The usual practice of the Tribunal was to make no order for costs in proceedings before it. However, if a question of law was raised pursuant to s 342BK of the 1919 Act, that question would be determined in the Supreme Court where costs would normally "follow the event." When the LEC assumed the jurisdiction of the Local Government Appeals Tribunal it adopted a similar approach to that of the Tribunal in relation to costs in Classes 1 and 2. That approach was reflected in a Practice Direction which provided:
"The practice of the Court is that no order for costs is made in planning and building appeals unless the circumstances are exceptional."
226 The Practice Direction was criticised by this Court in Maurici v Chief Commissioner of State Revenue (2001) 51 NSWLR 673. Although now recognised as probably invalid, the Practice Direction reflected the intention of the legislature that proceedings in Classes 1 and 2 should eschew adversarial processes. However, its invalidity was not because it reflected an inappropriate policy but rather because it may have imposed an impermissible fetter on the discretion of the Court to make an order for costs as provided by s 69(2) of the Court Act.
227 It is usual in administrative review proceedings that an order for costs will not be made in other than unusual circumstances. Generally where a body has been created by statute with only an administrative review function the statute will modify any general discretion in relation to costs. For instance, except in relation to applications under s 54 of the ASIO Act 1979 (Cth), the Commonwealth Administrative Appeals Tribunal is given no power to order costs at all under the Administrative Appeals Tribunal Act 1975 (Cth). Specific legislation may give the Tribunal the power to order or "recommend" the paying of costs in relation to specific decisions (see eg s 66 of the Freedom of Information Act 1982 (Cth)), but the Tribunal has no general power to make costs orders. Similarly, the Migration Review Tribunal and the Refugee Review Tribunal do not have power under the Migration Act to make costs orders. The New South Wales Administrative Decisions Tribunal may only make a costs order if satisfied that there are "special circumstances" (Administrative Decisions Tribunal Act 1997 (NSW), s 88). Parties must bear their own costs in the Victorian Civil and Administrative Tribunal unless the Tribunal is satisfied that it is "fair" to make a costs order (Victorian Civil and Administrative Tribunal Act 1998 (Vic), s 109) and the default position in the Social Security Appeals Tribunal is also that the parties should bear their own costs (Social Security (Administration) Act 1999 (Cth), s 176).
228 The issue of costs in administrative (as distinct from judicial) review proceedings has been considered on a number of occasions by Committees of Inquiry and Law Reform Commissions. Their recommendations and conclusions have been consistent with these principles: (see the Franks Committee (Report of the Committee on Administrative Tribunals, London, Cmnd 218, 1957, para 94); the Kerr Committee (Report of the Commonwealth Administrative Review Committee, 1971, para 297); the Bland Committee (Final Report of the Committee on Administrative Discretions, 1973, para 217); the WALRC (Review of Administrative Decisions, Report 26, 1982, paras [5.21]-[5.22]); the South Australian Law Reform Committee (Report Relating to Administrative Appeals, 1984, pp 34-35); the Administrative Review Council (Eleventh Annual Report 1986-1987, p. 80 and p. 84); and see also Re Verus Capital Ltd (as mgr of the Benwood Property Trust) and Australian Securities and Investments Commission (2001) 66 ALD 349 per Deputy President Handley at 360).
229 The Australian Law Reform Commission considered the matter in 1995 in its report Cost Shifting - who pays for litigation? when it said at [5.1]:
"The administrative actions and decisions of government may be reviewed in a number of ways. They may be subject to judicial review by a court, administrative review by a tribunal or investigation by an ombudsman. The costs rule in administrative law proceedings vary according to the type of review a party pursues" ( Cost Shifting - who pays for litigation? Report 75, 1995)
230 The Commission expressed the view that the degree to which proceedings are or are not adversarial should influence whether the "costs follow the event" principle should apply (see esp [5.8], [5.12] and [5.15]).
231 The former Practice Direction of the LEC and the usual orders made by that Court when exercising its administrative review function are consistent with this approach. The reason for such an approach is well known. It is accepted, in my view correctly, that where an individual or corporation believes that an administrative decision which affects it is unreasonable, it should not be discouraged from seeking to have the decision reviewed by a concern that it may have to pay the costs of the decision-maker (invariably a public body) if the application fails. This approach acknowledges the fact that the nature of the proceedings is a review of an administrative decision where, unless review is provided, an individual will have no means of challenging the decision, however unreasonable, except if the high threshold of Wednesdbury unreasonableness can be overcome. It is derived from considerations of fundamental fairness and seeks to strike an appropriate balance between the resources of the decision-maker and those of the citizen affected by its decision.
232 The Court Act contains two provisions relevant to costs. Section 52 provides for costs in Class 5 proceedings and s 69 provides for costs in Classes 1 to 4 and Class 6. Section 69(2)(a) states that "costs are in the discretion of the Court." Section 69(6) provides that "the Court may determine by whom and to what extent costs are to be paid."
233 Section 69 was considered by the High Court in Oshlack v Richmond River Council (1998) 193 CLR 72. That case concerned proceedings in Class 4 of the LEC's jurisdiction where the applicant, who failed at the trial, was not ordered to pay the respondent's costs. Applying the principles in Latoudis v Casey (1990) 170 CLR 534 this Court reversed that decision. By a majority the High Court restored the decision of the trial judge. Latoudis v Casey is authority for the proposition that in civil litigation costs orders are generally made to compensate the party who has been put to expense by reason of the legal proceedings. However, it is important to remember that Latoudis turned upon the correct application of s 97(b) of the Magistrates (Summary Proceedings) Act 1975 (Vic) in summary criminal proceedings. To the extent that the High Court passed observations on the appropriate approach to an award of costs in civil proceedings, it is apparent that it had in mind conventional inter partes civil litigation: (Dawson J at 561; McHugh J at 567 (and the case to which he refers); at 568).
234 As I have indicated the High Court divided in Oshlack. Brennan CJ, who with McHugh J was in the minority, held that to uphold the order of the trial judge would be to depart from the principle laid down in Latoudis which governs civil cases. McHugh J adopted the statement of principle articulated by Gleeson CJ in Owen v Walton (1995) 36 NSWLR 77 to 79 that "the purpose of an order for costs is to indemnify or compensate the person in whose favour it is made, not to punish the person against whom it is made." Neither Brennan CJ nor McHugh J gave consideration to the appropriate exercise of a discretion to make an order for costs in administrative review proceedings.
235 Gaudron and Gummow JJ published joint reasons. After discussing the antecedents to s 69 they considered whether rules of practice "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) [36] effectively dictating the approach which a court should take when vested with a discretion to make an order for costs. Their Honours concluded with observations of general relevance which are apposite to the present matter:
"There is no absolute rule with respect to the exercise of the power conferred by a provision such as s 69 of the Court Act that, in the absence of disentitling conduct, a successful party is to be compensated by the unsuccessful party. Nor is there any rule that there is no jurisdiction to order a successful party to bear the costs of the unsuccessful party: Knight v Clifton [1971] Ch 700 at 710, 713-714, 716, 724-725; Tekmat Investments Pty Ltd v Ward (1988) 65 LGRA 444 at 446.
If regard be had to the myriad circumstances presenting themselves in the institution and conduct of litigation, and to the varied nature of litigation, particularly in the equity jurisdiction, it will be seen that there is nothing remarkable in the above propositions. Several examples will suffice. In a suit for redemption, the successful mortgagor, being obliged to do equity, was required to bear the mortgagee's general costs of the suit, unless the mortgagee had forfeited them by some improper defence or other misconduct: Cotterell v Stratton (1872) 8 Ch App 295; Pearson v Dennett (1911) 11 SR (NSW) 449 at 453-454. One of several joint promisees who refused to be joined as a plaintiff could, after an offer of indemnity against costs, be made a defendant: Coulls v Bagot's Executor & Trustee Co Ltd (1967) 119 CLR 460 at 493. Likewise an equitable assignor of a present legal chose in action could, on receiving a similar indemnity, be required to permit an assignee to sue in the name of the assignor: Norman v Federal Commissioner of Taxation (1963) 109 CLR 9 at 27; Weddell v Pearce & Major [1988] Ch 26 at 38-41. However, if the recalcitrant joint promisee or assignor had not been offered the indemnity before joinder as a defendant, the promisor or assignee who had failed to take that step, although otherwise successful in the action, was obliged to bear the costs of that defendant: see Daniell's Chancery Practice, 7th ed (1901), vol 1, p 980.