Ryde Pool Action Group Inc. v Ryde City Council

LEGISLATION CITED: security for costs - public interest litigation - impecuniosity - discretionary considerations justifying refusal of award of security for costs

DATE OF JUDGMENT DELIVERY: 04/22/1999

APPLICANT Mr K F Morrissey

Solicitors Bush Burke & Co LEGAL REPRESENTATIVES: RESPONDENT Mr L G Foster SC

Solicitors Hill Thompson & Sullivan

This is an application instituted by Ryde City Council ("the council") for security for costs in respect of proceedings instituted against it by the applicant as detailed hereunder.

The land which is the subject of these proceedings is located at Lot 1 in deposited plan No. 323175 and is known as Olympic Park, 504 Victoria Rd, Gladesville ("the land"). On the 21 October 1954 the land was vested in council subject to a trust to use such land for the purpose of a public park, or a public reserve or a public recreation area and development thereon was limited to buildings associated with such purposes. The council constructed thereon a public swimming pool and associated facilities ("the centre") and has managed it until 1998. In June 1998 the council proposed to enter into an arrangement to re-develop the centre and thereafter to lease the land to David Lloyd Leisure Australia Pty Limited ("DLLA"). Such company would thereafter operate and manage the centre on behalf of council for a period in excess of twenty-one years. Stage I of such proposed development comprised the construction of new swimming pool facilities and Stage II comprised the construction of tennis courts, squash courts, a gymnasium and child minding facilities. The evidence confirms that the Olympic Co-ordinating Committee proposed that the centre be used as a training and or sporting facility in connection with the forthcoming Olympic Games upon its re-development to be held in the year 2000.

To implement the above proposals, the council, on 14 October 1997 resolved to prepare a local environmental plan to reclassify the land from "community" to "operational" and for this purpose in January 1998 caused notice of the public exhibition of a Draft Ryde Local Environmental Plan No. 90 ("DRLEP 90") to be published. An inquiry was held on the 1 May 1998 by an officer appointed by the council and on 2 June 1998 the council thereafter reported to the Minister for Urban Affairs and Planning pursuant to the provisions s69 of the Environmental Planning and Assessment Act 1979, ("the EPA Act"). Such report recommended the implementation of the DRLEP 90.

Ryde Pool Action Group Inc ("the action group") was incorporated on 23 June 1998 pursuant to the provisions of the Associations Incorporation Act 1984. The objects included in its Application for Incorporation:- To provide support, action and reverse decisions to re-classify Ryde Olympic Park from community to operational.

Subsequently in a Notice of Alteration of Objects or Rules filed with the Department of Affairs and Trading the aims and objects of the action group were expanded. In summary the action group's activities are now stated to be inter alia, the preservation of " Ryde Swimming Centre as an affordable council owned and operated facility catering for the swimming and leisure needs of the people of Ryde ." Other aims are directed to the maintenance of the centre and of its upgrading by the council.

By application Class Four filed in this court on 25 September 1998 the action group sought a declaration that the DRLEP 90 is void and an order restraining the council from dealing with the land. Since that date there have been several directions hearings in this court. The court record reveals that the action group has been remarkably slow in the preparation of its case and in complying with the court's directions.

On 11 November 1998 the council informed the Regional Director of the Department of Urban Affairs and Planning ("the Department") of the institution of these proceedings and advised that, " on the basis of legal advice, council has decided to consent to a declaration of invalidity ". It set out the reasons for such decision and proposed that a new draft local environmental plan be prepared. In a subsequent letter dated 16 November 1998, council informed the Department of its resolution to prepare Draft Local Environmental Plan No. 98 (DRLEP 98) to replace the DRLEP No. 90.

The council's proposals contained in its letters of 11 November 1998 and 16 November 1998 have not been implemented and council has not consented to any declaration of invalidity of DRELP 90. Accordingly the Class Four proceedings will continue.

Points of claim and points of defence have been filed but no evidence has been filed in the proceedings by the action group. The council has now filed its notice of motion for security for costs seeking an order that the sum of $39,536.77 be provided by way of security or such other sum as the court considers appropriate.

The action group presently comprises approximately eighty-five members of which there are eight members who serve on an executive committee. It has debts of approximately $1,500 and has cash in hand of $1,160. It is conceded that the action group would be unable to meet any order for costs made against it and that it will not be able to proceed with the litigation unless it receives a grant of legal aid or some other form of legal assistance. Application has been made for such assistance but the result is not yet known.

When the council's proposals for the centre became known a petition was presented to council protesting against the alienation of the centre to a private organisation. It is apparent that the principal concern of the action group is the removal of community land from council's control and delegation of its management and operation to the private operator, DLLA, who may charge commercial rates for entry into and use of the proposed facilities. The concern is essentially related to Stage II of the development.

This court is invested with specific power to require a party to provide security for costs (Land and Environment Court Act 1979 s69(3)). Part 6 Rule 1 of the Land and Environment Court Rules 1996 incorporates Pt 53 of the Supreme Court Rules 1970 which relate to the power of the Supreme Court to impose security for costs. Part 53 Rule 2(1) states the circumstances in which such court may grant security. One such circumstance is that of a plaintiff who is suing " not for his own benefit, but for the benefit of some other person and there is reason to believe the plaintiff will be unable to pay the costs of the defendant is ordered to do so " (Part 53 Rule 2(1)(b)). Another circumstance is that " there is reason to believe that the plaintiff being a body corporate will be unable to pay the costs of the defendant if ordered to do so " (Part 53 Rule 2(1)(e)). The latter provision coincides with the circumstances of the present applicant. Pursuant to s15 of the Associations Incorporation Act 1984 the incorporated group is a "body corporate" for the purposes of the Rule.

Section 69(2) of the LEC Act gives this court unfettered discretion to award costs provided such discretion is exercised judicially ( Oshlack v Richmond River Council (1998) 193 CLR 72). The "usual rule" in relation to the award of costs following a hearing entitles the successful party to an award of costs ( Latoudis v Casey (1990) 170 CLR 534). The court has the benefit of numerous authorities which provide principles in respect of an application of the type now before it. For example in Tinda Creek Spiritual & Environment Centre v Baulkham Hills Shire Council (NSWLEC No. 40066 of 1997) Sheahan J drew attention to the fact that an application for security for costs involves different considerations from those when considering an award of costs. He observed that security for costs is designed to ensure that unsuccessful proceedings did not cause injustice to a successful party. In Ariss & Anor v Express Pty Limited (in liquidation) [1996] 2VR 507 the Court of Appeal of the Supreme Court of Victoria observed that the plaintiff was required to prove the " commercial impracticability " in providing any security in circumstances where the proceedings would be stultified by such an order. In Bell Wholesale Co. Limited v Gates Export Corp. (1984) 2 F.C.R. 1 the court observed that the plaintiff against whom the security was sought bore the onus of adducing evidence to establish its impecuniosity. In North Cronulla Precinct Committee Incorporated v Sutherland Shire Council (NSWLEC No. 40098 of 1997) Pearlman J in respect of an application for costs following the conclusion of a hearing determined that legitimate public interest held by the applicant was not sufficient per se, to constitute " special circumstances which would deprive a successful party of its costs ". Such authorities whilst providing useful guidelines, do not detract from the power of this Court to consider each application upon its merits.

To date the action group has expended a sum in excess of $5,000 in respect of legal fees. All its funds have been donated by residents to challenge the validity of DRLEP 90. The dedication of the incorporated group has been clearly demonstrated as well as its concern for the community interest.

The overall development costs incurred by council in the development of the site will be in excess of twenty million dollars. The estimated costs to which it is exposed in the event that it is successful in the proceedings varies between $25,000 and $40,000 which is a small sum when compared to the total expenditure. The council is concerned that rate payers funds will be wasted in the event that the council is successful in defending the application.

Whilst the above factors are matters for consideration they are outweighed by other factors. An order requiring security for costs would result in the termination of the proceedings. The issues raised by the action group are at least arguable as is conceded by the council. It appears that council's proposal to adopt a substitute local environmental plan only resulted from the institution of these proceedings. The new strategy has now been abandoned without any public explanation. These facts suggest the public interest justifies an investigation of the council's procedures. It could not be said that the claim of the action group is frivolous or vexatious and the interests of justice would not be served if the action group was prevented from proceeding to a hearing by the making of such an order.

In these circumstances the application for security for costs is refused.

The conduct of proceedings to date makes it clear that the action group has been lax in the formulation and prosecution of its claim. Now that construction has already commenced upon the site the proceedings should be determined as soon as practicable. The proceedings will be expedited.

The court makes the following orders:- 1. The Notice of Motion for security of costs be dismissed. 2. The respondent council pay the costs of this Motion subject to any application to be made within 14 days of the date of this statement. 3. The applicant formulate and provide to the respondent a precise statement of issues within 14 days of this judgment. 4. The proceedings be expedited and that a hearing date be allocated upon the first available hearing day at the expiration of four weeks from the date of this judgment.

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.