Salmon v Water Administration Ministerial Corporation of New South Wales

APPELLANT: Mr F J Parrington (Barrister) SOLICITORS: N/A

FIRST RESPONDENT: Mr B M Green (Barrister) SOLICITORS: LEGAL REPRESENTATIVES: Paul Percival Esq. Director, Legal Services Department of Land and Water Conservation

SECOND RESPONDENT: Mr J J Webster (Barrister) SOLICITORS: Farrel Lusher

IN THE LAND AND Matter No.: 30009 of 2001 ENVIRONMENT COURT Coram: Lloyd J OF NEW SOUTH WALES Decision date: 2 July 2002 Maurice Augustine Salmon Appellant v Water Administration Ministerial Corporation of New South Wales First Respondent Beverley Jeanette McPherson Second Respondent EXTEMPORE JUDGMENT [No. 2] HIS HONOUR:

1. On 5 December 2001, I allowed an appeal brought by the appellant Mr M A Salmon against the first respondent's refusal of his application to renew a water licence issued under s 13A of the Water Act 1912: see Salmon v Water Administration Ministerial Corporation of New South Wales and Anor [2001] NSWLEC 275. The second respondent, Mrs B J McPherson, lodged an objection to appellant's application to renew the licence and joined as a party to the proceedings on her application. In allowing the appeal I reserved the question of costs. The appellant now applies for an order for costs against the respondents.
2. It is not necessary to repeat the detailed facts, neither is it necessary to repeat the reasons for the decision which I have fully set out in my previous judgment. It is sufficient to note that the appellant's appeal essentially had two limbs. Firstly, an appeal against the first respondent's refusal to accept his application for a water licence under s 10 of the Water Act 1912, and secondly, an appeal against the first respondent's refusal to grant the renewal of his existing water licence under s 13A of the Water Act. The appellant in his claims failed on the first limb but succeeded on the second limb. The Court's discretion to make orders for costs under s 69(2) of the Land and Environment Court Act 1979 is unfettered. In Oshlack v Richmond River Council (1998) 193 CLR 72, the High Court considered the scope of s 69(2). After noting that s 69(2) is the traditional form of a court's jurisdiction to award costs, McHugh J, with whom Brennan CJ agreed, said (at 96): [65] Although the statutory discretion is broadly stated, it is not unqualified. It clearly cannot be exercised capriciously. Importantly, the discretion must be exercised judicially in accordance with established principle and factors directly connected with the litigation. … [66] By far the most important factor which courts have viewed as guiding the exercise of the costs discretion is the result of the litigation. A successful litigant is generally entitled to an award of costs.
3. McHugh J further explained what is meant by the expression the "usual order as to costs" (at 97): [67] 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 v Casey (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.
4. McHugh J went on to demonstrate that the traditional exceptions to the "usual order as to costs" focus on the conduct of the successful party disentitling it to the beneficial exercise of the Court's discretion. After referring to Latoudis v Casey (1990) 170 CLR 534 McHugh J said (at 102): [80] Mason CJ, Toohey J and I were all of the view that one starts with the proposition that a successful party to litigation (the defendant in Latoudis ) can usually expect to receive a costs award in its favour, unless its own conduct disentitles it from the benefit of the discretion. It is the conduct of the successful party, and not the conduct or motives of the unsuccessful party which is relevant to the exercise of the costs discretion. [ Similarly, the fact that an unsuccessful plaintiff is funded by legal aid is irrelevant to the exercise of the costs discretion. See Re Minister for Immigration and Ethnic Affairs; Ex parte Qin (1997) 186 CLR 622 at 628-629; Latoudis (1990) 170 CLR 534 at 543, per Mason CJ .] Thus Mason CJ said [Latoudis (1990) 170 CLR 534 at 542-543 ]: "in exercising its discretion to award or refuse costs, a court should look at the matter primarily from the perspective of the defendant [who was the successful party in Latoudis ]. To do so conforms to fundamental principle. If one thing is clear in the realm of costs, it is that, in criminal as well as civil proceedings, costs are not awarded by way of punishment of the unsuccessful party. They are compensatory in the sense that they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings".
5. Kirby J in Oshlack also accepted (at 121) that the compensatory principle applies to order for costs under s 69(2) of the Land and Environment Court Act. Kirby J said (at 122): The compensatory principle is adequately reflected by the adoption of a general practice by which, ordinarily (including in a case brought by a party under the "open standing" rule and purportedly in the public interest), costs are ordered in favour of the successful party.
6. Although McHugh J (and Brennan CJ) in Oshlack were in the minority in the final result, the principles explained by his Honour and to which I have referred were the majority view of the High Court as to how the discretion in making costs order should be exercised. In the present case the appellant having been successful in his appeal could, consistent with these principles, expect to have an order for costs in his favour.
7. The application for an order for costs is opposed by the respondents. It is submitted that the appellant failed on the first limb of his claim relating to his application under s 10 of the Water Act. It is submitted that his application under s 10 was summarily returned to Mr Salmon because it was hopeless and could not succeed; the Court lacked jurisdiction to entertain the application; the Court lacked jurisdiction to entertain the associated claims relating to the doctrine of lost modern grant and an equitable easement; the application to the Court was futile; and the appellant's claim in the nature of mandamus was bound to fail. It is accepted that if a party unreasonably pursues or persists with issues which have no merit then it is a consideration relevant to a costs order even though that party is generally successful: see Kirby J in Oshlack at 134.
8. In the present case I have noted (in par [12] of my principal judgment) that the appellant was invited to make an application under s 10 of the Water Act by Mr S F Webb, the Resources Access Manager of the Department of Land and Water Conversation. Mr Webb gave the appellant an application form for a licence under s 10 of the Act. The first respondent can hardly complain that the appellant wrongly made an application and pursued it under s 10 of the Act when it was the one who invited the appellant to follow that course. In these circumstances I do not regard this as disentitling conduct on the part of the appellant. Moreover, there was relatively little additional hearing time devoted solely to the claim relating to s 10.
9. There exists authority for the proposition that apportionment of costs against a successful party should only be made in exceptional circumstances, lest the ultimate ends of justice be prevented if a party is dissuaded by the risk of costs from canvassing all issues. In Hughes v Western Australian Cricket Association Inc [1986] ATPR 48,134 (40-478), Toohey J, in dismissing a claim for the apportionment of costs, referred to the warning provided by Jacobs J in Cretazzo v Lombardi (1975) 13 SASR 4 (at 16): Having said that, I would wish to sound a note of cautious disapproval of applications which are being made with increasing frequency to apportion costs according only to the success or failure of one party or the other on the various issues of fact or law, which arise in the course of a trial. …But trials occur daily in which the party, who in the end is wholly or substantially successful, nevertheless fails along the way on particular issues of fact or of law. The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case.
10. It is said that a successful party should be deprived of costs only where the conduct of that party was such as to unreasonably prolong the proceedings: see Latoudis v Casey at 565. In the present case most of the hearing time was occupied with evidence that was adduced of the facts. Those facts were common to both the claim for a licence under s 10 of the Water Act, the claims relating to lost modern grant and for an equitable easement, and the claim for a licence under s 13A of the Water Act. All of these considerations suggest that there should be no apportionment of costs in this case.
11. It is also submitted that the position of the first respondent is a difficult one. The Water Administration Ministerial Corporation of New South Wales does not benefit in any way from the decision. It is merely a determining authority that weighs up many disparate factors, sometimes on scant or unsatisfactory evidence. In the present case, however, the first respondent had the benefit of the views of the Local Land Board in two previous hearings before the board in which the Board on each occasion found in favour of the appellant. It is the first respondent's failure to adopt the approach of the Local Land Board in its previous determination of the appellant's application for a water licence, which led to this appeal. The first respondent, rather than adopting the views of the local land board, fully participated in the appeal as a party and opposed the application.
12. It is further submitted that a ten-year renewal of a licence was sought by the appellant but only two-year period was granted. It is further submitted that the yearly compensation payable by the appellant to the second respondent was doubled. However, if the appellant had not brought the appeal he would not have obtained a renewal of his licence at all. Although the yearly compensation was doubled from $250 to $500, it must be remembered that the second respondent contended for a yearly compensation of $3,500 per annum. In this respect I regard the appellant as being more successful.
13. For the above-mentioned reasons there will be an order that the respondents pay the appellant's costs.

I hereby certify that the preceding 13 paragraphs are a true copy of the reasons for judgment herein of the Honourable Mr Justice Lloyd.

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