Sharples v Minister for Local Government

Land and Environment Court (NSW)|2009-04-29|Before: Biscoe J

BACKGROUND 7 The applicant was a ratepayer in the local government area of the third respondent, Tweed Shire Council. He challenged the validity of two determinations made in 2006 and 2007 by the first respondent, the Minister for Local Government under s 508A(1) of the Local Government Act 1993 that the council's general income may be increased. Section 508A(3) provides that such a "determination may be made only on the application of the council made in accordance with any applicable guidelines issued by the Director-General under the Act".

8 There were two limbs to the applicant's case: (a) both determinations were ultra vires because under the guidelines the council was required to demonstrate to the Minister that there was evidence of community support but, in seeking to obtain such evidence, misleadingly understated to the community the effect of the proposed rate increase in the council newspaper Tweed Link. The applicant called this limb of his case "misleading the public";

10 On the second limb, the applicant was unsuccessful in its contentions that the council misled the Minister as to the extent of positive responses from ratepayers and that the determinations were invalid on four legal bases: (a) simply because the applications contained misleading survey representations;

(b) in breach of the guidelines, the council failed to provide valid evidence of community support;

(d) by reason of (a) to (c) above, the Minister's determinations were manifestly unreasonable. PUBLIC INTEREST 11 The applicant submits by reference to the five Engadine considerations, that these proceedings were brought in the public interest. (a) The public interest served by the litigation 12 The applicant submits that the public interest was served by holding up to public scrutiny the misleading conduct of the council towards its ratepayers and the manner in which the council applied to the Minister. The applicant submits that this is consistent with a concept of public benefit as supporting the transparency of government processes.

13 The council at an interlocutory stage of the proceedings, on a security for costs application, conceded that the proceedings concerned a matter of public interest: Sharples v Minister for Local Government [2008] NSWLEC 67 at [20] - [21]. However, on the present application the council submits that the public interest was not served because: (i) letters written by the applicant prior to the litigation in which he made allegations of corrupt and criminal conduct by the council indicate that he was on a personal vendetta. I held in my earlier judgment that those allegations were wrong on any view of the evidence. However, they were not made in the proceedings. I am not inclined to conclude that the proceedings were a vendetta and not brought in the public interest simply because the applicant made intemperate or worse accusations before the litigation commenced. There is a stark contrast between the proceedings and the allegations made in letters from the applicant prior to the proceedings;

(ii) the transparency of government processes as a public benefit is entitled to little weight because it is a relevant factor in many cases challenging government decisions. I agree that it is a relevant factor in many such cases;

(iii) the proceedings were doomed to failure. I do not think that this can possibly describe the first limb of the applicant's case. On the second limb, the applicant's case faced substantial difficulties but again I would not characterise it as doomed to fail. 14 In my opinion the public interest was served by the litigation for the reasons submitted by the applicant. (b) Whether that interest is confined to a relatively small number of people or whether the interest is wide 15 The council points out that the proceeding was brought by the applicant alone, it was not a class action nor was it brought by a representative association, and there is no evidence of support for the proceeding. In my opinion, this consideration is not governed by proof of popularity of the litigation in the minds of people affected. The outcome of the case directly affected all ratepayers in the Tweed Shire and the legal principles were of general significance to the legality of revenue raising activities of all local governments in New South Wales. In my opinion, the public interest served by the litigation was wide. (c) whether the applicant sought to enforce public law obligations 16 The council concedes that the application sought to enforce public law obligations, but submits that that is entitled to little weight since that will generally be the case in judicial review proceedings. (d) whether the prime motivation of the litigation was to uphold the public interest and the rule of law 17 The council submits that the motivation was a vendetta against the council as evidenced by the applicant's corruption and criminality allegations in his pre-litigation correspondence. I have earlier said that I do not accept the vendetta characterisation of the litigation. In my view this consideration is satisfied. The prime purpose of the litigation was to demonstrate that, in law, the council's conduct rendered the Ministerial determinations invalid. (e) whether the applicant had no pecuniary interest in the outcome of the proceedings 18 The council submits that the applicant had a pecuniary interest in the outcome because he sought a refund of rates and was a ratepayer and therefore stood to benefit financially if the proceedings succeeded. The council also says that there is no evidence that anyone else wanted a refund of rates.

19 It is true that the applicant has a pecuniary interest in the outcome, but it is limited to his interest as a ratepayer. His pecuniary interest is so small that I think it is of little significance. Even if he had succeeded in the proceedings and been awarded costs, it seems likely that he would still have been out of pocket in that the usual non-recoverable component of costs would have exceeded any rates refund, or at least it is unlikely that he would have been significantly financially better off. The real pecuniary beneficiaries of the litigation, if it had succeeded, would have been numerous ratepayers who did not have to bear the burden of the litigation.

20 In the circumstances of this case, in my view, more is necessary for the exercise of the discretion under r 4.2. This was, I think, recognised by the applicant who submits that the finding that the council misled the public is a special factor justifying the exercise of the discretion under r 4.2, and is also a factor relevant to the Court's general discretion on costs. I accept that that factor has significant weight in relation to the first limb of the applicant's case. However, on the second limb, the applicant failed completely. The second limb was fairly weak.

21 The applicant submits that a further special factor favouring an order under r 4.2 is novelty (the effect of local government misleading ratepayers) and general significance (the effect of s 508A). The raising of novel legal issues of general importance can be sufficient reason for not ordering costs against an unsuccessful applicant under the general law, even apart from r 4.2: Anderson at [9]; Oshlack v Richmond River Council (1998) 193 CLR 72 at [20]. 22 The council submits that there is insufficient novelty and importance in the case given its nature and the absence of evidence that other ratepayers thought it was important, and because the applicant was conducting a vendetta against the council. I have earlier not accepted the vendetta submission.

23 In relation to the first limb, in my view the case did raise questions of novelty and general significance, as submitted by the applicant. In relation to the second limb, I do not think that it did.

24 In my opinion, under r 4.2 there should be no order as to costs in relation to the first limb of the applicant's case. In relation to the second limb, I am not persuaded that I should depart from the usual order that costs should follow the event. It is therefore necessary to make an apportionment in a broad way. The council submits that half the costs should be attributed to the first limb and half to the second. Doing the best I can, my impression is that about two thirds of the hearing time was spent on the first limb. I think that this proportion probably also represented preparation time.

25 The order of the Court is that the applicant is to pay one third of the third respondent's 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.

CITATION : Sharples v Minister for Local Government (No 2) [2009] NSWLEC 62

Anderson v NSW Minister for Planning (No 2) [2008] NSWLEC 272, (2008) 163 LGERA 132 Engadine Area Traffic Action Group Inc v Sutherland Shire Council (No 2) [2004] NSWLEC 434, (2006) 136 LGERA 365 Ku-Ring-Gai Council v Minister for Planning (No 2) [2008] NSWLEC 276 CASES CITED: Minister for Planning v Walker (No 2) [2008] NSWCA 334 Oshlack v Richmond River Council [1998] HCA 11, (1998) 193 CLR 72 Sharples v Minister for Local Government [2008] NSWLEC 67 Sharples v Minister for Local Government [2008] NSWLEC 328

JUDGMENT 1 HIS HONOUR: This is an application for costs by a successful respondent against the applicant in judicial review proceedings in class 4 of the Court's jurisdiction: Sharples v Minister for Local Government [2008] NSWLEC 328. The proceedings were brought against the Minister for Local Government, the Department of Local Government and Tweed Shire Council. Costs were reserved. Only the council seeks an order for costs against the applicant. LEGAL PRINCIPLES 2 Costs normally follow the event in class 4 proceedings. However, the applicant resists a costs order on the basis of r 4.2(1) of the Land and Environment Court Rules 2007, which provides: " 4.2 Proceedings brought in the public interest

5 In a case decided before the introduction of the new public interest costs rule, Engadine Area Traffic Action Group Inc v Sutherland Shire Council (No 2) [2004] NSWLEC 434, (2004) 136 LGERA 365 at [15], Lloyd J identified five matters that may be considered in determining whether proceedings can be categorised as having been brought in the public interest: "The public interest served by the litigation.

Whether the applicant has no pecuniary interest in the outcome of the proceedings." 6 In Minister for Planning v Walker (No 2) [2008] NSWCA 334 Ms Walker succeeded at first instance but failed on appeal. The Court of Appeal held that the litigation brought by Ms Walker was public interest litigation and there were additional special circumstances, and exercised the costs discretion by ordering each party to pay their own costs both at first instance and on appeal. It appears that the new public interest costs rule in this Court and the cases which had considered them were not brought to the Court of Appeal's attention. The Court of Appeal decided the case by approving the five public interest considerations identified in Engadine, and by holding that more was required to displace the ordinary rule as to costs.

(2008) 163 LGERA 132

(2006) 136 LGERA 365

(2004) 136 LGERA 365

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