The Applicant Upper Hunter Sustainable Industries Association Inc has commenced proceedings which it identifies as judicial review in relation to Mach Energy Australia Pty Ltd the Respondent's mining project in the Hunter Valley. The Applicant alleges that the relevant development consent was not physically commenced within the time required by the consent. The relief sought is a declaration that the relevant consent has lapsed. Such proceedings would more usually be considered to be civil enforcement in nature given reliance on s 123 of the Environmental Planning and Assessment Act 1979 (EPA Act). The Respondent has filed a Notice of Motion dated 31 March 2017 seeking an order for security for costs. The Applicant has agreed to an order for security for costs by providing a bank guarantee for $150,000 by 21 April 2017. That order (Order 1) has been made. I reserved my decision on whether a second order (Order 2) sought by the Respondent ought to be made and that is the subject of this judgment. That proposed order is in the following terms:
2. In the event that security is not provided by the Applicant pursuant to Order 1 above, the proceedings are dismissed with costs in favour of the Respondent.
Security for costs orders are provided for under r 42.21 of the Uniform Civil Procedure Rules 2005 (UCPR) which states:
42.21 Security for costs
(1) If, in any proceedings, it appears to the court on the application of a defendant:
…
(d) that there is reason to believe that a plaintiff, being a corporation, will be unable to pay the costs of the defendant if ordered to do so, or
…
the court may order the plaintiff to give such security as the court thinks fit, in such manner as the court directs, for the defendant's costs of the proceedings and that the proceedings be stayed until the security is given.
(1A) In determining whether it is appropriate to make an order that a plaintiff referred to in subrule (1) give security for costs, the court may have regard to the following matters and such other matters as it considers relevant:
(a) the prospects of success or merits of the proceedings,
(b) the genuineness of the proceedings,
(c) the impecuniosity of the plaintiff,
(d) whether the plaintiff's impecuniosity is attributable to the defendant's conduct,
(e) whether the plaintiff is effectively in the position of a defendant,
(f) whether an order for security for costs would stifle the proceedings,
(g) whether the proceedings involves a matter of public importance,
(h) whether there has been an admission or payment in court,
(i) whether delay by the plaintiff in commencing the proceedings has prejudiced the defendant,
(j) the costs of the proceedings,
(k) whether the security sought is proportionate to the importance and complexity of the subject matter in dispute,
(l) the timing of the application for security for costs,
(m) whether an order for costs made against the plaintiff would be enforceable within Australia,
(n) the ease and convenience or otherwise of enforcing a New South Wales court judgment or order in the country of a non-resident plaintiff.
…
(2) Security for costs is to be given in such manner, at such time and on such terms (if any) as the court may by order direct.
(3) If the plaintiff fails to comply with an order under this rule, the court may order that the proceeding on the plaintiff's claim for relief in the proceedings be dismissed.
...
I have not had to determine whether to make a security for costs order in light of the Applicant's offer to the Respondent which has been accepted. It is useful to consider the terms of r 42.21(1A) in determining whether to make the additional order sought in the interests of justice. Subsection (2) provides that a court can impose an order for security for costs on such terms as it sees fit. Factors in r 42.21(1A) of most relevance are sub-cls (a), (b), (c), (f), (g), (i) and (j).
If these are judicial review proceedings, r 59.11 is also relevant. It states:
59.11 Security for costs
(1) A plaintiff is not to be required to provide security for costs in respect of judicial review proceedings except in exceptional circumstances.
(2) Where a plaintiff:
(a) invokes an open standing provision, or
(b) commences representative proceedings,
the court is not to treat the plaintiff as bringing proceedings for the benefit of a third party for the purposes of considering whether exceptional circumstances exist.
(3) This rule has effect despite rule 42.21.
[3]
Chronology
The parties outlined to the Court a brief summary of the events and circumstances which gave rise to this dispute. I have attempted to capture these as faithfully as possible in the chronology below. The history is relevant to the Respondent's argument on delay, see below par 10.
Date Event
22 December 1999 Development consent granted to Coal and Allied Operations Pty Ltd, a subsidiary of Rio Tinto Ltd, for the Mount Pleasant Coal Project (the Project) by the Minister for Urban Affairs and Planning under the EPA Act.
19 January 2005 Applicant alleges that the consent for the Project lapsed for want of physical commencement of the approved development.
19 September 2011 Modification of the Minister's approval under s 75W of the EPA Act (since repealed).
29 February 2012 Project approved under the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act) following a public exhibition process.
January 2016 Respondent signed a binding agreement to purchase the Project from Coal and Allied Operations Pty Ltd.
4 August 2016 Transaction for the purchase of the Project completed.
19 August 2016 Applicant came into existence as an incorporated association.
25 November 2016 First stage of construction of the Project commenced.
21 March 2017 Summons filed in the Land and Environment Court commencing these proceedings.
29 March 2017 Further modification of the Minister's approval of the Project.
31 March 2017 Notice of motion filed by the Respondent seeking an order for security for costs.
[4]
The Respondent gave two reasons in support of its application for Order 2 as being appropriate in the circumstances of the case. These are that the Applicant is impecunious and that the Applicant delayed the commencement of proceedings.
[5]
Whether Applicant impecunious
The Respondent submitted that the Applicant is impecunious. It read the affidavit of Mr Guy Dwyer solicitor for the Respondent dated 31 March 2017 in support of this application. Annexed to that affidavit was a copy of the application for registration of an incorporated association completed on behalf of the Applicant. The application form included a section on financial details where it was indicated that the Applicant's estimated total income was $200,000, the same as its estimated expenditure, and its total assets were nil.
The Respondent submitted that the Applicant's unwillingness to agree to Order 2 despite agreeing to pay security suggests that it will not be able to deliver on its bank guarantee. This makes Order 2 reasonable.
The Applicant did not admit that it is impecunious. It submitted that the evidence relied upon by the Respondent was not sufficient to support a finding that the Applicant is impecunious. The Applicant offered to pay security and the Court should not be concerned by its ability to comply with this order. If the Applicant is unable to comply then it should have an opportunity to explain to the Court why not and if necessary seek an amendment to the orders.
[6]
Whether delay in commencing proceedings
The Respondent submitted that there had been extraordinary delay on the part of the Applicant in commencing these proceedings. Given the Applicant's contention that consent for the Project lapsed in January 2005 it should have acted much sooner to bring this to the attention of the Court rather than wait until mining operations were about to commence. The timing of these proceedings was intended to cause maximum discomfort to the Respondent. The Respondent and other stakeholders will potentially suffer gross prejudice as a consequence of these proceedings being brought.
To support its argument the Respondent relied in part on the affidavit of Mr Christian Lauritzen General Manager - Resource Development at the Respondent company dated 29 March 2017. Mr Lauritzen deposed that the Respondent paid US$200.7 million to purchase the Project in 2016. The Project is approved to produce up to 10.5 million tonnes of run-of-mine thermal coal per annum for export markets and has total marketable reserves of 474 million tonnes. Ninety employees currently work on the Project site and that workforce is expected to increase to over 300 employees by July 2017. The target date for the first coal to be delivered from the Project is 1 April 2018, which necessitates the Respondent having to soon enter into a binding agreement with a contractor for the operation of the mine.
On the issue of delay the Applicant submitted that it could not be expected to commence proceedings in circumstances where there was no evidence of actual works being undertaken between 2005 and 2016 in reliance on the development consent for the Project. The relief sought by the Applicant, in particular the order that the Respondent be restrained from acting upon the consent, would be futile if there was merely a theoretical possibility that the consent might be relied upon at a later stage. Moreover, the Applicant only came into existence on 19 August 2016 meaning the timing of these proceedings which were commenced in March 2016 is not unreasonable. It considered legal advice which the Respondent obtained in December 2016 and made available to the Applicant before deciding to commence proceedings.
In reply the Respondent contended that there was a "well-publicised... spurt of activity" between 2010 and 2011 which included public consultation processes for the modification of development consent and approval sought under the EPBC Act. The Respondent noted that a representative of the Applicant made a submission during the public consultation process for modification of the development consent in 2016. There was also significant media coverage of the proposed and eventual transfer of the Project to the Respondent.
[7]
Not established that Applicant is impecunious
In Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 744, in his reasons for ordering the payment of security Einstein J said at [60] that "there is substantial authority... that the defendants, as applicants for security for costs, have an evidentiary burden of leading evidence to establish a prima facie entitlement to such an order...". I agree with the Applicant's submission that it did not need to put on evidence to satisfy the Court that it was not impecunious when the onus falls on the Respondent as the mover of the notice of motion to establish why an order ought to be made. I am not satisfied on the evidence before me that the Applicant in these proceedings is impecunious. Offering security for costs by way of a bank guarantee of $150,000 suggests to the contrary. Accordingly, there is no indication at this stage that security will not be provided.
[8]
No substantial delay established
I do not find that the Applicant delayed the commencement of these proceedings in a way that would justify the making of Order 2. Given the time frame whereby the Applicant came into existence in August 2016 and work commenced in November 2016 commencement of proceedings in March 2017 is not substantial delay. For the reasons given by the Applicant, earlier commencement of proceedings (had the Applicant existed) would have been in a factual vacuum in the absence of works being undertaken in reliance on the development consent.
The arguments raised by the Respondent on delay are more relevant to the necessity of expedition of the proceedings, the subject of another notice of motion filed by the Respondent. Expedition has been granted.
[9]
Further considerations
Relevant to determining whether to make proposed Order 2 is authority that it does not automatically follow that because a party to the proceedings fails to comply with an order to provide security for costs the proceedings should be dismissed. In Idoport Pty Ltd v National Australia Bank Ltd [2002] NSWSC 18, Einstein J at [24] accepted the following factors that a court should take into account in considering whether to exercise its discretion to dismiss proceedings:
1. the period that has elapsed since the security was ordered;
2. the fact that the plaintiff has been on notice of the application for dismissal;
3. the seeming inability of the plaintiff to further fund the proceedings;
4. the prejudice to the defendant;
5. the position of the court.
Einstein J at [24] acknowledged that the list of factors is not exhaustive and that the Court should take into account all relevant circumstances and attempt wherever practicable to act consistently with the interests of justice. These factors were also cited with approval on appeal in Idoport Pty Ltd v National Australia Bank Ltd [2002] NSWCA 271.
Idoport (2002) concerned the Court's discretion to dismiss proceedings after an order for security was not complied with. If Order 2 is made the factors referred to in Idoport cannot arise for further consideration by the Court, an unsatisfactory outcome.
In terms of relevant matters referred to in r 42.21(1A) not already dealt with, there appears to be no dispute that there is a case to be argued (sub-cl (a)) and the proceedings appear genuine given the objects of the Applicant (sub-cl (b)). The objects were set out in the Applicant's Constitution annexed to Mr Dwyer's affidavit. They include the promotion and support of the protection of rural and agricultural enterprises, the application of principles of ecologically sustainable development in decision-making concerning land use and planning, the prevention of incompatible land uses and the monitoring and enforcement of compliance with planning, mining and environmental laws. The Applicant's Constitution contemplates the use of legal actions to support the attainment of the general objects listed above. Furthermore, Order 2 potentially stifles the proceedings (sub-cl (f)) and the matters in issue are arguably of public importance (sub-cl (g)). That costs will be incurred by the Respondent in the proceedings (sub-cl (j)) informs the making of a security for costs order as has already occurred in this case. No other relevant matters justify the making of Order 2 in the interests of justice.
Exceptional circumstances are required before a security for costs order can be made in judicial review proceedings as provided in r 59.11 of the UCPR. If these proceedings can be characterised as judicial review, that is a high threshold for the Respondent to meet. None have been established by the Respondent.
[10]
Conclusion
I will not make Order 2 sought by the Respondent pursuant to its Notice of Motion dated 31 March 2017.
[11]
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Decision last updated: 24 April 2017
Parties
Applicant/Plaintiff:
Upper Hunter Sustainable Industries Association Inc