Visser v Department of Customer Service

Judgment

1. In Visser v Department of Customer Service [2021] NSWLEC 88 (Visser No 1) I found that Tahmoor Coal Pty Ltd (Tahmoor) was not a proper party to these proceedings in which Jan and Yvonne Visser (the Vissers) are seeking compensation for mine subsidence under the Coal Mine Subsidence Compensation Act 2017 (NSW) (CMSC Act 2017). The Vissers have commenced proceedings under s 16 of the CMSC Act 2017 appealing the review decision of the Deputy Secretary of the Department of Customer Service of compensation payable to them under s 15. The issue of costs of Tahmoor's amended notice of motion dated 23 July 2021 remains and is the subject of this judgment.
2. The Court has jurisdiction to hear and dispose of appeals under s 16 of the CMSC Act 2017 in Class 3 of the Court's jurisdiction pursuant to s 19(f1) of the Land and Environment Court Act 1979 (NSW) (LEC Act). The issue of whether an active mine proprietor was a proper party to such an appeal arose for the first time in Visser No 1.
3. The Vissers seek their costs of Tahmoor's amended notice of motion. The parties agree that s 98 of the Civil Procedure Act 2005 (NSW) (CP Act) applies. Whether any Land and Environment Court Rules 2007 (NSW) (LER) or Uniform Civil Procedure Rules 2005 (NSW) (UCPR) also apply is in dispute.
4. In Visser No 1 the principle matter in issue was whether Tahmoor ought to be joined as a party, considered at [30]-[43]. Whether an order should be made under s 38(2) of the LEC Act was identified as an issue at [44]. No court hearing time was spent on the application of s 38(2).

Legislation

1. Section 98 of the CP Act relevantly provides: Part 7 Judgments and orders … Division 2 Costs in proceedings 98 Courts powers as to costs (1) Subject to rules of court and to this or any other Act - (a) costs are in the discretion of the court, and (b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and (c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis. (2) Subject to rules of court and to this or any other Act, a party to proceedings may not recover costs from any other party otherwise than pursuant to an order of the court. (3) An order as to costs may be made by the court at any stage of the proceedings or after the conclusion of the proceedings. (4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to - (a) costs up to, or from, a specified stage of the proceedings, or (b) a specified proportion of the assessed costs, or (c) a specified gross sum instead of assessed costs, or (d) such proportion of the assessed costs as does not exceed a specified amount. …
2. The LEC Act specifies which matters are to be determined in Class 3 of the Court's jurisdiction including: Part 3 Jurisdiction of the Court Division 1 General … 19 Class 3 - land tenure, valuation, rating and compensation matters The Court has jurisdiction (referred to in this Act as "Class 3" of its jurisdiction) to hear and dispose of the following - … (f1) appeals under section 16 of the Coal Mine Subsidence Compensation Act 2017, … (h) any other appeals, references or other matters which an Act provides may be heard and disposed of by the Court, being appeals, references or other matters that are not referred to in any other section of this Part.
3. The LER provide: Part 3 Proceedings in Class 1, 2 or 3 of the Court's jurisdiction … 3.7 Costs in certain proceedings (1) This rule applies to the following proceedings (except for appeals under section 56A of the Act) - … (c) the following proceedings in Class 3 of the Court's jurisdiction - (i) appeals, references or other matters that may be heard and disposed of by the Court under the Crown Lands Act 1989 or Western Lands Act 1901, as referred to in section 19 (a) of the Land and Environment Court Act 1979, (ii) appeals under section 37 (1) of the Valuation of Land Act 1916, (iii) appeals under section 8E of the Rookwood Necropolis Act 1901 or clause 56 (2) of Schedule 8 to the Crown Lands Act 1989, (iv) appeals and applications under section 526 (including section 526 as applied by section 531) or 574 of the Local Government Act 1993, (v) appeals under section 202 of the Fisheries Management Act 1994, (vi) appeals under section 174, and references under section 175, of the Aboriginal Land Rights Act 1983, (vii) any other appeals, references or other matters referred to in section 19 (h) of the Land and Environment Court Act 1979. (2) The Court is not to make an order for the payment of costs unless the Court considers that the making of an order as to the whole or any part of the costs is fair and reasonable in the circumstances.
4. Appeals pursuant to s 16 of the CMSC Act 2017 are not specified in LER r 3.7(1)(c).
5. The general rule that costs follow the event is provided in UCPR r 42.1 as follows. Rule 42.7 is also relevant. Part 42 Costs Division 1 Entitlement to costs 42.1 General rule that costs follow the event Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs. … 42.7 Interlocutory applications and reserved costs (1) Unless the court orders otherwise, the costs of any application or other step in any proceedings, including - (a) costs that are reserved, and (b) costs in respect of any such application or step in respect of which no order as to costs is made, are to be paid and otherwise dealt with in the same way as the general costs of the proceedings. (2) Unless the court orders otherwise, costs referred to in subrule (1) do not become payable until the conclusion of the proceedings.
6. Pursuant to UCPR r 1.5 and Sch 1, UCPR r 42.1 does not apply to proceedings in Class 3 of the Court's jurisdiction.

Vissers' submissions

1. Costs in Class 3 proceedings are governed by LER r 3.7 and UCPR r 42.1. The costs considerations in LER r 3.7(1) are directed to the costs of proceedings as distinct from the costs of an interlocutory application. Tahmoor should pay the Vissers' costs of the interlocutory amended notice of motion for joinder pursuant to UCPR r 42.1 which has primary application in this circumstance. Tahmoor was unsuccessful and costs should follow the event. Any costs ordered must be payable forthwith, under UCPR r 42.7(2).
2. By without prejudice correspondence before the hearing the Vissers provided a detailed analysis of why they opposed the joinder application and foreshadowed this costs application.
3. Tahmoor should not be considered to be partially successful in relation to the opportunity provided for making of a s 38(2) order under the LEC Act as its primary relief for joinder as a party was not granted. A s 38(2) order under the LEC Act was proposed on the eve of the hearing for the first time and was conceded by the Vissers as an alternative order available. Tahmoor then had the opportunity not to proceed to a hearing, but it continued with its motion. Costs could have been avoided.
4. The Vissers have been put to considerable expense in these appeal proceedings of defending the joinder application and have been vindicated in doing so. There is no basis for the Court to decline to award the Vissers' costs.
5. Alternatively, in reply, costs should be paid by Tahmoor under s 98 of the CP Act for the same reasons outlined above. The discretion in s 98 of the CP Act should be exercised to order Tahmoor to pay the Vissers' costs forthwith as provided by UCPR r 42.7(2) given that Tahmoor is a third party.
6. Accepting that this is the first such application under the CMSC Act 2017, suggesting it was a novel application does not absolve Tahmoor of any liability for costs. Tahmoor's application was unreasonable given that the CMSC Act 2017 provides no basis for the application for joinder. Further Tahmoor should not be seen as partly successful in relation to the making of s 38(2) orders.

Tahmoor's submissions

1. Rule 3.7(1)(c) of the LER does not refer to s 16 of the CMSC Act 2017. Rule 3.7(2) of the LER does not apply to these proceedings. Rule 1.5(1) of the UCPR states that the UCPR apply to each court referred to in Column 1 of Sch 1 (which includes the Court) in relation to civil proceedings of a kind referred to in Column 2 (which includes Class 3 proceedings, subject to one exception which does not apply to this case). The operation of UCPR r 42.1 is, however, a specifically excluded provision: see Column 4 of Sch 1. Rule 42.1 of the UCPR does not apply in this case. Section 98 of the CP Act does apply.
2. Both the Vissers and Tahmoor have been partially successful and partially unsuccessful on the amended notice of motion. Whilst the application for joinder was refused, an alternative set of orders pursuant to s 38(2) of the LEC Act will be made. On that basis alone, and paying due regard to the fact that the outcome of the proceedings in proceedings of this kind is not in any event determinative of the issue of costs under s 98 of the CP Act, Tahmoor submits that the Court should make no order as to the costs of and incidental to the amended notice of motion.
3. In addition, given this was the first occasion on which joinder in the context of appeals under s 16 of the CMSC Act 2017 had been considered by the Court, it was entirely reasonable for Tahmoor as the active mine proprietor to seek to be joined and to seek a determination by the Court on the matter, notwithstanding it was ultimately unsuccessful: see Visser No 1 at [2] in relation to the novelty of the application.
4. The form of appropriate orders in accordance with s 38(2) of the LEC Act is also not without its own complications. This was one reason why neither the Vissers, the Department nor Tahmoor were able to reach an agreement as to the appropriate orders to be made (and the timing of the same) when the matter was last before the Court and these still remain to be determined. Therefore, it is unlikely that the need for a hearing would have been altogether removed had Tahmoor not proceeded with its joinder application, contrary to what is submitted by the Vissers above in [13].

Department's submissions

1. The Department provided submissions to assist the Court. The discretionary power conferred by s 98 of the CP Act is wide and is only expressly limited by the rules of court or any other relevant statutory provision: s 98(2). In the present case there are no rules or statutory provisions limiting the operation of the power under s 98 of the CP Act. In particular, the "presumptive rule against costs" in LER r 3.7 and the "usual rule" that costs follow the event in UCPR r 42.1 do not apply to these proceedings. The Vissers' submissions with respect to the applicability of LER r 3.7 and UCPR r 42.1 are incorrect.
2. Section 98(3) and (4) of the CP Act make it clear that the Court has the discretion to make a costs order irrespective of whether the proceedings have been finally determined: Verde Terra Pty Ltd v Central Coast Council; Central Coast Council v Verde Terra Pty Ltd (No 5) [2020] NSWLEC 48 at [12].
3. The discretion that s 98 of the CP Act confers is subject to the qualification that it must be exercised judicially "in accordance with established principle and factors directly connected with the litigation": Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 ("Oshlack") at [65] per McHugh J adopted in Lou v IAG Limited t/as NRMA Insurance (2019) 101 NSWLR 606; [2019] NSWCA 319 ("Lou") at [42].
4. The Department submits that the following factors are relevant to the exercise of the Court's discretion under s 98 of the CP Act in the particular circumstances of this case: 1. The amended notice of motion raised a novel question in relation to the joinder of the active mine proprietor liable for the payment of compensation for subsidence under the CMSC Act 2017 in what is the first appeal brought under that Act in relation to compensation for subsidence with respect to an active coal mine: Visser No 1 at [27]. 2. Tahmoor was partially successful on the amended motion on the basis of the finding that an order under s 38(2) of the LEC Act ought to be made. 3. Whilst the Vissers consented at the time of the hearing of the amended notice of motion to the alternative order in Prayer 2, the terms of such an order under s 38(2) of the LEC Act for the participation of Tahmoor in the proceedings was, and remains, a matter of controversy. 4. The Department neither consented to nor opposed the amended notice of motion and was represented at the hearing of the amended notice of motion to assist the Court. The Department submitted that if Tahmoor was joined as a party, the Department would file a submitting appearance and would continue to assist in providing any documents sought from it by the Vissers at no cost: Visser No 1 at [14]. 5. All of the parties and Tahmoor acted reasonably on the amended notice of motion.
5. In all of these circumstances, the Department submits that the "principled exercise" (Lou at [42]) of the Court's discretion as to costs under s 98 of the CP Act would be for the Court to make an order that there be no order as to costs of, and incidental to, the amended notice of motion.

Consideration

1. For the reasons identified above by Tahmoor in [17] and the Department in [21] the relevant costs provision is s 98 of the CP Act which provides the Court with wide discretion to determine costs, subject to its exercise being principled and related to factors directly connected with the proceedings: Lou at [42] citing Oshlack. No rules or statutory provisions limit the operation of the power under s 98 of the CP Act in the circumstances of this case. A costs order may be made at any stage of proceedings inter alia, ss (3). The broad scope for making costs is identified in ss (4). Costs are compensatory: Latoudis v Casey (1990) 170 CLR 534; [1990] HCA 59 at 543. The Court has power to order costs to be paid by a non-party to proceedings such as Tahmoor in this instance: Knight v FP Special Assets Ltd (1992) 174 CLR 178; [1992] HCA 28 at 192-3; Yu v Cao (2015) 91 NSWLR 190; [2015] NSWCA 276 at [136]-[137]; UTSG Pty Ltd v Sydney Metro (No 6) [2020] NSWLEC 63 at [412].
2. The same costs provision, namely s 98 of the CP Act, generally applied under the former Mine Subsidence Compensation Act 1961 (NSW) (the 1961 Act): Venn v Mine Subsidence Board (2013) 7 ARLR 313; [2013] NSWLEC 30 at [204], until the introduction of the CMSC Act 2017. In Elhazouri v Subsidence Advisory NSW [2019] NSWLEC 41 ("Elhazouri") Moore J dealt with an application under s 12B of the 1961 Act after the introduction of the CMSC Act 2017 which caused an alteration in the applicable costs regime. The 1961 Act was removed from Class 3 of the Court's jurisdiction in s 19(f1) of the LEC Act when the CMSC Act 2017 was inserted in that subsection: Elhazouri at [7]. The Court continued to have jurisdiction to hear an application under the 1961 Act by virtue of s 19(h) of the LEC Act. Consequently, LER r 3.7(1)(c)(vii) applied, with the result that the Court needed to be satisfied that it was fair and reasonable to make a costs order in favour of a successful applicant.
3. No case where costs in relation to a finalised appeal under the 1961 Act were determined pursuant to s 98 was identified by the parties or the Court. Costs orders have been made on occasion following appeals from the Court.
4. In Australian Gas Light Company v Mine Subsidence Board (2006) 147 LGERA 433; [2006] NSWLEC 494, Biscoe J answered a preliminary question as to whether the Court had jurisdiction to hear an appeal under s 12B of the 1961 Act in the affirmative. No reference to costs was made. The Court of Appeal in Mine Subsidence Board v Australian Gas Light Co (2007) 152 LGERA 73; [2007] NSWCA 100 found by majority (Tobias and Handley JJA) that the primary judge was wrong to so hold. The costs order required the opponents of the appeal to pay the costs of the hearing of the preliminary question before this Court and the costs of the appeal. No discussion of the applicable costs regime appears in the Court of Appeal judgment.
5. In Vervoorn Maria v Mine Subsidence Board [2007] NSWLEC 538, Talbot J decided an appeal under s 12B of the 1961 Act. The applicant was successful. No reference was made to costs. On appeal, in Mine Subsidence Board v Maria Vervoon (2008) 165 LGERA 346; [2008] NSWCA 280 (Beazley JA, McColl JA and Nicholas J agreeing), the appeal was dismissed, and the cross-appeal allowed in part. The Court of Appeal identified that the question of costs was the subject of a separate application which was not dealt with by the primary judge but that the Mine Subsidence Board had advised that the question had been resolved, at [163]. Noting that no costs order had been made at first instance the Court of Appeal ordered that the question of the costs of the Land and Environment Court proceedings be remitted to the Court for determination. The costs of the appeal were ordered to be paid by the Mine Subsidence Board. No discussion of the applicable costs regime appears in the Court of Appeal judgment.
6. None of the above cases assists in determining this costs matter.
7. Given that costs are "at large", the approach to costs in another statutory compensation scheme considered in Class 3 of the Court's jurisdiction, the compulsory acquisition of land by the NSW Government under the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (Just Terms Act), may provide some assistance. Parallels could be drawn with the statutory compensation scheme for mine subsidence in that the permission to mine which results in subsidence claims because of damage to private property can only occur with State sanction. Rule 3.7(2) of the LER and UCPR r 42.1 do not apply in such matters.
8. As considered in Dillon v Gosford City Council (2011) 184 LGERA 179; [2011] NSWCA 328 ("Dillon") at [60]-[72] (Basten JA, Macfarlan JA and Handley AJA agreeing), any consideration of costs must be mindful that the Just Terms Act arises from the compulsory acquisition by the State of private property. In Dillon the Court of Appeal identified that the power to award costs in the proceedings arose under s 98 of the CP Act, with no presumption that costs follow the event as UCPR r 42.1 did not apply, at [60]. I note that LER r 3.7(1)(c) does not apply to land acquisition cases because s 19(e) claims, for compensation by reason of the acquisition of land, are not a type of proceedings listed in r 3.7(1)(c).
9. Basten JA stated in Dillon at [70]-[72] (Macfarlan JA and Handley AJA agreeing): 70 In other respects, however, the appellants' propositions may be accepted. They support the proposition that a claimant for compensation in respect of a compulsory acquisition should usually be entitled to recover the costs of the proceedings, having acted reasonably in pursuing the proceedings and not having conducted them in a manner which gives rise to unnecessary delay or expense. 71 That approach is also consistent with the absence of any general presumption that costs should follow the event: the owner who has been compulsorily dispossessed is entitled to take reasonable steps to seek the judgment of the Court in respect of the adequacy of any compensation offered. 72 Whether steps taken in maintaining proceedings are reasonable will depend upon the circumstances of the particular case. These may include a comparison between the positions adopted by the parties at the commencement of proceedings and the final outcome. To the extent that a claimant obtains less than the valuation provided by the Valuer-General, the claimant has been unsuccessful in the litigation. That will be a factor to be taken into account, but the weight given to that factor may depend upon the extent of the failure. The Court may also take into account the time and expense incurred in relation to specific items. Beyond such general statements, it is unhelpful to go, lest the very generality of the discretion be thought to be fettered in some way. In short, the purpose of an award of costs must be taken into account, namely to compensate the party for expenditure incurred in the course of litigation; the nature of the litigation and the reasonableness of the conduct of the litigation are central considerations.
10. That statement of principle related to finalised proceedings where a claimant for compensation was not successful, not to an interlocutory procedural application such as this matter. The importance of compensation for expenditure incurred, the nature of the litigation and the reasonableness of the conduct of the litigation can provide useful guidance at this preliminary stage also.
11. This is the first time an application for joinder as a party by an active mine proprietor has been considered in relation to an appeal by an applicant for compensation under s 16 of the CMSC Act 2017. The amended notice of motion was a procedural motion on an issue not previously determined by the Court.
12. The general rule that "costs follow the event"' under UCPR r 42.1 does not apply. The outcome of the amended notice of motion is a relevant consideration but not determinative of how costs ought to be awarded if at all.
13. I do not agree with the Vissers that Tahmoor's application was unreasonable. The amended notice of motion raised a real issue concerning how appeals commenced by an applicant under s 16 for compensation from an active coal mine should be constituted. The Department wrote a letter dated 17 June 2021, set out in full at [13] of Visser No 1, identifying that Tahmoor could consider if UCPR r 6.24 should be availed of. While not an invitation to do so the letter raised the prospect of such an application being made simply by it being written.
14. The Vissers consented to the possibility of a s 38(2) order before the hearing and virtually no court time was spent on that topic at the contested hearing. Describing Tahmoor as "partially successful" does not reflect what costs were incurred in relation to the amended notice of motion, namely the joinder application.
15. On balance I consider that Tahmoor should pay the Vissers' costs of its amended notice of motion dated 23 July 2021 and will make an order to that effect. The Applicants are seeking to avail themselves of a statutory compensation scheme for mine subsidence, were successful in resisting Tahmoor's application for joinder as a party and had to incur costs in doing so. There was no disentitling conduct on their part. That s 38(2) orders are envisaged, although yet to be made, does not reduce that success.
16. The Vissers' application that costs be ordered payable earlier than the conclusion of proceedings as provided for in UCPR r 42.7(2) is appropriate in the circumstances.
17. As the Applicant has also incurred costs in relation to this costs application Tahmoor should be liable for these costs.

Orders

1. The Court orders: 1. Tahmoor Coal Pty Ltd must pay the Applicants' costs of the amended notice of motion dated 23 July 2021 within 28 days of agreement or assessment. 2. Tahmoor Coal Pty Ltd must pay the Applicants' costs of the costs application following the amended notice of motion referred to in Order 1 within 28 days of agreement or assessment.

---

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. Decision last updated: 22 October 2021