Weston Aluminium Pty Limited v Alcoa Australia Rolled Products Pty Limited

Land and Environment Court Act 1979, 69 LEGISLATION CITED: Supreme Court Rules 1970 Pt 52A, r 9

Carriage v Stockland (Constructions) Pty Limited (2003) 125 LGERA 414; Cretazzo v Lombardi (1975) 13 SASR 4; Equityloan Limited v Windy Dropdown Pty Limited, Campbell J, NSWSC, 12 March 2003, unreported; Fiduciary Limited v Morningstar Research Pty Ltd (2002) 55 NSWLR 1; [2002] NSWSC 432; Hughes v Western Australian Cricket Association Inc [1986] ATPR 48,134 (40-748); Jamal v Secretary Department of Health (1988) 14 NSWLR 252; CASES CITED: Laguillo v Haden Engineering Pty Ltd [1978] 1 NSWLR 306; Liverpool City Council v Roads and Traffic Authority (1992) 75 LGRA 210; Nobris v Nobris (1986) 161 CLR 513; Oshlack v Richmond River Council (1998) 193 CLR 72; Trade Practices Commission v Nicholas Enterprises Pty Ltd [No. 3] (1979) 42 FLR 213; (1979) 28 ALR 201 ; Westfield Management Limited v Direct Factory Outlets Homebush Pty Ltd [2004] NSWLEC 538

APPLICANT: P C Tomasetti (barrister) SOLICITORS: Henry Davis York LEGAL REPRESENTATIVES:

RESPONDENT: D Brigden (solicitor) SOLICITORS: Freehills

JUDGMENT:

• 7 - IN THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

WESTON ALUMINIUM PTY LIMITED v ALCOA AUSTRALIA ROLLED PRODUCTS PTY LIMITED (No. 4) [2005] NSWLEC 154

JUDGMENT 1 The applicant, Weston Aluminium Pty Limited ("Weston"), is seeking an order for costs in proceedings that are presently part heard and a further order that those costs be assessed immediately.

2 The background facts may be briefly described. The respondent, Alcoa Australia Rolled Products Pty Limited ("Alcoa"), occupies and uses an area of land at Yennora for the manufacture of aluminium products. A by-product or waste material of the manufacturing process is an aluminium oxide, known as dross. Although dross is a by-product, it can be, and is, reprocessed as a feed material for Alcoa's operation at Yennora.

3 In September 2000 an application was made to the Environment Protection Authority to vary the pollution control licence applying to the operations at Yennora so as to allow the acceptance of dross from Alcoa's Point Henry works in Victoria for use as a feed material. Since about that time dross generated at Point Henry has been utilised as feedstock at Yennora, in addition to the use of dross generated at Yennora itself.

4 On 23 December 2003 Weston commenced proceedings against Alcoa seeking the following relief: 1. A declaration that the use of Alcoa's land at Yennora for the processing of aluminium dross, other than aluminium dross formed as a result of its operation on the premises, is in breach of the Environmental Planning and Assessment Act 1979 (the "EP&A Act"). 2. A declaration that the use of Alcoa's land at Yennora for the processing of aluminium dross, other than aluminium dross formed as a result of the operations on the premises, is prohibited by Holroyd Local Environmental Plan 1991. 3. An order that Alcoa be restrained from using its premises for the processing of aluminium dross, other than aluminium dross produced by its use of the premises. 5 On 25 March 2004, McClellan J ordered that the proceedings be heard in two parts. The first part was to deal with the question of whether the existing development consents allowed Alcoa to process externally produced dross at its Yennora site. The second part of the proceedings, which was to be litigated only if the Court found that the existing development consents do not permit the processing at Yennora of externally produced dross, was to deal with the issues of discretion, including any alleged environmental harm.

6 The first part of the proceedings was heard over two days on 19 August and 20 August 2004. In an ex tempore judgement given on the second of those days I found in favour of Weston. That is, I found that the importing of dross from Alcoa's Point Henry facility and the processing of it at the Yennora site was not part of any development consent that had been granted for the Yennora site.

7 Weston now seeks an order that Alcoa pay its costs for the first stage of the hearing up to and including 20 August 2004. Those costs are said to be in the order of $363,000.00 from the date of commencement of the proceedings to 20 August 2004. Weston says that the non-payment of these costs is causing serious pressure upon it, as it is said to be a relatively small company which has to meet cash flow requirements and interest. There could be a significant delay before the conclusion of the proceedings since Alcoa has now made a development application to enable it to process aluminium dross imported from Point Henry.

8 In passing I observe that the amount of costs claimed appears to be unusually large for a two-day case involving only questions of fact, at the end of which it was possible to deliver an ex tempore judgement. That does not presently concern me, however. I am only to decide the principle of whether an order for costs and for the immediate assessment of such costs should be made at this stage, before the conclusion of the proceedings.

9 The applicant's submissions have concentrated on whether the Court should exercise its discretion to order that costs be assessable forthwith and the authorities relied upon relate to that question: Fiduciary Limited v Morningstar Research Pty Ltd (2002) 55 NSWLR 1; Equityloan Limited v Windy Dropdown Pty Limited, Campbell J, NSWSC, 12 March 2003, unreported; Westfield Management Limited v Direct Factory Outlets Homebush Pty Ltd (2004) 136 LGERA 174. A more fundamental question, however, is not when costs that have been ordered should be payable, but whether there should be an order for costs at all at this stage; that is, whether an order for the costs of the first part of the proceedings should now be made, or whether the question of costs of the first part of the proceedings should await the final outcome of the case.

10 The respondent submits that it is not appropriate to consider the question of the costs of the first part of the proceedings at this stage. Reference was made to Liverpool City Council v Roads and Traffic Authority& Anor [No. 2] (1992) 75 LGRA 210.

11 In that case the applicant established a breach of s 112 of the EP&A Act, but the Court, in the exercise of its discretion, declined to make any orders. Both the applicant council and the respondent then sought an order for the costs of the proceeding. The applicant's argument was twofold: firstly, it had established a breach of the law and, secondly, the litigation should be properly characterised as public interest litigation.

12 On the question of costs Cripps J said (at 211): Section 69 of the Land and Environment Court Act 1979 (NSW) provides that costs are in the discretion of the Court. The discretion must, of course, be exercised judicially. Ordinarily in class 4 litigation costs follow the event. It is accepted that where a litigant has succeeded only on a portion of a claim, the circumstances may make it reasonable that he bear the expense of litigating that portion and a successful party who has failed on certain issues may not only be deprived of the cost of those issues but may be ordered as well to pay the other party's costs of them: see Hughes v Western Australian Cricket Association (Inc) [1986] ATPR 48,134. 13 Cripps J said that he did not regard the respondent's conduct as relevantly unreasonable with respect to its defence that it had complied with the provisions of s 112, but declined to characterise the litigation as public interest litigation. His Honour then said (at 212): It is trite law that a breach of the Environmental Planning and Assessment Act 1979 will not automatically result in a declaration being made much less a restraining order. Cripps J then held that the fair and the proper order of the Court is that the council pay the respondent's costs of the proceedings, notwithstanding the fact that it was successful in establishing that the respondent was in breach of the EP&A Act.

14 The respondent submits that it is appropriate to await the final outcome of these proceedings before making any order as to costs because the Court may decide to follow the course adopted by Cripps J in Liverpool City Council v Roads and Traffic Authority.

15 In Oshlack v Richmond River Council (1998) 193 CLR 72, the joint judgment of Gaudron and Gummow JJ acknowledges, at par [35], the existence of a general rule that a wholly successful party should receive its costs unless good reason is shown to the contrary, but also acknowledges that the rule must be understood in the sense explained by Brennan J in Nobris v Nobris (1986) 161 CLR 513 at 517: It is one thing to say that principles may be expressed to guide the exercise of a discretion; it is another thing to say that the principles may harden into legal rules which would confine the discretion more narrowly than the Parliament intended. The width of a statutory discretion is determined by the statute; it cannot be narrowed by a legal rule devised by the court to control its exercise. 16 The joint judgment then asserts at par [40], however, that: "[t]here is no absolute rule with respect to the exercise of the power conferred by a provision such as s 69 of the Land and Environment Court Act 1979 that, in the absence of disentitling conduct, a successful party is to be compensated by the unsuccessful party. Nor is there any rule that there is no jurisdiction to order the successful party to bear the costs of the unsuccessful party". Similarly, the other member of the majority, Kirby J, stated, at par [134], that the principle, that costs will usually be ordered in favour of the successful party, cannot be treated as an absolute rule, otherwise the discretion conferred in unqualified terms would be shackled and confined and would be incompatible with the statutory language. Kirby J further held that although there are principles which guide the exercise of the discretion, they cannot extinguish the element of discretion and must not be allowed to harden into rigid or inflexible requirements.

17 The general approach to the apportionment of costs is that it will ordinarily be appropriate to award the costs of proceedings to the successful party without attempting to differentiate between those issues on which it was successful and those on which it failed, unless a particular issue or group of issues is clearly dominant or separable: Hughes v Western Australian Cricket Association Inc [1986] ATPR 48,134 (40-748) per Toohey J. However, subject to this general approach a party may be entitled to the costs of any issue in which he or she succeeds (Laguillo v Haden Engineering Pty Ltd [1978] 1 NSWLR 306), to be set off against the general costs, if that party is otherwise unsuccessful (Jamal v Secretary Department of Health (1988) 14 NSWLR 252), or the court may deprive an otherwise successful party of costs in relation to issues on which it failed. 18 There are, of course, cases in which it has been held appropriate to make interlocutory costs orders, typically in cases where the decision relates to a discrete question or the determination of a separate question, or where there is likely to be a long delay before the final resolution of the proceedings. The general or normal practice, however, is that such costs are not payable until the conclusion of the proceedings: cf Pt 52A, r 9, Supreme Court Rules 1970. 19 There are also decisions, however, which express caution before any order for apportionment is made. In Cretazzo v Lombardi (1975) 13 SASR 4, Jacobs J, in the Full Court of the Supreme Court of South Australia, said (at 16): … 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. 20 Jacobs J noted that trials occur daily in which the party, who in the end is wholly or partially successful, nevertheless fails along the way on particular issues of fact or law, and concluded by stating (at 16): There are, of course, many factors affecting the exercise of the discretion as to costs in each case, including in particular, the severability of the issues, and no two cases are alike. I wish merely to lend no encouragement to any suggestion that a party against whom the judgment goes ought nevertheless to anticipate a favourable exercise of the judicial discretion as to costs in respect of issues upon which he may have succeeded, based merely on his success in those particular issues. 21 Similarly, in Trade Practices Commission v Nicholas Enterprises Pty Ltd [No. 3] (1979) 42 FLR 213 at 220, Fisher J saw the discretion to apportion costs as one to be exercise only in the most exceptional circumstances. His Honour accepted, however, that if a considerable portion of the trial is taken up in determining issues upon which the defendant falls, it is a proper exercise of the discretion to reduce the costs allowed to that defendant.

22 In this Court, in Carriage v Stockland (Constructions) Pty Limited (2003) 125 LGERA 414, Pain J expressed the view that a prudent course is to reserve the costs of an interlocutory hearing until the final outcome of the proceedings.

23 The difficulty in making an order for costs in this case at the present stage of the proceedings is that it is not known whether the applicant will, at the end, be the successful party. Moreover, if the respondent is, in the end, the successful party, it is not known at this stage whether the successful party should be merely deprived of the costs of the first issue, or whether those costs should be set off against the general costs, or whether some other order should be made, such as no apportionment of costs (as was decided by Cripps J in Liverpool City Council v Roads and Traffic Authority). The extent to which the first issue in the present case fits in to the overall picture of the litigation is not known at this stage - the hearing on discretion may take longer than the hearing of the first issue and may overlap that issue. In other words, bearing in mind the caution expressed in Cretazzo, in Trade Practices Commission v Nicholas Enterprises Pty Ltd and in Carriage, I am left with the impression that the present application for costs is premature and should await the final outcome of the proceedings.

24 For these reasons, in the exercise of the Court's discretion, I decline to make the order sought at this stage of the proceedings. Those costs are reserved. The applicant's amended notice of motion dated 17 March 2005 will be stood over for consideration at the conclusion of the proceedings. I hereby certify that the preceding 24 paragraphs are a true copy of the reasons for judgment herein of the Honourable Mr Justice D H Lloyd.

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.