City of Stirling v Mindarie Regional Council
[2010] WASC 149
•22 JUNE 2010
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: CITY OF STIRLING -v- MINDARIE REGIONAL COUNCIL [2010] WASC 149
CORAM: LE MIERE J
HEARD: 25 & 26 MAY 2010
DELIVERED : 4 JUNE 2010
PUBLISHED : 22 JUNE 2010
FILE NO/S: CIV 1620 of 2010
BETWEEN: CITY OF STIRLING
Plaintiff
AND
MINDARIE REGIONAL COUNCIL
First DefendantCITY OF JOONDALUP
CITY OF PERTH
CITY OF WANNEROO
TOWN OF CAMBRIDGE
TOWN OF VINCENT
TOWN OF VICTORIA PARK
Second Defendants
Catchwords:
Injunction - Interlocutory injunction - Serious question to be tried - Equitable estoppel - Whether estoppel applies to a public authority exercising a statutory discretion - Unconscionability - Balance of convenience - Comparative injury to parties if injunction granted - Practical consequences to be considered rather than status quo - Interference with rights of a public authority exercising statutory power
Legislation:
Local Government Act 1995 (WA), s 6.16, s 6.17
Result:
Application dismissed
Category: B
Representation:
Counsel:
Plaintiff: Mr K M Pettit SC & Mr N F A Douglas
First Defendant : Mr C G Colvin SC & Mr P C Doherty
Second Defendants : Mr J D Allanson SC
Solicitors:
Plaintiff: McLeods
First Defendant : Woodhouse Legal
Second Defendants : Minter Ellison
Case(s) referred to in judgment(s):
Attorney‑General (NSW) v Quin [1990] HCA 21; (1990) 170 CLR 1
Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd [2001] HCA 63; (2001) 208 CLR 199
Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57
Australian Crime Commission v Gray [2003] NSWCA 318
Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618
Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148
Commonwealth v Verwayen (1990) 170 CLR 394
Legione v Hateley (1983) 152 CLR 406
Minister for Immigration and Ethnic Affairs v Kurtovic (1990) 21 FCR 193
Re Minister for Immigration and Multicultural Affairs Ex Parte Lam [2003] HCA 6; (2003) 214 CLR 1
Southend‑on‑Sea Corporation v Hodgson (Wickford) Ltd [1962] 1 QB 417
Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387
Wright v Commonwealth [2005] VSC 200
LE MIERE J: Mindarie Regional Council (MRC) is a regional local government established under the Local Government Act 1960 (WA) and continued in existence under the Local Government Act 1995 (WA) (the Act). The member councils or Participants of MRC are the City of Stirling (Stirling) and the second defendants.
The function or functions of MRC include the treatment and/or disposal of waste. MRC conducts a landfill operation at Tamala Park. Waste collected by each of the member councils is taken to Tamala Park for disposal. MRC has established a resource recovery facility, or recycling facility, at Neerabup (the RRF). In 2006 MRC awarded a contract to build, own and operate the RRF plant to Bio Vision 2020 Pty Ltd for 20 years. In 2009 the Participants, except for Stirling, commenced to deliver waste to the RRF.
Stirling collects about 72,000 tonnes of household refuse from residents' bins. Stirling has contracted to Atlas Pty Ltd the processing of 60,000 of that 72,000 tonnes. Atlas separates the 60,000 tonnes into recycled materials and residue. The residue of about 22,000 tonnes is usually but not necessarily taken to Tamala Park by Atlas. The other 12,000 tonnes is presently dumped by Stirling at Tamala Park as landfill. Although this material is 'processable' by Atlas it is not in fact processed but goes to landfill because Atlas does not have the capacity to deal with more than 60,000 tonnes. Stirling has contracted with DiCOM AWT Operations Pty Ltd (AnaeCo) to process the 12,000 tonnes over 20 years. Apart from household refuse, Stirling also delivers to Tamala Park about 105,000 tonnes of commercial and trade refuse none of which is currently regarded as processable. Stirling delivers far more waste to Tamala Park than any other Participant. Stirling does not deliver any waste to the RRF.
At present MRC charges Participants two different fees for waste: $120.50 per tonne for 'processable' (ie recyclable) waste delivered to the RRF and $66 per tonne for non‑processable waste delivered to Tamala Park. Stirling refers to this as the 2‑fee model. Stirling says that the 2‑fee model reflects the different costs of the two processes ‑ it is much cheaper to dispose of waste as landfill than to process it. MRC forecast that the fees for processable waste delivered to the RRF and non‑processable waste delivered to Tamala Park would rise in the year 2010/2011 to $134 and $86 per tonne respectively.
In August 2009 MRC held the first of four workshops in which representatives of the Participants considered a review of the fees charged by MRC for the treatment or disposal of waste and the replacement of the two fee model with a single fee model under which MRC would charge the same fee for waste delivered to Tamala Park as for waste delivered to the RRF. On 22 April 2010 the council of MRC resolved that the council 'adopt a single fee model as the basis for determining the fee for the acceptance of waste from member Councils for the 2010/2011 budget'.
The adoption of a single fee model would adversely affect only Stirling. The adverse effect on Stirling is illustrated by the following two tables:
Table 1 - Estimated waste tonnages delivered by each MRC participant to the MRC in 2009/2010
MRC participant
Processable tonnage
Unprocessable tonnage
City of Perth
16,000
37
City of Joondalup
55,941
10,261
Town of Cambridge
9,500
1,200
Town of Vincent
13,742
484
Town of Victoria Park
13,964
689
City of Wanneroo
49,300
24,700
City of Stirling
12,000
105,000
Totals
170,447
142,371
Table 2 - Cost comparisons for 2011
MRC participant
Costs under current fee structure
Costs under single-fee model
$
Difference
%
Difference
City of Perth
$1,975,936
$1,640,477
-$335,459
-17%
City of Joondalup
$8,100,038
$7,197,562
-$902,476
-11%
Town of Cambridge
$1,518,433
$1,351,101
-$167,332
-11%
Town of Vincent
$1,942,226
$1,631,070
-$311,156
-16%
Town of Victoria Park
$2,034,072
$1,736,936
-$297,136
-15%
City of Wanneroo
$10,152,878
$9,972,874
-$180,004
-2%
City of Stirling
$10,824,389
$13,017,953
+$2,193,564
+20%
In this action Stirling claims against MRC an injunction to restrain MRC from implementing the single fee model as against Stirling, a declaration that Stirling is entitled to the benefit of a contractual promise by MRC not to implement the single fee model as against Stirling, damages for breach of contract and equitable damages. Stirling now applies for an interlocutory injunction to restrain MRC 'from implementing the decision made by [its] council on 22 April 2010 to adopt a single fee model as the basis for determining the fee for the acceptance of waste from [the Participants] for the 2010/2011 budget'.
Basis of claim for interlocutory injunction
In its written submissions Stirling submitted that its action lies in statutory duty, equity and contract. However, Stirling did not press its claim in statutory duty or contract in support of its application for an interlocutory injunction. Stirling pressed only its claim based on equitable estoppel.
Interlocutory injunctions - legal principles
In Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57 Gummow and Hayne JJ said at [65] that the principles concerning interlocutory injunctions in Australia are those explained in Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618. In Beecham the court said that on such applications the court addresses itself to two main enquiries and continued:
The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief … The second enquiry is … whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted (622 ‑ 623).
Gummow and Hayne JJ said at [70] that there is no objection to the use of the phrase 'serious question' if it is understood as conveying the notion that the seriousness of the question, like the strength of the probability referred to in Beecham, depends upon the considerations emphasised in Beecham. Gummow and Hayne JJ at [65] made three points about the considerations emphasised in Beecham. First, by the use of the phrase 'prima facie case', the court did not mean that the plaintiff must show that it is more probable than not at trial that the plaintiff will succeed. Secondly, it is sufficient that the plaintiff shows a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending trial. Thirdly, how strong the probability needs to be depends upon the nature of the rights asserted by the plaintiff and the practical consequences likely to flow from the order sought. There is no verbal formula which can or should be used or applied to describe or define the seriousness of the question. It all depends on the circumstances of the case. Matters of degree are involved which require the principled exercise of discretion by the court. Gummow and Hayne JJ said that the governing consideration is that the requisite strength of the probability of ultimate success depends upon the nature of the rights asserted and the practical consequences likely to flow from the interlocutory order sought [71].
In O'Neill Gleeson CJ and Crennan J said:
… in all applications for an interlocutory injunction, a court will ask whether the plaintiff has shown that there is a serious question to be tried as to the plaintiff's entitlement to relief, has shown that the plaintiff is likely to suffer injury for which damages will not be an adequate remedy, and has shown that the balance of convenience favours the granting of an injunction. These are the organising principles, to be applied having regard to the nature and circumstances of the case, under which issues of justice and convenience are addressed. We agree with the explanation of these organising principles in the reasons of Gummow and Hayne JJ, and their reiteration that the doctrine of the court established in Beecham Group Ltd v Bristol Laboratories Pty Ltd should be followed [19].
The court should ask whether Stirling has made out a prima facie case, or a serious question to be tried as to its entitlement to relief, as explained in O'Neill. In doing so the court must consider the strength of Stirling's case having regard to the governing consideration that the requisite strength of the probability of ultimate success depends upon the nature of the rights asserted and the practical consequences likely to flow from the interlocutory order sought. That does not mean that the court is to conduct any form of preliminary trial. The task of the court is not to seek to predict the result of a later trial based upon incomplete and untested materials. The court's function is to decide what the application of the organising principles in all the circumstances indicates is the correct balance of justice between the parties pending trial.
Equitable estoppel - legal principles
In Commonwealth v Verwayen (1990) 170 CLR 394 Deane J stated the central principle of the doctrine of estoppel by conduct:
The law will not permit an unconscionable - or, more accurately, unconscientious - departure by one party [the representor] from the subject matter of an assumption which has been adopted by the other party [the representee] as the basis of some relationship, course of conduct, act or omission which would operate to that other party's detriment if the assumption not be adhered to for the purposes of the litigation (444).
In broad terms Stirling must establish a reliance on the representation(s) of MRC to its detriment, which in turn would make it unconscionable for MRC to resile from the representation.
The assumption made must be the same assumption that the party sought to be estopped is claimed to be resiling from: Wright v Commonwealth [2005] VSC 200 [395] ‑ [398] (Ashley J). In its statement of claim Stirling pleads that by certain representations and conduct MRC induced in Stirling an assumption that the two fee model would continue if Stirling executed the RRF Guarantee. In his oral submissions senior counsel for Stirling submitted that the assumption induced in Stirling was that the two fee model would continue for the life of the RRF at Neerabup (or RRF Stage 1) if Stirling executed the RRF Guarantee.
A representation must be clear before it can found an estoppel: Legione v Hateley (1983) 152 CLR 406, 436 (Mason & Deane JJ). The requirement that a representation be clear does not require it to be express; it can be inferred from conduct: Legione v Hateley (438 - 439) (Mason & Deane JJ). While an ambiguous or imprecise representation will often not give rise to a promissory estoppel, that is not inevitably the case. In virtually every statement of existing fact or future intent some ambiguity or imprecision of language may be found: Australian Crime Commission v Gray [2003] NSWCA 318 [193] (Ipp JA). A representation is sufficiently clear if, in the circumstances, it is reasonable for the representee to have interpreted it in a way that it is clearly capable of bearing and upon which it is reasonable for the representee to rely: Australian Crime Commission v Gray [183] (Ipp JA with whom Mason P and Tobias JA agreed).
The evidence of representations
Senior counsel for Stirling indicated eight representations or conduct by MRC that induced the assumption by Stirling that the two fee model would continue for the life of RRF if the plaintiff executed the RRF Guarantee.
The first is the MRC Council decision of July 2004. The only evidence of the decision presently before the court is a statement in the agenda for a meeting of the MRC Council on 22 April 2010. Item 8.1.1 of the agenda is 'review of member fees model'. Part of the agenda papers in relation to that item states that Council, in July 2004, resolved as follows:
That Council approve:
(i)An approach for the definition of categories of members waste, with effect from the opening of the Resource Recovery Facility, as follows:
(a)Processable waste defined as Municipal Solid Waste suitable for any Secondary Waste Treatment process adopted by MRC;
(b)Non‑Processable waste defined as waste not suitable for a Secondary Waste Treatment process and includes any residue from a Secondary Waste Treatment process.
(ii)The subsequent development of a business plan and financial model that will allow analysis of the charging regime that will apply
Senior counsel for Stirling submits that the decision is that in planning for the RRF, the distinction for the purposes of the charging regime for Participants was between processable and non‑processable waste.
It is difficult to form an opinion as to what that decision would objectively have conveyed to Stirling in the circumstances or whether it is reasonable for Stirling to have relied on the decision when so little is known about the circumstances or context of the decision.
The second matter relied upon by Stirling is the MRC Council decision of April 2005. The only evidence of that decision presently before the court is the reference to the decision in the agenda papers for the council meeting of MRC on 22 April 2010 to which I have already referred. Immediately after the reference to the council decision in July 2004 in the agenda papers it states that Council further resolves, in April 2005, the following:
That Council:
(i)Note the previous decision to adopt a waste categorisation structure which contains processable and non‑processable categories of material for disposal;
(ii)Approve a definition for processable waste as follows: ‑
'Processable waste is defined as all waste collected via
- weekly household waste collection services for all Councils
- daily and weekly collection services for City of Perth'
(iii)Approve a definition of non‑processable waste as follows:
'Non‑processable waste is defined as that waste not suitable for processing by any Stage 1 Resource Recovery Facility established by MRC, and residue material from any waste processing facility within the region';
(iv)Approve the application of these definitions for the Stage 1 Resource Recovery Facility only;
(v)Approve the development of an information package by the Mindarie Regional Council for member councils to explain the revised waste categorisation structure and the rationale for the associated fees, and the investigation of further options for fee structures, for Council consideration.
Senior counsel for Stirling submits that the April 2005 decision distinguished between processable and non‑processable waste, amended the definitions and approved the application of the definitions to RRF1.
Again, there is little or no evidence of the circumstances or context of the April 2005 decision. The translation of these decisions into actual fees occurred in the context of Budget Financial Year 09/10 where Council, inter alia, resolved member fees as follows:
•Processable Fee: $120.50 (excl GST)
•Non‑Processable Fee: $66 per tonne (excl GST)
The third representation or representations relied upon by Stirling are oral representations by John King who is said to be MRC's consultant project manager for the tender relating to the RRF project. Ewald Albrecht, the manager of Stirling's waste and fleet operation, swears that:
During the several years that the City and the other MRC participants negotiated the implementation of the RRF, the MRC's consultant, Mr John King, repeatedly informed the City that the two‑fee model would be the basis upon which its decision could be made.
It appears from [51] of the statement of claim that the decision referred to is Stirling's decision to execute the RRF Guarantee.
It is difficult to form a view as to what such statements objectively conveyed to Stirling or what Stirling reasonably interpreted the statements to mean or whether it was reasonable for Stirling to have relied upon them. It appears that the information was orally conveyed by Mr King to Stirling. However, Mr Albrecht does not say to whom the statements were made, the occasions on which they were made or the context in which they were made. Furthermore, Mr Albrecht states the statements or information in such an abbreviated and conclusionary form that it is difficult to form a view as to what they could or would have reasonably conveyed to the person to whom they were made.
The fourth matter relied upon by Stirling is the MRC council meeting of 14 June 2006. In his affidavit Mr Albrecht says that the background to the two‑fee model appears from the agenda papers for the special council meeting of the MRC held on 14 June 2006. The agenda papers show that there were two main items of business. The subject of the first item (8.1) is 'Resource Recovery Facility ‑ Progress on Negotiations'. The agenda papers say that the purpose of this item is to provide council with information on progress with regard to negotiations with potential contractors for a resource recovery facility and obtain some decisions in this regard. The subject of the second item (8.2) is 'Resource Recovery Facility ‑ Member Council Issues'. The agenda papers say that the purpose of this item is to reinforce the advantages to MRC, and its member councils, of the decision to proceed with the establishment of a resource recovery capability within the region and that the item describes the requirements from a member council perspective, in order for the decision to establish such a capability to be implemented, particularly in relation to financial security. The agenda papers include:
Estimated Costs to Member Councils
The Mindarie Regional Council had previously agreed a gate model, for implementation upon the establishment of the Resource Recovery Facility, which comprised the categorisation of waste as follows:
•Processable Waste
•Non Processable Waste
The philosophy associated with this model recognises that not all processable material will be delivered to the Resource Recovery Facility initially. Therefore, an equitable charging model was required, in order to manage, in a fair manner, all processable material, with respect to charges. This model is important because it provides a clear picture to Member Councils of the impact of Resource Recovery Facility Gate Fee charges on the overall charges to Member Councils.
The fee arrangement associated with the preferred tenderer are as follows:
•Year 1 gate fee estimate of $112.00/tonne
…
The translation of these fee arrangements into processable and non processable fees results in the following:
…
•The non‑processable fee is the Tamala Park Landfill fee (2006/2007 = $43.00/tonne)
•The processable fee, based on the previously accepted formula, is calculated as $95.89/tonne
The estimated financial impact on Member Councils for the first complete FY of Resource Recovery Facility operation, with a comparison of existing arrangements ie. Disposal to landfill versus proposed arrangements ie. some disposal to Resource Recovery and the balance to landfill, the current tonnages are described in the table below.
INDIVIDUAL MEMBER COUNCIL COSTS - RESOURCE RECOVERY FACILITY V NON RESOURCE RECOVERY FACILITY
Calculation Using 2005/2006 tonnage up to 26/5/6 and then annualised.
Council
Annual Processable Tonnage
Total Annual Disposal Cost without Resource Recovery Facility
Total Annual Disposal Costs with Resource Recovery Facility
City of Perth
15,358
$ 661,418
$ 1,473,670
City of Wanneroo
39,745
$ 2,792,385
$ 4,894,442
City of Joondalup
58,287
$ 3,065,694
$ 6,148,388
Town of Cambridge
9,524
$ 497,023
$ 1,000,723
Town of Vincent
13,070
$ 562,855
$ 1,254,111
Town of Victoria Park
12,045
$ 555,588
$ 1,192,628
City of Stirling
-
$ 4,297,382
$ 4,297,382
Total
148,028
Comparative Cost Analysis
The direct comparison between the Resource Recovery Facility Gate Fee and existing fees for disposal to landfill is not an appropriate mechanism for comparative cost analysis.
An appropriate mechanism for this analysis comprises the following elements:
•A consideration of future charges to Member Councils, of a basis of a 'landfill only' option, with due respect to external factors such as landfill levy charges
•A recognition of the whole of life costing with respect to a Resource Recovery Facility, planned for operation over twenty (20) years, and other options ie Landfill
The table does not allow for any processable waste to be delivered by Stirling. That is because Stirling had its own arrangements for dealing with processable waste and the estimates were made on the basis that Stirling would not be delivering processable waste to the RRF.
The agenda papers show that MRC had previously agreed a gate fee model for implementation upon the establishment of the RRF. That gate fee model was a two‑fee model. Waste was categorised as processable waste and non‑processable waste. The fee for processable waste to be treated at the RRF was to be $95.89 per tonne and the fee for non‑processable waste was the Tamala Park landfill fee of $43 per tonne.
The fifth matter relied upon by Stirling is a document described by Mr Albrecht as a draft model report prepared in about June 2006. Mr Albrecht says that it was prepared by Mr Peter Hoar, a senior officer of the City of Joondalup, with input from Mr John King. On 4 July 2006 Kevin Poynton, the chief executive officer of MRC, forwarded a copy of the draft model report to officers of each of the Participants, including Stirling with the comment, 'For use as appropriate pls [sic] ‑ a kind offering from peter hoar'.
Senior counsel for Stirling submits that this draft model report repeats the essence of the matters contained in the agenda papers for the meeting of the MRC Council on 14 June 2006 to which I have already referred. The draft model report states that the preferred tenderer for the RRF had proposed a business structure through a special purpose vehicle called Bio Vision 2020 and that in order for the RRF project to proceed, Bio Vision require a guarantee from the member councils. The draft model report says that the MRC is structured in such a way that the member councils have always had ultimate responsibility for the obligations and liabilities of MRC. Under the heading 'Estimated Costs to Member Councils' the draft model report set out the same matters that were set out under the heading 'Estimated Costs to Member Councils' in the agenda for special council meeting of the MRC of 14 June 2006. The draft model report contains the following comment:
COMMENT
The preferred tenderer of the RRF project and its financiers require a financial guarantee of the MRC's payment obligations for the project. This is necessary for the project to be bankable. Legally, the MRC is not a signatory to its own existence (through the Constitution) and ultimately its liabilities rest with the member councils. Also, the MRC does not have the capital reserve to fund a call in the case of being required to purchase the RRF if the agreement is terminated due to the occurrence of a prolonged uninsurable Force Majeure or a default due to MRC's non‑payment of amounts owing under the agreement. The MRC is now seeking members' agreement to guarantee its payment obligations under the agreement.
This report details the unlikely events that could trigger a call on the guarantee and the risks involved. Risks have been identified through a risk analysis and mitigated where possible with insurances. Significantly, the report details the landfill disposal option and the uninsurable risks associated with slow seepage into ground.
The sixth matter relied upon by Stirling is a financial presentation by MRC in March 2007. Mr Albrecht refers to what appears to be a Powerpoint presentation. The first slide is titled 'Mindarie Regional Council, Financial Presentation, March 2007'. Mr Albrecht draws attention to a key assumption, 'All bales will be tipped at non‑processable COT [Cost of Tipping] once the RRF commences'. That appears to be a reference to bales of waste that go to landfill.
The seventh matter relied upon by Stirling is a presentation by Ian Watkins, MRC Project Manager, to a financial workshop on 30 July 2007. Mr Albrecht refers to what appears to be another powerpoint presentation consisting of a number of slides. The presentation is entitled 'Processable vs Non‑processable Waste Rate'. The presentation commences with a slide entitled 'Concept agreed by Council' under which it is stated, 'All Processable Waste received by MRC is charged at the same rate irrespective of whether it is landfilled or processed through the RRF'. The remainder of the presentation appears to relate to the calculation of the rate for processable waste. It is difficult to draw from this presentation what meaning or meanings it might have conveyed to the persons attending other than that MRC was charging different rates for processable and non‑processable waste. The circumstances and context of the financial workshop might indicate that the presentation would be reasonably understood by those attending to convey that MRC then intended to continue to charge a separate rate for processable and non‑processable waste. However, in the absence of any evidence as to the circumstances and context of the presentation and what was actually said at the presentation it is difficult to draw any meaningful conclusions.
The eighth matter relied upon by Stirling is the provision by MRC to Stirling of the draft RRF Agreement. Stirling was provided with a copy of the RRF Agreement before it signed the RRF Guarantee. It is a condition precedent of the agreement that MRC, the Participants and the Contractor enter into the RRF Guarantee under which the Participants agreed to provide a guarantee to the Contractor of payment by MRC of certain moneys and obligations under the RRF Agreement.
The RRF Agreement provides that the MRC must pay fees to the Contractor for the performance of services. The fees include the capital cost in respect of the RRF, the fixed operating costs in respect of the provision of the RRF and the variable operating costs for the services performed to process the processable waste delivered to the RRF. Each of those terms is defined in the RRF Agreement. Annexures to the RRF Agreement set out the financial model and gate fee calculation model and the remuneration and fees to be paid by MRC to the Contractor. The fees are calculated by reference to the capital cost, fixed operating costs, variable operating costs of operating the facility and the revenue derived by the Contractor from the by‑products of the facility.
In a written submission senior counsel for Stirling wrote that the provision by MRC to Stirling of the draft RRF Agreement implied that fees to Participants would be commensurate. I assume that counsel means commensurate with the fees that the MRC must pay the contractor under the RRF Agreement.
MRC showed Stirling the draft RRF Agreement for the purpose of Stirling considering whether it should execute the RRF Guarantee. Stirling says that this constitutes conduct by MRC that induced in Stirling a reasonable assumption that the RRF would proceed on its own, independently calculated, gate fee for both MRC and Participants.
Senior counsel for Stirling submitted that each of the eight matters relied upon takes its character from the circumstance that Stirling had no need for the RRF which was known to MRC and the other Participants. In his affidavit Mr Albrecht said that Stirling had no need for the proposed RRF and would derive no benefit from it because:
(1)Stirling had contractual arrangements with Atlas, with an option to extend that contract, and had a 20 year contract with AnaeCo to process up to 22,000 tonnes of household waste that could not be processed by Atlas; and
(2)apart from the RRF's limited capacity of 100,000 tonnes, it was designed to accommodate other MRC Participants which had a two bin or multi‑bin system; it was not designed to accommodate efficiently or effectively Stirling's single bin system.
Mr Albrecht said that despite this, Stirling was persuaded to be a party to, and to contribute financially and operationally to, the establishment of the RRF. The defendants do not accept that to be an accurate or complete statement of the position. Christopher John Colyer, Director of Infrastructure for the Town of Cambridge states in his affidavit that since 1996 it had been part of MRC's strategic plan to develop multiple resource recovery facilities to process waste delivered by members of MRC. Further, the Department of Environment granted approval to MRC to construct Stage 2 of the landfill at Tamala Park on the proviso that MRC progress towards the construction of a resource recovery facility to reduce the amount of waste to landfill.
Mr Poynton's report to MRC in June 2006 and the draft model report forwarded to Stirling on 4 July 2006, each contained, amongst other things, the following information:
1.MRC had agreed a two‑tiered gate fee for implementation upon the establishment of the RRF.
2.There was a distinction in the fees for processable and non‑processable waste.
3.The philosophy of the two‑fee model recognised that not all processable waste would be delivered to the RRF.
4.An equitable charging model was required in order to manage, in a fair manner, all processable material with respect to charges.
5.The gate fee model is important because it provides a clear picture to member councils of the impact of the resource recovery facility gate fee charges on the overall charges to member councils.
This material, and the other conduct referred to by Stirling, conveyed to Stirling and it was reasonable for Stirling to have interpreted it to represent that the two‑fee model would be adopted by MRC at the commencement of the RRF. Stirling says that the conduct of MRC induced it to assume that the two-fee model would continue for the life of the RRF and it relied upon that assumption. The question is whether that conduct is capable of giving rise to the assumption, whether it is reasonable for Stirling to have made that assumption and whether it is reasonable for Stirling to have relied upon it.
It is arguable that the conduct referred to by Stirling is capable of conveying that the two‑fee model would continue for the life of the RRF. The material that I have referred to says in effect that on establishing the RRF MRC would charge a different fee for processable waste to be delivered to the RRF and non‑processable waste to be delivered for landfill at Tamala Park. That conduct is capable of conveying that in calculating fees for processable waste MRC would continue to charge a different fee for processable waste than non‑processable waste. There is no express statement at any time of how long that situation would continue. However, it is arguable that the conduct of MRC is capable of being interpreted as a representation that the two‑fee model would continue so long as the RRF, that is the Stage 1 facility at Neerabup, continued to operate under the RRF Agreement and was the subject of the RRF Guarantee.
Reliance
In addition to establishing a clear representation, the representee must show his or her reliance on that representation. This requires proof of a sufficient link between the promises relied upon and the conduct which constitutes the detriment. The assumption must be proven to have actually been induced by the alleged representor, not by a third party or from the representee's own assumption. The representation relied on need not be the representee's sole inducement for acting as he or she did, it is sufficient if it was an inducement. Further, the representee must establish that his or her reliance on the representation was reasonable in the circumstances.
Stirling relies upon evidence of Mr Albrecht to establish that it relied on the assumption. The evidence of Mr Albrecht relied upon is to a large extent argumentative. Mr Albrecht says that Stirling had no need for the proposed RRF and would derive no benefit from it. Mr Albrecht then says:
Despite this, [Stirling] was persuaded to be a party to, and to contribute financially and operationally to, the establishment of the RRF. Central to [Stirling's] participation was the agreed fee model.
The statement that the agreed two‑fee model was central to Stirling's participation in the RRF is argument not evidence. The decision to participate in the RRF was made by Stirling's council, not by Mr Albrecht.
Next Mr Albrecht swears:
77.The City agreed to be a party to the RRF Guarantee in a set of circumstances that those advising it (including myself) assumed would continue. Fundamental to those circumstances was that the agreed two‑fee model would continue. If the single fee had then been foreshadowed, it would have been obvious to the employees and councillors of the City that it was contrary to its interests to facilitate the establishment of the RRF including by being a party to the RRF Guarantee.
78,I have no doubt that ‑
(a)in drafting the report of 4 September 2007 to the Council of the City, recommending that the Council approve the financial guarantees and accept the identified associated risks, and that the RRF Guarantee be executed by the City, the City relied substantially on the financial impact of the RRF and the RRF Guarantee, based on the agreed two‑fee model; and
(b)the employees' report to the Council of the City would not have recommended this course of action if it had been proposed that a single‑fee model, rather than the two‑fee model, would apply in the future.
Except for Mr Albrecht's statement that he assumed that the two‑fee model would continue, the remainder of [77] is argument or inadmissible hearsay in that to the extent that Mr Albrecht is repeating or relying on what he has been told by others he does not set out the source of that information.
Paragraph 78(a) of Mr Albrecht's affidavit is not clearly expressed. Mr Albrecht appears to be saying the following. First, Mr Albrecht drafted the report of 4 September 2007 to the council of Stirling. Secondly, the report recommended that the council approve the financial guarantees, accept the identified associated risks and that Stirling execute the RRF Guarantee. Thirdly, in deciding to execute the RRF Guarantee Stirling relied substantially on the financial impact of the RRF and the RRF Guarantee on Stirling on the basis that a two‑fee model would apply to the fees for processable and non‑processable fees and that two‑fee model would continue. The statement that Stirling relied on those matters is argument not evidence. It was the council that made that decision, not Mr Albrecht. I am willing to read [78(b)] of Mr Albrecht's affidavit to mean that he was the, or one of the, authors of the report to the council and he would not have recommended that Stirling execute the RRF Guarantee if MRC had proposed that a single‑fee model, rather than the two‑fee model, would apply in the future. That is some evidence of reliance on the assumption by Stirling. The report was before the members of council when they made their decision. It is arguable that it may be inferred that the members of the council relied upon that report in deciding that Stirling should execute the RRF Guarantee. Mr Albrecht says that he would not have recommended that Stirling execute the RRF Guarantee if MRC had proposed that a single‑fee model apply in the future.
On the other hand, to say that Mr Albrecht would not have recommended Stirling execute the RRF Guarantee if the MRC had proposed that a single‑fee model would apply in the future is not the same thing as saying that in recommending that Stirling execute the RRF Guarantee Mr Albrecht assumed that the two‑fee model would continue for the life of the RRF. Mr Albrecht may not have tuned his mind to whether or not the two‑fee model would continue for the life of the RRF.
There is some evidence from which it might be inferred that Stirling relied upon the assumption. However, at this time the evidence is not compelling. There is no contemporaneous evidence that Stirling relied upon the assumption in deciding to execute the RRF Guarantee. The Council of Stirling decided to approve the financial guarantees required by MRC and to execute the RRF Guarantee at its meeting on 28 November 2006. The agenda papers for that meeting show that the Stirling officers recommended that course. The agenda papers include a report from the officers. The report outlined the financial obligations and exposure of Stirling upon executing the RRF Guarantee. The report stated that those obligations and exposure
are no more than what it would be under the current Constitution [of MRC] and a financial guarantee is merely formalising the obligations to provide comfort to the prospective contractor (and its financiers) by providing a direct contractual relationship between each Member Council and the contractor.
The report does not refer to the two‑fee model or to the fees to be charged by MRC for processable and non‑processable waste. After 28 November 2006 the asset manager and shareholder for the RRF, Worley Parsons, withdrew from the project and a new asset manager, SITA Australia Pty Ltd, was nominated by Bio Vision. SITA requested modifications to the RRF Agreement which were accepted by MRC. At a meeting on 4 September 2007 the Council of Stirling approved the amended financial guarantees required by MRC to progress the RRF project and approved execution of the amended RRF Guarantee on the recommendation of the officers. The agenda papers include the officers' report. The report sets out what had occurred since the council resolutions of 28 November 2006. The report includes the first paragraph of the section entitled 'Estimated Costs to Member Councils' included in the agenda papers for the meeting of MRC Council on 14 June 2006. However, the report did not include the references to the fee arrangements for the RRF and Tamala Park nor the individual member council costs with and without the RRF. There is no reference anywhere in the papers before the Council of Stirling to the two‑fee model continuing for any period. It should also be observed that it appears from the minutes of the meeting of the Council of the Town of Cambridge on 25 July 2006 that the decision to purchase the land in Neerabup was made in March 2004, that is before any of the conduct by MRC which Stirling says induced it to make the assumption.
Detriment
Stirling must establish that it relied on the assumption to its detriment. A sufficient causal link between that reliance and the detriment must be proved.
In its statement of claim Stirling pleads that in reliance on the assumption it executed the RRF Guarantee and contributed financially and operationally to the establishment of the RRF. In his affidavit Mr Albrecht swears that Stirling 'was persuaded to be a party to, and to contribute financially and operationally to, the establishment of the RRF'. The only evidence that Stirling contributed financially to the establishment of the RRF is that it met a proportionate part of the purchase price of the land on which the RRF at Neerabup was built. The minutes of the meeting of the council of the Town of Cambridge on 25 July 2006 says that the decision to purchase the land in Neerabup was made in March 2004 and the purchase was executed in July 2005. That is, the purchase of the land took place before the conduct of MRC that Stirling says induced it to make the assumption. There is no evidence of any other act or omission of Stirling that may constitute relevant detriment other than the execution of the RRF Guarantee.
There is no direct evidence that Stirling executed the RRF Guarantee in reliance upon the assumption claimed. However, for the reasons I have set out earlier it is arguable that Stirling did so. It may be argued that that is insufficient detriment. Stirling, as a Participant in the MRC, is liable for its proportionate share of MRC's liabilities. However, for the purposes of this interlocutory hearing it is evidence of some detriment. The execution of the RRF Guarantee created a potential liability of Stirling directly to the RRF contractor.
Unconscionability
The doctrine of equitable estoppel extends to the enforcement of voluntary promises on the footing that a departure from the basic assumptions underlying the transaction between the parties must be unconscionable: Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387, 406 (Mason CJ and Wilson J). The representor's departure or intended departure from the representation must be unconscionable. In Commonwealth v Verwayen Deane J said:
… the question whether departure from the assumption would be unconscionable must be resolved not by reference to some pre‑conceived formula framed to serve as a universal yardstick but by reference to all of the circumstances of the case, including the reasonableness of the conduct of the other party in acting upon the assumption and the nature and extent of the detriment which he would sustain by acting upon the assumption if departure from the assumed state of affairs were permitted (445).
Proof of a representation relied upon to the representee's detriment, without more, will not necessarily render it unconscionable for the representor to resile from the representation. The representor must have played such a part in the adoption of, or persistence in, the assumption that he would be guilty of unjust and oppressive conduct if he were now to depart from it: Commonwealth v Verwayen at 444 (Deane J). There are three principal elements of unconscionable conduct. First, the representor must have induced the representee to adopt an assumption or expectation that a particular legal relationship was to exist or existed between them. Secondly, the representor knew or intended or ought to have known or foreseen that the representee would rely on the promise to his or her detriment. Thirdly, the representor failed to act to avoid the detriment that has been or would be suffered by the representee were the assumption or expectation not fulfilled.
The conduct of MRC relied upon by Stirling consists primarily of statements made in the course of presentations or reports about the desirability of MRC undertaking the RRF project and the financial impact of it upon the Participants. The financial impact was principally concerned with the impact upon the Participants in paying fees for processable waste that was to be delivered to the RRF and the potential liability of MRC and the Participants upon them executing the RRF Agreement and the RRF Guarantee. Any statements about the non‑processable waste and the fee to be charged for that waste must be seen in that context. It may be argued that in those circumstances it is not reasonable for Stirling to act upon an assumption that MRC was making promises in relation to the fee for non‑processable costs where the fee for non‑processable waste was related only to the landfill costs at Tamala Park and not the costs of maintaining the RRF or the liabilities of MRC or the Participants resulting from the RRF Agreement or the RRF Guarantee. Furthermore, there is nothing in any of the material presented by MRC which said anything about how long MRC would maintain the two‑fee model or a fee for non‑processable waste unrelated to the fee to be charged for processable waste to be delivered to the RRF at Neerabup.
An important consideration in assessing the reasonableness of Stirling acting on the assumption is the statutory context in which MRC sets fees. The power for MRC to impose a fee is conferred on it by s 6.16 of the Act. Section 6.16(3) provides that fees and charges are to be imposed when adopting the annual budget but may be imposed during a financial year and amended from time to time during a financial year. Section 6.17 prescribes matters the MRC is required to take into consideration when determining the amount of a fee.
There may also be a question about the reasonableness of Stirling in acting upon an assumption concerning the fee to be charged for non‑processable waste at Tamala Park on the basis of materials addressing the establishment of a facility for recycling processable waste at Neerabup. There may also be a question about the reasonableness of Stirling acting on an assumption that the fee for the delivery of non‑processable waste to Tamala Park would continue for the life of a different facility, that of the RRF at Neerabup.
The question whether a departure from the assumption would be unconscionable relates to the conduct of the allegedly estopped party in all the circumstances. That party must have played such a part in the adoption of, or persistence in, the assumption that he would be guilty of unjust and oppressive conduct if he were now to depart from it. In Verwayen Deane J said at 444 that the cases indicate four main, but not exhaustive, categories in which an affirmative answer to that question may be justified. The relevant category is where the allegedly estopped party has induced the assumption by express or implied representation. Deane J said at 445 that in cases falling within that category a critical consideration will commonly be that the allegedly estopped party knew or intended or clearly ought to have known that the other party would be induced by his conduct to adopt, and act on the basis of, the assumption.
There is no evidence that MRC knew or intended Stirling to execute the RRF Guarantee in reliance on the assumption that the two‑fee model would continue for the lifetime of the RRF. Mr Albrecht's evidence concerning statements by Mr King is too conclusionary in nature and lacking in particularity to be an adequate foundation for such a finding. To establish that MRC induced Stirling to make the assumption Stirling relies upon the conduct I have set out earlier in these reasons. That conduct consists of decisions and statements in documents which Stirling argues induced it to make the assumption. It is arguable that MRC ought to have known that Stirling would be induced by its decisions and the statements made by it in the documents referred to, to adopt the assumption. However, that evidence does not compel the conclusion that MRC clearly ought to have known that Stirling would be induced by that conduct to act on the basis of the assumption.
Estoppel and statutory discretion
The second defendants submit that estoppel does not apply against a public authority where the source of the relevant decision making power is statutory. The second defendants cite Minister for Immigration and Ethnic Affairs v Kurtovic (1990) 21 FCR 193, 208 and Attorney‑General (NSW) v Quin [1990] HCA 21; (1990) 170 CLR 1, 17 in support of that proposition. The second defendants submit, in particular, that estoppel by representation, particularly in relation to future conduct, cannot operate to prevent or hinder the performance of a statutory duty or the exercise of a statutory discretion. Therefore, they submit that even if the requirements for an estoppel were otherwise established, the estoppel plea is unlikely to succeed.
The conventional view is that estoppel by conduct cannot interfere with the exercise of a statutory power or the performance of a statutory duty by the repository of the power: Southend‑on‑Sea Corporation v Hodgson (Wickford) Ltd [1962] 1 QB 417, 423 ‑ 424 (Lord Parker CJ) Attorney‑General (NSW) v Quin 17 (Mason CJ). The conventional view is that a promissory representation is not binding if it would interfere with the exercise of a statutory power or statutory duty: Minister for Immigration v Kurtovic.
The plaintiff claims that MRC is estopped from denying that the two‑fee model will continue for the life of the RRF. The two‑fee model refers to the MRC charging separate, and different, fees for processable waste treated at the RRF and non‑processable waste disposed of as landfill at Tamala Park and the fee for non‑processable waste being calculated independently of the fee for processable waste. That promise, if binding on MRC, will interfere with the exercise of the power conferred on MRC by s 6.16 of the Act. Section 6.16(3) requires MRC to impose the fee for disposing of non‑processable waste when adopting the annual budget, although it may be imposed during a financial year or amended from time to time during a financial year.
In answer to those contentions Stirling submitted that the courts have not excluded the possibility that estoppel can fetter the exercise of a statutory power where this would occasion little harm to the public interest and not to allow estoppel would cause great detriment to the individual. The plaintiff relies upon dicta of Mason CJ in Attorney‑General (NSW) v Quin:
The Executive cannot by representation or promise disable itself from, or hinder itself in, performing a statutory duty or exercising a statutory discretion to be performed or exercised in the public interest, by binding itself not to perform the duty or exercise the discretion in a particular way in advance of the actual performance of the duty or exercise of the power (17).
Mason CJ then referred with approval to the statement of Gummow J in Minister for Immigration v Kurtovic at [52] that:
In a case of a discretion, there is a duty under the statute to exercise a free and unhindered discretion and an estoppel cannot be raised (any more than a contract might be relied upon) to prevent or hinder the exercise of the discretion; the point is that the legislature intends the discretion to be exercised on the basis of a proper understanding of what is required by the statute, and that the repository of the discretion is not to be held to a decision which mistakes or forecloses that understanding (17).
Later in his judgment Mason CJ at 18 left open the possibility that an estoppel might exceptionally operate against the exercise of a discretion by the Executive:
What I have just said does not deny the availability of estoppel against the Executive, arising from conduct amounting to a representation, when holding the Executive to its representation does not significantly hinder the exercise of the relevant discretion in the public interest. And, as the public interest necessarily comprehends an element of justice to the individual, one cannot exclude the possibility that the courts might in some situations grant relief on the basis that a refusal to hold the Executive to a representation by means of estoppel will occasion greater harm to the public interest by causing grave injustice to the individual who acted on the representation than any detriment to that interest that will arise from holding the Executive to its representation and thus narrowing the exercise of the discretion: see the observations of Lord Denning MR in Laker Airways v Department of Trade [54]; but see also the criticism of this approach by Gummow J in Kurtovic [55].
In Aronson, Dyer and Groves Judicial Review of Administration Action (4th ed) the authors say:
Mason CJ's concession seemed extraordinarily cautious at the time, given the strength of his Honour's initial remarks in opposition to the concept of estoppel and administrative law. His Honour was in no doubt that Lord Denning's approach was inapplicable to Quin, because it would involve the courts in second‑guessing the government on a political or policy issue which the separation of power's doctrine had always (and wisely) left exclusively to the government (395).
Aronson, Dyer and Groves say that in Re Minister for Immigration and Multicultural Affairs Ex Parte Lam [2003] HCA 6; (2003) 214 CLR 1 McHugh and Gummow JJ said that Quin had refused to acknowledge a place for administrative estoppel or anything akin to that.
In the course of his submissions senior counsel for Stirling submitted that the decision by the MRC council to adopt a single‑fee model did not take into account the criteria specified in s 6.17(1) of the Act and is not a proper exercise of the statutory power. The argument is, in effect, that an estoppel may operate to prevent the MRC from unlawful exercise of the power.
There are a number of difficulties with that argument. First, the fact that the MRC council decided to adopt a single‑fee model as the basis for determining a fee for the acceptance of waste from Participants for the 2010/2011 budget does not of itself establish that the MRC council failed to take into consideration the cost to MRC of accepting processable waste from Participants. The cost of providing the service of accepting processable waste from the Participants was a factor that was taken into account by MRC in making calculations of the cost that should be charged for accepting waste from Participants. Secondly, the fact that MRC failed to take into account a consideration it was required to take into account in determining the fee for accepting waste in 2010/2011 is not a reason for holding MRC to a decision it made about fee models in previous years. Thirdly, requiring MRC to adhere to a decision made in a previous year about the fee to be charged is still a fetter upon the exercise of the discretion of MRC. On the hearing of this interlocutory application the plaintiff has not based its case on a ground that the decision made by the MRC council on 22 April 2010 is unlawful because the MRC failed to take into consideration the factors specified in s 6.17(1)(a)(c) of the Act.
Balance of convenience
The second main enquiry to which the court addresses itself is whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted. The strength of the applicant's case and the balance of convenience are not independent of each other. An apparently strong claim may lead a court more readily to grant an injunction when the balance of convenience is fairly even but a claim of less strength which nevertheless raises a serious question to be tried may attract interlocutory relief where there is a marked balance of convenience in favour of it. In Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148, 154 Mason ACJ pointed out that the degree of likelihood of success is a factor related to the balance of convenience and that it might be that a probability or even a distinct probability of success might need to be shown if the injunction might adversely affect the public interest. For these reasons it is appropriate to consider the balance of convenience before determining whether Stirling has shown a sufficient likelihood of success to justify in the circumstances the injunction sought.
The requirement that the balance of convenience favour the grant of an injunction is sometimes expressed by saying that the balance of injustice must favour the grant rather than the refusal of the injunction. In considering the balance of convenience or the balance of injustice the court should have regard to the comparative injury if an injunction were to be granted rather than withheld.
Comparative injury
In its written outline of submissions Stirling submitted that the imposition by MRC of a one‑fee model for waste disposal and recycling would cause direct costs of about $2.2 million in the first year to shift from the second defendants to Stirling. That is broadly correct. Whether MRC adopts a one‑fee model or a two‑fee model will have little direct financial consequence upon MRC. That is because MRC operates its waste services on what is essentially a cost recovery basis. However, the adoption of a single‑fee model will cause a shift of costs from the second defendants to Stirling in the sense that the increased direct costs to Stirling consequential upon the adoption of the single‑fee model rather than a two‑fee model will approximately equal the decrease in costs to the second defendants. In other words, the loss to Stirling is the obverse side of the coin from the gain to the second defendants. Whether MRC adopts a one‑fee model or a two‑fee model is essentially a zero sum game in relation to the direct costs to Stirling and the second defendants, that is, a gain by Stirling is matched by a loss by the second defendants and vice versa.
The gain or loss to each of the second defendants is significantly less than the gain or loss to Stirling. That is demonstrated by Table 2. However, there is no evidence of the relative impact of the gain or loss on Stirling compared with the second defendants. There is no evidence of the number of residents, ratepayers or users of waste services in Stirling compared with that in each of the second defendants. There is no evidence of the relative sizes of the total budgets of each local government. In short, there is no basis for a conclusion that the loss to Stirling from the adoption of a single‑fee model rather than a two‑fee model is a relatively greater injury than the loss to the second defendants from the adoption of a two‑fee model rather than a one‑fee model.
Stirling says that it has embarked upon its budget process and that process is well advanced. If MRC is not restrained from adopting a single‑fee model as the basis for determining the fee for the acceptance of waste for the Participants in the MRC budget for 2010/2011 then Stirling will have to change its budget. That will occasion difficulty to Stirling because its budget processes are so well advanced. That is a significant inconvenience to Stirling. However, Stirling has known for some months that MRC's member councils were considering the adoption of a single‑fee model and that on 22 April 2010 MRC resolved to adopt a single‑fee model as the basis for determining waste fees for 2010/2011. It must be assumed that as a prudent local government Stirling has taken steps, or will take steps, to adjust its budget accordingly. Furthermore, restraining MRC from adopting a single‑fee model will require each of the second defendants to adjust their budget processes for 2010/2011.
Mr Albrecht says that if the single‑fee model were to be adopted Stirling would be required to increase the general waste services fee for all its ratepayers. This is not compelling evidence that the comparative injury to Stirling and its ratepayers from the adoption of a single‑fee model is significantly greater than the injury to the second defendants and their ratepayers from the adoption of the two‑fee model for the 2010/2011 year. As a matter of logic, if the waste fees payable by the second defendants are greater if the two‑fee model is adopted in 2010/2011 rather than the single‑fee model then the increased costs will be borne by their ratepayers.
Mr Albrecht says that Stirling would be required to increase the fees applying to commercial and domestic users of the Recycling Centre Balcatta (based on the current disposal rate of $66 per tonne compared with the proposed increase of $113 to $119 per tonne), affecting not only the residents and ratepayers of Stirling but also residents and ratepayers of neighbouring local governments and other domestic and commercial users of the facility.
Mr Albrecht says that if the single‑fee model was to be adopted for the 2010/2011 year and it was later held to be invalidly imposed a number of consequences would follow. First, because MRC does not have significant cash reserves it would not be in a position to repay Stirling for some time and may require capital contributions from the Participants. Secondly, it would be impossible to repay, retrospectively, every commercial and private user of the Recycling Centre Balcatta the substantial difference between the charge imposed under the single‑fee model and the charge that should have been imposed under the two‑fee model. Thirdly, Mr Albrecht expects that the substantially higher rate that Stirling would be required to charge all customers of the Recycling Centre Balcatta as a result of the single‑fee model would result in the loss to Stirling of the significant number of commercial and domestic customers. Fourthly, if the amount of waste received at the Recycling Centre Balcatta were to drop significantly as a result of a loss of customers Stirling would be exposed to adverse commercial consequences and potentially adverse legal consequences under its separate contract with Atlas to transport waste from the recycling centre Balcatta to the Tamala Park landfill site. Fifthly, the ratepayers of Stirling who would be required to pay the increased general waste services rate for 2010/2011 would not be the same ratepayers who would benefit from any reduction in that rate in a later year as a result of a successful action for damages by Stirling against MRC.
I do not find these to be compelling factors. First, if MRC incurs a liability to repay Stirling then under MRC's constitution its member councils will be required to contribute to that liability. To the extent that Stirling will have to pay a share of that amount that factor could be taken into account in calculating any damages suffered by Stirling. Secondly, there may be some loss to the users of the Recycling Centre Balcatta that cannot be reimbursed but the evidence does not establish the likely quantum of their loss. Thirdly, there may be some loss to Stirling as a result of Stirling being required to charge customers of the Recycling Centre Balcatta a higher rate but there is no evidence of the likely quantum of that loss and in any event it is a matter that could be taken into account in any claim for damages by Stirling. Fourthly, the same considerations apply to any liabilities incurred by Stirling to Atlas. Fifthly, Stirling says that the Stirling ratepayers who would be required to pay the increased general waste services rate for 2010/2011 would not be the same ratepayers who would benefit from any reduction in that rate in a later year as a result of a successful action for damages by Stirling against MRC. In general terms, the same observation applies to the ratepayers of the second defendants who would be required to pay the increased rates for 2010/2011 if a two‑fee model is adopted rather than a single‑fee model.
Mr Albrecht says that there are major ramifications for Stirling that would result from a substantially increased fee by Stirling to the commercial and casual users of the Recycling Centre Balcatta as a result of the MRC's replacement of the two‑fee model with the single‑fee model. The adoption by the MRC of the single‑fee of $113 ‑ $119 per tonne (an increase of about $30 per tonne above the proposed fee under the two‑fee model) would result in the fee charged by Stirling to commercial and casual users at the recycling centre Balcatta rising to about $189. This compares to the proposed 2010/2011 landfill rates at Redhill, operated by the Eastern Metropolitan Regional Council of $93.18 per tonne. Mr Albrecht expects that in these circumstances the number of commercial and casual users of the Recycling Centre Balcatta would drop substantially and that there would be a consequential reduction in waste deposited at the Recycling Centre Balcatta. Stirling says this has significant budgetary ramifications for it. In preparing its 2010/2011 budget Stirling would be required, for the purpose of calculating an appropriate fee, and for wider resourcing and budgetary purposes to quantify estimates of the loss of commercial and casual users, the reduced waste that would be deposited and any reduced resources, particularly staffing resources, necessary for the operation of the Recycling Centre Balcatta.
This is evidence of some injury that will be occasioned to Stirling. However, those sorts of matters are the sort of things which a local government must take into account in preparing its budget. It is not a compelling factor.
Stirling says that similar considerations and consequences follow in relation to the contractual arrangements that Stirling has with Victor John Filippou and Marie Filippou trading as Direct Recycling. Direct Recycling operates a business on the Recycling Centre Balcatta site. Customers entering the Recycling Centre Balcatta site are encouraged to drop off, for free, any waste that Direct Recycling wishes to take ‑ such as goods that may be sold on the second hand market, scrap metal, glass etc. The advantage for customers is that the fee they are charged for depositing their waste is calculated on the remainder of their load. The advantage for direct recycling is that it is able to sell the materials that it receives. Direct Recycling's business will be adversely affected by a reduction in customers resulting from increased fees as a consequence of the MRC adopting the single‑fee model.
The evidence of Mr Albrecht shows that in addition to the direct financial cost to Stirling of the adoption of a single‑fee model there is a risk of indirect financial costs to Stirling and adverse financial costs to other parties. The evidence before the court necessarily does not permit a quantification of those losses or of the likelihood of such losses resulting.
The evidence establishes that if MRC adopts the single‑fee model for its 2010/2011 budget that will cause inconvenience and hardship to Stirling and its ratepayers and to some third parties. However, requiring MRC to adopt a two‑fee model for its 2010/2011 budget will cause inconvenience and hardship to the second defendants and their ratepayers. There is evidence that the comparative injury to Stirling, its ratepayers and third parties if the single‑fee model is adopted for 2010/2011 is likely to be greater than the injury to the second defendants and their ratepayers if the two‑fee model is adopted for 2010/2011. However, the evidence does not enable a quantification of the comparative injuries. The evidence does not establish that the comparative injury to Stirling, its ratepayers and third parties of the adoption of a single‑fee model is so much greater than injury to the second defendants and their ratepayers if a two‑fee model is adopted for MRC's 2010/2011 budget that the court should grant the injunction even if Stirling's case is comparatively weak.
Status quo
Stirling submits that the injunction should be granted so as to preserve the status quo pending trial. The defendants submit in effect that the injunction sought by Stirling is in effect a mandatory injunction requiring MRC to adopt the two‑fee model for its 2010/2011 budget.
It is often stated that the purpose of an interlocutory injunction is to keep matters in status quo until the rights of the parties can be determined at trial: see eg Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd [2001] HCA 63; (2001) 208 CLR 199 [9] ‑ [10] (Gleeson CJ). Whether or not the interlocutory injunction sought by Stirling would maintain the status quo depend upon what one takes to be the status quo.
Stirling says that the status quo is that the two‑fee model, that is, that the MRC charge a separate and different fee for non‑processable waste at Tamala Park than for processable waste at Neerabup. Stirling seeks an order requiring the MRC to maintain the two‑fee model pending trial.
On the other hand the defendants say in effect that they had commenced the allegedly wrongful conduct by the time the action was commenced. The wrongful conduct is adopting a single‑fee model as the basis for determining the fee for acceptance of waste from the Participants for the MRC's 2010/2011 budget. MRC has already commenced preparing its 2010/2011 budget based on a single-fee model. The defendants say in effect that Stirling is seeking to cause MRC to change its position by the interlocutory injunction by ceasing the allegedly wrongful conduct pending trial. The defendants say in effect that Stirling seeks to maintain the status quo pending trial only in the sense that it wants the position to remain as it was before MRC commenced to engage in the conduct complained of. In other words, Stirling seeks a return to the status quo not to maintain the status quo if that includes MRC continuing to prepare its 2010/2011 budget based on a single‑fee model.
In this case it is more appropriate to consider the practical consequences likely to flow from the granting or withholding of the interlocutory injunction than to consider what is the status quo.
Practical consequences
The plaintiff must show a sufficient likelihood of success to justify in the circumstances the interlocutory order sought. How strong the probability needs to be depends upon the nature of the rights asserted by the plaintiff as well as the practical consequences likely to flow from the orders sought. In O'Neill Gummow and Hayne JJ said:
The second of these matters, the reference to practical consequences, is illustrated by the particular considerations which arise where the grant or refusal of an interlocutory injunction in effect would dispose of the action finally in favour of whichever party succeeded on that application [72].
No party submitted that the grant or refusal of the interlocutory injunctions sought would in effect dispose of the action finally in favour of whichever party succeeded on that application. It is likely that MRC will adopt a single‑fee model or a two‑fee model as the basis for determining the fee for the acceptance of waste from Participants for its 2010/2011 budget depending on whether the court grants or refuses the injunction. The effect of s 6.16(3) of the Act is that MRC may change the fees for receiving waste during the financial year and from time to time during the year. The trial of this action may be heard and determined in about six months. MRC might change its fees for receiving waste shortly after if it is appropriate to do so in light of the court's decision. If the injunction is granted and found at trial to have been wrongly granted then MRC and the second defendants may be entitled to compensation in accordance with Stirling's undertaking as to damages. If the injunction is refused and Stirling is successful at trial then Stirling may be entitled to damages.
The practical consequences of granting or refusing an injunction are not strong factors indicating whether the injunction should be granted or refused.
Nature of rights
In O'Neill Gummow and Hayne JJ referred to the governing consideration that the requisite strength of the probability of ultimate success depends upon the nature of the rights asserted as well as the practical consequences likely to flow from the interlocutory orders sought. Their Honours gave the following examples:
For example, special considerations apply where injunctive relief is sought to interfere with the decision of the executive branch of government to prosecute offences. Again, in Castlemaine Toohey Ltd v South Australia, Mason ACJ, in the original jurisdiction of this court, said that 'in the absence of compelling grounds' it is the duty of the judicial branch to defer to the enactment of the legislature until that enactment is adjudged ultra vires, and dismissed applications for interlocutory injunctions to restrain enforcement of the law under challenge [66].
In O'Neill itself special or particular considerations were held to apply where the interlocutory injunction sought is to restrain an alleged defamation. The value of free speech is to be given particular weight in the context of the defendants seeking to establish a valid defence.
In this case Stirling seeks to interfere with the exercise by MRC of the power and duty conferred on it by s 6.16 of the Act. The particular consideration in this case is that the interlocutory injunction seeks to interfere with the exercise of a statutory power by MRC. As a general rule a court should not interfere with the exercise of a statutory power by a local government unless there are strong grounds that the threatened exercise of power by the local government is unlawful. Stirling does not base its claim for an interlocutory injunction on the ground that the exercise of the power by the MRC is unlawful.
Strength of Stirling's case
Stirling has made out an arguable case. However, there are substantial obstacles in the way of Stirling succeeding at trial. Stirling must establish the conduct by MRC that induced an assumption by Stirling that the two‑fee system would be maintained by MRC for the life of the RRF. Stirling relies upon inferences from documents and upon evidence concerning statements by Mr King. The evidence concerning the statements by Mr King is too general and vague to form any proper basis for a finding as to the strength of Stirling's case. The documents refer to the fee to be charged for non‑processable waste and the financial impact upon the Participants of the RRF facility. However, the focus of the documents is the financing of the RRF, the fees to be charged for the use of the RRF, the impact upon the Participants of those fees and the liabilities to be assumed by the Participants on the establishment of the RRF and the giving of the RRF Guarantee. The documents do not refer to any period for which a two‑fee model is to apply.
There is no direct evidence that Stirling relied upon the assumption. The relevant decisions were made by the council of MRC. The inference that MRC relied upon the assumption is to be drawn from the documents relied upon by Stirling. The documents contain no express statements to that effect.
The context in which the conduct of MRC occurred is relevant. The estoppel would interfere with the future exercise of MRC's statutory powers. If Stirling succeeds in establishing the elements of estoppel it must still overcome the conventional principle that estoppel by conduct cannot interfere with the exercise of a statutory power or the performance of a statutory duty by the repository of the power. Whilst the authorities do not absolutely deny the availability of estoppel in relation to the exercise of a statutory power by the repository of the power that is a significant hurdle for Stirling to overcome.
The materials before the court are incomplete. The argument is incomplete. The court should not seek to predict the result of the trial based upon the incomplete materials and arguments. However, the materials before the court and the arguments presented to the court demonstrate that there are significant hurdles for Stirling to overcome if it is to obtain relief at trial that will require MRC to continue to adopt the two‑fee model for the life of the RRF or for some other period.
Conclusion
The court does not conduct any form of preliminary trial. The court's function is to decide what the application of the organising principles in all the circumstances indicates is the correct balance of justice between the parties pending trial.
The nature of the rights which the plaintiff asserts and the practical consequences for the parties which would flow from the interlocutory orders sought if granted govern the requisite strength or seriousness of the plaintiff's case for such an order being made.
In this case, there will be significant adverse consequences for Stirling, its ratepayers and third parties, if interlocutory relief is refused. Those consequences will continue at least until the trial of the action and judgment. The parties estimate that it may be about six months before the trial of the action.
It is important to consider the nature of the rights in issue. The interlocutory order sought would interfere with the exercise of a statutory power by a local government. The court should only grant the order sought if Stirling shows a sufficient likelihood of success to justify in the circumstances the interference with the exercise by MRC of its statutory power and duty. I am not satisfied that Stirling has demonstrated that there is a sufficient likelihood of success to justify the interlocutory injunction sought. That is so notwithstanding the adverse consequences to Stirling, its ratepayers and others with whom it has contractual relations as a consequence of the imposition of a one‑fee model.
It is important that the position be resolved as quickly as possible. Accordingly, the parties should proceed to trial with all due expedition.
The application for an interlocutory injunction will be dismissed.
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