Cowley and Ors v Smith and Anor, Poulos v Smith and Anor

[2003] NSWSC 1251

CITATION:	Cowley & Ors v Smith & Anor, Poulos v Smith & Anor [2003] NSWSC 1251
HEARING DATE(S):	18/12/03
JUDGMENT DATE:	23 December 2003
JUDGMENT OF:	Whealy J at 1
DECISION:	In proceedings 10557/03 I dismiss the summons. I order the plaintiffs to pay the costs of the first defendant. The Exhibits are to remain with the file. In proceedings 10558/03 I dismiss the summons. I order the plaintiffs to pay the costs of the first defendant. The Exhibits are to remain with the file.
LEGISLATION CITED:	Liquor Act Environmental Planning and Assessment Act 1979 (NSW)
CASES CITED:	House v The King (1936) 55 CLR 499 at 505 Australian Coal & Shale Employees Federation v The Commonwealth (1953) 94 CLR 621 at 627 Wallace v Bourke (NSWSC unreported 5 June 1992 per Finlay J) Emery v Binnie & Ors (NSWSC unreported 4 August 1995 per Grove J) Sandown Park Hotel Pty Ltd v The Queen (1963) 109 CLR 521 In Re Thompson (1964) Tas SR 129; Re Zappia's Application (1965) 7 FLR 405 Cross v McHugh (1974) 1 NSWLR at 500 Latoudia v Casey (1990) 170 CLR 534 at 543 and 556-567 Oshlack v Richmond River City Council (1998) 193 CLR 72 at 89 and 121
PARTIES :	Ian Cowley & Ors v Anthony Charles Leybourne Smith & Anor Poulos v Anthony Charles Leyborne Smith & Anor
FILE NUMBER(S):	SC 10557/03; 10558/03
COUNSEL:	Mr I. Lawry - Plaintiffs Mr S. Austin QC; Mr S. Balafoutis - Defendants
SOLICITORS:	Cameron & Myers - Plaintiffs Back Schwartz Vaughan - Defendants

LOWER COURTJURISDICTION:	Licensing Court of NSW
LOWER COURT FILE NUMBER(S):
LOWER COURT JUDICIAL OFFICER :	Full Bench

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

WHEALY J

TUESDAY 23 December 2003

10557/03 - Ian COWLEY & Ors v Anthony Charles Leybourne SMITH & Anor

10558/03 - James POULOS v Anthony Charles Leybourne SMITH & Anor

JUDGMENT

1 HIS HONOUR: These appeals raise a short but not unimportant point. The point may be stated thus: Is it an error of law for the Licensing Court, in public interest litigation, to award costs because a party has sought – unsuccessfully – to raise public interest objections?

The Background

2 Although there are two appeals before the Court it is agreed they can be dealt with together. There were two applications before the Licensing Court. The first was an application by the defendant to move a dormant off-licence retail from 319 Liverpool Road, Enfield to premises at 356 Liverpool Road, South Strathfield. There was a preliminary argument as to whether the Strathfield premises were within the neighbourhood of the premises at Enfield. The Full Bench of the Licensing Court determined on 22 January 2003 that the Strathfield premises were within the neighbourhood of the premises at Liverpool Road, Enfield. There is no challenge to the correctness of that decision. There was also an objection relating to parking issues but the Licensing Court indicated, after hearing argument, that it did not consider that this was a matter appropriate for its intervention. Rather it was a matter for the local council. There is no challenge to that aspect of the Licensing Court’s decision.

3 Perhaps the principal matters ventilated throughout the proceedings, however, were public interest objections taken by the objectors which sought to focus on a number of unusual aspects of the defendant’s removal application. These aspects related to the fact that the proposed premises were to be operated under the Dan Murphy banner. This was a chain of liquor stores which traded in Victoria but which had been acquired in recent years by Woolworths Limited. The removal of the dormant licence to the premises at South Strathfield was the first attempted entry by the Dan Murphy operation into New South Wales. Naturally enough, the application generated significant opposition in New South Wales. It was feared, apparently, that the size of the Dan Murphy operation together with the group’s anticipated marketing tactics would have a significant negative effect on existing licensed businesses. This led to the filing of a number of novel grounds of objection. They are set out in the written submissions and in other material that has been placed before me. The grounds ultimately challenged in the proceedings were as follows: -

“2. That the grant of application will not be in the public interest for the following, amongst other reasons:
(b) The grant of the application would adversely affect the existing liquor outlets serving the people of Strathfield South such as to cause a deterioration in the standards of the facilities and services presently available at and from existing liquor outlets in and outside the neighbourhood.
(e) It would adversely affect the liquor industry by supporting major lines to the detriment of smaller lines.
(f) The proposed business to be conducted would be anti-competitive.”

4 On 1 November 2002, the Full Bench of the Licensing Court, in a lengthy decision, determined that it would disallow these grounds of objection on the basis that they were not permissible as public interest grounds of objection under the Liquor Act 1982. There is no challenge in the present appeal to the findings of the Licensing Court in this regard although Mr Lawry on behalf of the plaintiffs does not necessarily concede that each and every aspect of the Court’s determination in this regard is either legally correct or appropriate.

5 The second application was an application by the defendant to remove an off-licence retail from 28 Ormonde Parade, Hurstville to a nearby shopping centre known as Westfield Shopping Centre, Hurstville. Public interest objections were sought to be raised in this application identical to those which had been raised in the Strathfield matter. As a practical matter, this removal application awaited the fate of the Strathfield application. Once the Court had announced its decision on the neighbourhood issue in the Strathfield matter, and had given an indication of its preliminary views on the parking objection in that matter, it was by then apparent that the present plaintiffs had little, if any, hope of succeeding in their objections to either the Strathfield removal or the removal at Hurstville.

6 There had already been many days of hearings in which the various issues had been ventilated and interlocutory rulings given. Against this background, the plaintiffs announced to the Court on 23 January 2003 that they now wished to withdraw all objections to the applications. This was done and the applications were granted.

7 The first defendant, Mr Smith, then applied for costs in relation to each application. Extensive argument followed and on 6 February 2003 the Full Bench of the Licensing Court gave reserved decisions in relation to the cost application made in each application. Their decision was that, in each case, the objectors should pay the costs of the first defendant. The reasons are expressed in two separate decisions which are in evidence before me. Each decision traces the history of the individual application and its ultimate fate. Apart from these historical differences, the form of the decisions and the grounds for the grant of costs are virtually identical in each case.

8 The present plaintiffs, representing the interests of the various objectors to each application in the Licensing Court, lodged appeals to this Court on or about 14 March 2003. The summons in each case seeks a declaration that the decision of the Licensing Court on 6 February 2003 was made in error of law. There are consequential orders sought seeking to quash the order in each case and to remit the matter to the Licensing Court to be heard and determined according to law.

The Issues

9 Before identifying the arguments relied upon by the plaintiffs, it will be convenient if I set out at this point the section of the Liquor Act 1982 creating the jurisdiction to award costs. This is s 16 of the Act. It is in the following terms: -

“16. Costs

(1) The costs of any proceedings in the court (other than proceedings for an offence) including the costs of any ancillary proceedings shall be paid by or apportioned between the parties in such manner as the court in its discretion orders and, in default of any such order, follow the event.
(1A) If the court orders an applicant under Part 3 to pay costs, the court may also order that a person who is directly interested in the application, or in the business (whether proposed or actual) to which the application relates, or in the profits of that business, is to be jointly and severally liable (with the applicant) for the payment of those costs.
(2) Except in such circumstances as may be prescribed, costs shall not be awarded against an unsuccessful opponent of an application or a complainant on the grounds specified in section 68 (1) (d) if the court is satisfied:
(a) that the person opposing the application or making the complaint had no direct or indirect pecuniary interest in the refusal of the application and no expectation of such an interest, and
(b) that his or her opposition or complaint was not malicious, vexatious or frivolous.”

10 I propose at this stage to express in general terms the concerns of the plaintiffs in these appeals before stating in more precise terms the manner in which it is alleged error has occurred.

11 In short, the plaintiffs complain that the Court, in coming to a decision on the costs issue, gave no weight to the fact that there were genuine public interest concerns which the objectors wished to raise. While it is true the Court eventually found that the particular public interest objections did not fall within the scope of matters arising under the Act, they were nevertheless, matters of concern within the industry. They reflected genuine concerns not only of the particular objectors but of others in the industry as well. Counsel for the plaintiffs pointed, for example, to what he described as the anti-competitive nature of the business to be operated under the Dan Murphy banner.

12 The appeals fall to be determined by the application of well settled principles. The oft-quoted passage from House v The King (1936) 55 CLR 499 at 505 enshrines those principles. In Australian Coal & Shale Employees Federation v The Commonwealth (1953) 94 CLR 621 at 627 there appears the following passage in the judgment of Kitto J: -

“ I shall not repeat the references I made in Lovell v Lovell (1950) 81 CLR 513, at pp 532–534 to cases of the highest authority which appear to me to establish that the true principle limiting the manner in which appellate jurisdiction is exercised in respect of decisions involving discretionary judgment is that there is a strong presumption in favour of the correctness of the decision appealed from, and that that decision should therefore be affirmed unless the court of appeal is satisfied that it is clearly wrong. A degree of satisfaction sufficient to overcome the strength of the presumption may exist where there has been an error which consists in acting upon a wrong principle, or giving weight to extraneous or irrelevant matters, or failing to give weight or sufficient weight to relevant considerations, or making a mistake as to the facts. Again, the nature of the error may not be discoverable, but even so it is sufficient that the result is so unreasonable or plainly unjust that the appellate court may infer that there has been a failure properly to exercise the discretion which the law reposes in the court of first instance: (House v The King (1936) 55 CLR 499, at pp 504, 505).”

13 The power to order costs in s 16 of the Liquor Act creates an unfettered discretion to be exercised by the Court on a consideration of relevant facts as it sees fit in the interests of justice. (Wallace v Bourke (NSWSC unreported 5 June 1992 per Finlay J); Emery v Binnie & Ors (NSWSC unreported 4 August 1995 per Grove J). In essence, the plaintiffs complain that the Licensing Court erred in the exercise of its discretion in that it failed to give any weight to the proposition that the objectors were raising novel and important public interest issues. Mr Lawry has argued that it was the raising of the issues under the objections and the seeking of a ruling on the issues, albeit unsuccessfully, that attracted the orders as to costs.

14 There are, as well, two subsidiary arguments. The objectors point to one particular sentence in the decision where the Chairman of the Licensing Court said: -

“I conclude that the objector, therefore, took a risk in raising those issues that they would not be allowed. Genuine and recognised public interest grounds of objection are litigable in this jurisdiction. It is trite, of course, to say so but needs to be expressed. The Liquor Act specifically recognises the entitlement of a commercial objector, as described here, to raise permissible issues.”

15 The first subsidiary argument is that the Court ordered the plaintiffs to pay the costs in each case because the plaintiffs “took a risk” that the issues of public interest which they wished to raise would not be allowed to be raised.

16 The second subsidiary argument is that the Court, in effect, proceeded upon the essential basis that the applicant in each case had been successful and that “accordingly” costs should follow the event.

17 There is no doubt that, as Mr Lawry’s submissions indicated, one of the important issues that arises from time to time, and in different forms under the Liquor Act, is the proper regulation of the supply of liquor throughout the State. The distribution and location of facilities for the supply of liquor has long been recognised as an element of public interest within the jurisdiction of the Licensing Court (Sandown Park Hotel Pty Limited v The Queen (1963) 109 CLR 521; In Re Thompson (1964) Tas SR 129; Re Zappia’s Application (1965) 7 FLR 405.

18 The Licensing Court, however, took the view, as will be seen, that the particular objections sought to be raised fell outside the scope and purpose of the Act. It is an obvious and plainly correct proposition that not every argument sought to be raised which is said to be concerned with an aspect of the “proper regulation of the supply of liquor” will found a proper objection. Some will. Some will not. That was the nub of the extensive decision given by the Licensing Court in this matter in its interlocutory decision on 1 November 2002. There has, of course, been no challenge to the correctness of that decision.

Resolution of the issues

19 A resolution of the issues in these matters requires at the outset a fair reading of the Licensing Court’s decision (Cross v McHugh (1974) 1 NSWLR at 500). What then does the decision of the Court in each matter address? I shall from this point, for the purpose of analysis, treat the two decisions as if they were one. In each case, the learned Chairman gave the principal decision. First, the Court set out the specific arguments placed before it by all parties on the costs issue. The first argument raised by the objectors was recorded as the proposition that the fact that the applicants had succeeded on the application was not a relevant matter. (I should interrupt this analysis to say that the more correct submission should have been that the applicant’s success was not determinative on the costs issue. It was of course, a relevant matter but not, as I say, determinative).

20 The second argument set out was that the grounds of objection sought to be raised, but ultimately denied, involved important issues to the liquor industry and in particular to the off license retail section of that industry. It was stressed that those issues were “serious” and “important” and raised “unusual features”. The Court also mentioned the argument put to it in this context that the objections raised “genuine” public interest issues, that is, in particular, the promotion of competition and issues relating to the operation of off licenses in the market place.

21 The Court then referred to the fact that the objectors had stated that they had withdrawn promptly following the Court’s ruling in relation to the various grounds of objection. Finally, the Court reminded itself that it had been urged to take into account the fact that it should encourage parties to raise issues; and that the withdrawal of the objections, following the Court’s decision, saved the Court from having to deliberate at length on the merits of the objections.

22 I have not sought to state al these matters in the precise terms they appear in the decision but rather to outline their essential thrust.

23 The Licensing Court’s reasons then acknowledge that in resolving the issues between the parties on the costs argument, the Court was exercising the power under s 16 of the Liquor Act. This, the Court noted, was a section which confers an unfettered judicial discretion. In exercising that discretion, the obligation was on the Court to balance all relevant factors for and against each party. These propositions were plainly correct and have not been canvassed in the present appeals.

24 The Chairman’s decision then continued: -

“It is important to note that this Court sits in the public interest to determine applications such as this, but not on the basis of inter partes litigation. I place great emphasis, in determining this application, upon the fact that this is a public interest jurisdiction.
The application of those principles to this application, and having regard to the arguments advanced by the parties, lead me to the following conclusions: that the issues sought to be litigated in the public interest were all rejected, except one, as outside the scope and purpose of the Act. There has been, to my knowledge, no precedent to support the objectors taking those grounds in this type of application.
I conclude that the objector, therefore, took a risk in raising those issues that they would not be allowed. Genuine and recognised public interest grounds of objection are litigable in this jurisdiction. It is trite, of course to say so but needs to be expressed. The Liquor Act specifically recognises the entitlement of a commercial objector, as described here, to raise permissible issues. For my part, I accept that the objectors believed that the issues raised were important for the industry, but as the Court ruled, this Court is not the forum for those issues to be litigated and the Court so ruled, in fact, twice in these proceedings, to that effect. That is, having first lost on the arguments to support the taking of those grounds of objection, the objector then amended and it was the second amendment to the notice of objection, to test the waters again, and was again rejected.”

25 The Chairman then went on to consider a number of specific arguments that had been ventilated during the costs application. For example, the fact that the Court had congratulated the objectors when they withdrew their objections, he said, was not relevant to the issue of whether orders for costs should be made. This was especially so in the light of the entire history of each matter to which his Worship made reference. Secondly, the Chairman acknowledged that the Licensing Court, in effect, was saved the trouble of having to deliberate on the application but, rightly in my view, he placed this in the context that the consideration was of little comfort to the applicant who had successfully resisted the objections only after a considerable and no doubt an expensive bout of litigation.

26 There were other matters which the Chairman then considered and found to be of no weight in determining the question of costs. There is no need for me to set out every consideration addressed in this way by the decision.

27 The Chairman did however say at p 6: -

“Past practice of parties generally not seeking orders for costs in relation to applications of this type is a factor which was not argued but which might be seen as one which encouraged these objectors and others in other matters to proceed on an assumption that they could exercise, in a public interest jurisdiction, their statutory entitlement to object and to be safe in the knowledge that it was very rare for a costs order to be made. That is a factor which, in my view, must be given careful consideration (underlining added).”

28 The Chairman concluded: -

“Having regard to all the above reasons, I am of the opinion that the costs of the proceedings in this Court should be paid by the objectors and that, as the parties have indicated, should the Court come to that conclusion they should be in the amount assessed or agreed.”

29 Mr Collins and Mr Ashton, the other members of the Court, agreed and concurred with the Chairman’s decision. Thereafter, formal orders were made in each matter.

30 At the outset it seems to me that neither of the two subsidiary arguments advanced by the plaintiffs can succeed in these appeals. First, a fair reading of the decision makes it clear that the Licensing Court did not order costs because the applicant in each case had been successful. In fact, the Chairman said at the foot of p 5: -

“On the facts of this case and on the facts relevant to this application, I entirely disregard the fact that the applicant succeeded and the applicant (sic) was granted.”

31 As I said earlier, there was no need for the Court to disregard entirely the fact that each applicant had succeeded. Success was relevant but not determinative. The Court’s finding was, if anything, unduly favourable to the objectors in this regard.

32 Secondly, the reference at the foot of p 4 to the conclusion that the objectors “took a risk” in raising issues that might not be allowed needs to be read in context. Read fairly, the reference to the objectors “taking a risk” was but part and parcel of the overall reasoning process leading to the ultimate conclusion. Read in its proper context, it does not seem to me to be an irrelevant consideration.

33 In relation to the principal argument raised on behalf of the objectors, I have come to the conclusion that it cannot be said that the Licensing Court failed to give weight to the proposition that the objections raised were, from the perspective of the objectors and the industry generally, legitimate and genuine public interest concerns. It will be apparent from the passages I have read from the Licensing Court’s decision that the learned magistrates did make allowance for the proposition that the objectors believed that the issues raised were important for the industry. The Court also acknowledged that the objections were an unusual, in that they sought to raise matters that had not been previously litigated in the jurisdiction. The decision noted particularly that “careful consideration” had to be given to the factor that generally the Court did not discourage public interest objections being raised and normally or rarely made a costs order against a commercial objector where a public interest objection was in fact raised.

34 As I read the Licensing Court’s decision, the gravamen of the Court’s ultimate decision was the finding that the so-called “public interest” grounds were not “genuine” grounds. They were in fact, “outside the scope and purpose of the Act”. In my view, it could not be said this finding was irrelevant. Indeed, it was plainly a highly relevant matter on the costs issue.

35 Of course, this ultimate finding did not necessarily require that a costs order had to be made. But nor did it require that the Court was bound to refuse to make a costs order. The Court’s task was to examine the whole history of the litigation, the nature of the objections, the various arguments advanced by the parties and then come to a decision which was safely within the confines of a sound judicial discretion. That, in my opinion, is what they did.

36 There are three further matters requiring specific comment. The first relates to Mr Lawry’s broad submission that it was an error of law for the Licensing Court in public interest litigation to order costs where public interest objections had been found to be beyond the scope of the Act. In my opinion, this proposition is, as a matter of law, too broadly stated. It cannot be correct. The costs power in s 16 is one to be exercised within a broad generally unfettered discretion. Just as it would be wrong for the Licensing Court to approach the costs exercise solely by reference to considerations as to who won or who lost a contest, so too it would be wrong, in my view, for the Licensing Court to conclude that it could not, as a matter of discretion, order costs against a commercial objector who had unsuccessfully attempted to raise public interest objections.

37 In the course of its decision the Licensing Court noted that in the general run of cases before it, it was relatively rare for a costs order to be made against an objector who had lost in reliance upon a conventional public interest objection. This was a matter, the Court said, that had to be given careful consideration. It is important, however, to acknowledge, that it would be an error of law if such a practice were to harden into an unalterable and inflexible rule of application. That too would be contrary to the broad discretionary ambit of the costs making power.

38 The second matter requiring comment is the underlying proposition in the plaintiffs’ arguments that it was, in some way, unfair that the objectors were punished in terms of costs in the present matters. This assumption is at variance with the clear principle that generally costs are not awarded by way of punishment of the unsuccessful party. They are compensatory in the sense that they are awarded to partially indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings. (Latoudis v Casey (1990) 170 CLR 534 at 543 and 556-567). This proposition has been recently endorsed, at least in a general sense, in Oshlack v Richmond River City Council (1998) 193 CLR 72 at 89 and 121.

39 The third and final matter requiring comment is the decision in Oshlack itself. The plaintiffs in these appeals have argued that the Licensing Court failed to act upon the principle of public interest enquiry referred to in that case. Oshlack was concerned with proceedings brought in the Land and Environment Court under s 123 of the Environmental Planning and Assessment Act 1979 (NSW). The proceedings were brought against the Richmond River City Council and a developer. Mr Oshlack argued that the Council had failed to exercise its powers properly in relation to its determination that a fauna impact statement was not required. Stein J dismissed the application, holding that it was open to the Council to determine that a fauna impact statement was not required. Stein J however refused to make an order for costs in favour of the Council and the developer. There was an appeal to the New South Wales Court of Appeal which was successful. The matter argued, and which found favour on appeal, was that Stein J had erred by taking into account an irrelevant consideration, in particular the consideration that the litigation had been instituted by Mr Oshlack in what the primary judge regarded as the public interest.

40 The High Court by majority (Gaudron, Gummow and Kirby JJ) with Brennan CJ and McHugh J dissenting) held that the costs order made by the trial judge should be upheld. The majority held that there was no absolute rule with respect to the exercise of discretionary powers conferred by the relevant legislation that, in the absence of disentitling conduct, the successful party was to be compensated by the unsuccessful party. Nor was there a rule that there was no jurisdiction to order a successful party to bear the costs of the unsuccessful party. In making the costs order, the trial judge had not taken into account considerations which were extraneous to any objects the legislature could have had in view in enacting the relevant section in the legislation. It is important however, to note that no part of the decision of the majority in Oshlack suggests that Stein J was bound to decline to make an order for costs. The gravamen of the majority High Court decision was that the basis of the order he in fact made was a matter that was not irrelevant in the sense explained by the Court.

41 The defendants in the present appeals has argued that there are a number of points of distinction between the costs decision made by Stein J in the Oshlack litigation and the present matter. I agree that there are. However, the matter which strikes me as most important is the fact that the Licensing Court in the present case specifically took into account that it was dealing with public interest litigation and, indeed, placed great emphasis, in determining the costs application, on that matter. That is to say, the Licensing Court clearly and unequivocally took into account the very matter which it is said it failed to bring to account in the broad discretionary exercise undertaken. Unlike the trial judge in Oshlack, however, the Licensing Court, after a careful consideration of all the relevant circumstances and arguments, concluded that it should make costs orders. This was a conclusion that they were entitled to reach. They were not bound to reach but it was a conclusion that they were entitled to reach. In my view, Oshlack is of little assistance to the plaintiffs in the present appeals.

42 For these reasons, I conclude that there is no substance in the various attacks which have been made upon the legitimacy of the Licensing Court’s decisions. The answer to the question posed at the outset of this decision is that it is not an error of law, in the circumstances of the case, for the Licensing Court in public interest litigation to award costs where a party had sought but failed to raise a valid public interest objection.

43 I make the following orders: -

In proceedings 10557/03 I dismiss the summons. I order the plaintiffs to pay the costs of the first defendant. The Exhibits are to remain with the file.

44 In proceedings 10558/03 I dismiss the summons. I order the plaintiffs to pay the costs of the first defendant. The Exhibits are to remain with the file.

**********

Last Modified: 02/19/2004