Croghan v Blacktown City Council

The applicant, Alan Croghan, sought leave to appeal against orders made by Molesworth AJ in the Land and Environment Court concerning costs in a Class 3 compensation proceeding. The dispute arose after Mr Croghan rejected an offer of compromise made by Blacktown City Council and subsequently obtained a judgment for an amount less than that offer. The primary judge had made orders regarding costs, which Mr Croghan contended were erroneous.

The central legal issue before the Court of Appeal was whether the primary judge had erred in applying the principles governing costs in Class 3 compensation proceedings in the Land and Environment Court, particularly in relation to the application of rule 42.15(2) of the Uniform Civil Procedure Rules 2005 (UCPR). This rule deals with the court's discretion to "order otherwise" regarding costs when an offer of compromise is rejected and a lesser judgment is obtained. The court was required to determine if the presumption that costs follow the event applied, and if not, how the discretion under UCPR r 42.15(2) should be exercised.

The Court of Appeal found that the primary judge had erred in applying the relevant principles. It held that the presumption that costs follow the event does not apply in Class 3 compensation proceedings in the Land and Environment Court. Furthermore, the court determined that the primary judge had misapplied the principles relevant to the exercise of discretion under UCPR r 42.15(2). Consequently, the Court of Appeal allowed the appeal, set aside the primary judge's cost orders, and ordered that Blacktown City Council pay Mr Croghan's costs of the proceedings in the Land and Environment Court, assessed on the ordinary basis, as well as the costs of the appeal and the application for leave to appeal.