Mackenzie v Head, Transport for Victoria (Costs)
[2020] VSC 436
•17 July 2020
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
VALUATION, COMPENSATION AND PLANNING LIST
S CI 2016 04272
| MAIRIANNE MACKENZIE, IONA MACKENZIE and KEEP THE ORIGINAL ROUTE SUPPORTERS INC | Plaintiffs |
| v | |
| HEAD, TRANSPORT FOR VICTORIA | First Defendant |
| and | |
| MINISTER FOR PLANNING | Third Defendant |
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JUDGE: | Richards J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | Written submissions received 11 June 2020, 18 June 2020 and 26 June 2020 |
DATE OF JUDGMENT: | 17 July 2020 |
CASE MAY BE CITED AS: | Mackenzie v Head, Transport for Victoria (Costs) |
MEDIUM NEUTRAL CITATION: | [2020] VSC 436 |
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COSTS – Whether special circumstances justifying departure from usual rule that a successful party is entitled to its costs – No disentitling conduct on part of defendants – Not public interest litigation – Whether plaintiffs’ failure to accept defendants’ Calderbank offer was unreasonable in the circumstances – Not unreasonable – Plaintiffs to pay defendants’ costs on the standard basis.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr DRJ O’Brien | Michael I Kennedy & Associates |
| For the First Defendant | Mr S Goubran and Mr T Barry | Minter Ellison |
| For the Third Defendant | Mr DJ Batt QC and Ms ECV Porter | Matthew Hocking, Acting Victorian Government Solicitor |
HER HONOUR:
This is a proceeding brought by the plaintiffs against Head, Transport for Victoria, formerly VicRoads, and the Minister for Planning, concerning approvals for the duplication of the Western Highway between Beaufort and Ararat. The plaintiffs sought judicial review of the Minister’s assessment of the Stage 2 project under the Environment Effects Act 1978 (Vic) (EE Act), made in May 2013, and decisions made by the Minister under the Planning and Environment Act 1987 (Vic) (Planning Act) in December 2017 that authorised work to continue on the construction of Section 2B of the project.
I heard the proceeding over three days in March 2020 and delivered judgment on 4 June 2020.[1] The plaintiffs did not succeed. I found that the Minister’s assessment was valid. I also concluded that a valid assessment was not a precondition to the construction of the Section 2B works, or the Minister’s decisions of December 2017. I found that the Minister did not rely on the May 2013 assessment under the EE Act when making his decisions under the Planning Act in December 2017. I also found that the Minister’s decisions of December 2017 were valid. My ultimate conclusion was that none of the grounds relied on by the plaintiffs had been made out, there was no basis for the declarations they sought, and the proceeding must be dismissed.
[1]Mackenzie v Head, Transport for Victoria [2020] VSC 328 (Reasons).
On the question of costs, I indicated my starting point to be that, unless I was persuaded otherwise, I would order the plaintiffs to pay the defendants’ costs of the proceeding, including any reserved costs, on the standard basis. I made orders for the provision of brief written submissions by any party who sought a different order.
My starting point was informed by the general rule that costs should follow the event and that, absent disqualifying conduct, a successful party is entitled to its costs.[2] The usual basis on which costs are assessed is on the standard basis — that is, all costs reasonably incurred and of a reasonable amount.[3] An order that costs be assessed on an indemnity basis is generally only made where there are special circumstances that warrant a departure from the usual position.[4]
[2]Chen v Chan [2009] VSCA 233, [10]; Northern Territory v Sangare (2019) 265 CLR 164, [25].
[3]Supreme Court (General Civil Procedure) Rules 2015 (Vic), rr 63.30, 63.31.
[4]Ugly Tribe Co. Pty Ltd v Sikola [2001] VSC 189, [6]–[8].
The Minister did not seek any different order as to costs.
On 11 June 2020, VicRoads filed submissions in which it sought orders that the plaintiffs pay its costs of the proceeding and any reserved costs:
(a) on a standard basis until 28 February 2020; and
(b) on an indemnity basis on and after 28 February 2020.
On 18 June 2020, the plaintiffs filed submissions in which they sought an order that there be no order as to costs. Alternatively, they sought an order that VicRoads pay their costs of the proceeding on an indemnity basis until 8 June 2017, and that they pay the defendants’ costs from that date on a standard basis. They opposed an order that they pay VicRoads’ costs from 28 February 2020 on an indemnity basis.
On 26 June 2020, both VicRoads and the Minister filed submissions in reply.
For the reasons that follow, I have decided that:
(a) there is no basis for ordering VicRoads to pay the plaintiffs’ costs of the proceeding up to June 2017;
(b) the plaintiffs should pay the defendants’ costs of the proceeding; and
(c) those costs should be assessed on the standard basis.
Should VicRoads pay the plaintiffs’ costs until June 2017?
The plaintiffs submitted that VicRoads should pay their costs of the proceeding up to June 2017 on an indemnity basis. The basis for this submission was the expiry of the incorporated document included in the Ararat Planning Scheme by Amendment C27 in October 2013. When the plaintiffs commenced the proceeding in October 2016, they challenged the validity of the Minister’s approval and adoption of Amendment C27. In early February 2017, VicRoads became aware that the Amendment C27 incorporated document had expired, with the result that the impending trial date was vacated.[5] The proceeding was reconstituted during 2018 to seek judicial review of the decisions made by the Minister in December 2017.
[5]Reasons, [8], [13].
The plaintiffs asserted that both VicRoads and the Minister knew, before the plaintiffs commenced the proceeding in October 2016, that the incorporated document had expired and that, notwithstanding their responsibilities as model litigants, they did not inform the Court or the plaintiffs of its expiry until February 2017. Their delay in disclosing the expiry of the incorporated document was said to have caused the plaintiffs to incur substantial costs in commencing and maintaining the proceeding between 31 October 2016 and 8 June 2017.
I reject this submission, for three reasons.
First, there is no evidence that either VicRoads or the Minister knew that the incorporated document had expired before February 2017. The evidence is that its expiry was first drawn to VicRoads’ attention by the Ararat Rural City Council on 2 February 2017. VicRoads promptly notified the plaintiffs and the Court and, at a directions hearing on 17 February 2017, informed the Court that it would be seeking to obtain new planning permission for the Section 2B works.
Second, before VicRoads realised that the incorporated document had expired, the plaintiffs had applied for an interlocutory injunction based on their contention that the Minister’s May 2013 assessment was invalid. This application was refused by Emerton J, who was not persuaded that the plaintiffs had shown ‘a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending a trial’.[6] The plaintiffs’ originating motion was described by Emerton J as being ‘so long and convoluted as to make it very difficult “to see the wood for the trees”’.[7] In other words, the merits of the plaintiffs’ case were doubtful from the beginning. Had they discontinued the proceeding at that point, they would not have obtained a costs order in their favour.
[6]Mackenzie v VicRoads [2016] VSC 698, [49], citing Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57, [65].
[7]Mackenzie v VicRoads [2016] VSC 698, [47].
Third, the plaintiffs contended from the outset that the Minister’s May 2013 assessment under the EE Act was invalid. This was their central argument throughout the proceeding, and was unaffected by the expiry of the incorporated document. The plaintiffs’ central argument failed. There is no basis for making a costs order in their favour in respect of any part of the proceeding.
Should the plaintiffs pay the defendants’ costs?
The plaintiffs’ primary submission was that there should be no order as to costs. They submitted that, having regard to the facts and issues litigated in the proceeding, ‘it would not be unfair to require the two Defendants to bear their own costs of the litigation where they both had a clear interest in resolving uncertainty attending the valid exercise of their powers’. They relied in particular on the High Court’s decision in Oshlack v Richmond River Council,[8] and argued that ‘the subject matter of the proceeding and decisions and legislation under review concerned significant (and somewhat novel and uncertain) questions of public and environmental law’ that justified a departure from the usual rule that costs follow the event.
[8](1998) 193 CLR 72 (Oshlack).
Oshlack did not establish any ‘Public Interest Litigation Principle’, as the plaintiffs appeared to contend. It stands for the propositions that:
(a) there is no absolute rule that a successful party is entitled to be compensated for its legal costs by an unsuccessful party;[9] and
(b) in considering whether there are special circumstances that justify departure from the usual rule, a judge may take into account that the prime motivation of the unsuccessful applicant was to uphold the public interest and the rule of law, that the applicant had nothing to gain from the litigation, and that there was a real public interest in the outcome.[10]
[9]Oshlack, [40] (Gaudron and Gummow JJ), [134] (Kirby J).
[10]Oshlack, [20], [49] (Gaudron and Gummow JJ), [143]–[144] (Kirby J).
I am not satisfied that the prime motivation of the individual plaintiffs in prosecuting this proceeding was to uphold the public interest and the rule of law. I accept that MairiAnne Mackenzie and Iona Mackenzie both hold genuine concerns about the removal of large old trees and other native vegetation due to the Section 2B works. However, they were less concerned about the removal of trees and native vegetation for their preferred alternative alignments. For that reason, it appears to me that their dominant objective throughout has been to avert the construction of a highway across their land. They acknowledged that this involves ‘an element of private interest’.[11]
[11]Plaintiffs’ submissions on costs dated 18 June 2020, [18].
Nor can I find that Keep the Original Route Supporters Inc. was primarily concerned with the public interest and the rule of law in this proceeding. The evidence is that it is an association incorporated in October 2016 to ‘preserve remnant vegetation and habitat by utilising as much existing road infrastructure as possible’.[12] I know nothing about its membership or its activities since incorporation. There was no evidence about why it joined with the individual plaintiffs in this proceeding, when both of the alignment options considered by the Minister involved the loss of a ‘considerable amount of native vegetation and habitat’.[13]
[12]Affidavit of Russell Charles Pearse sworn 23 November 2018, Exhibit RCP-1.
[13]Minister’s Assessment, 12.
Further, I do not agree with the plaintiffs that the proceeding raised significant issues of public and environmental law. I accept the Minister’s characterisation of the proceeding as ‘a largely misguided attack on the merits of the Minister’s decisions, by reference to orthodox judicial review grounds’.[14] The plaintiffs’ challenge to the validity of the Minister’s assessment under the EE Act failed in every respect, including in relation to the significance of the assessment for the Minister’s subsequent decisions under the Planning Act.[15] While there was a question about the proper construction of s 8C of the EE Act,[16] it was not a determinative issue given my finding that the Minister’s assessment was valid. The construction of s 8C and its application to the particular facts of this case were not, in my view, of sufficient public interest to justify a departure from the usual rule.
[14]Minister’s reply submissions on costs dated 26 June 2020, [16].
[15]Reasons, [51]–[56].
[16]Reasons, [45]–[50].
The plaintiffs placed some reliance on the costs order made by Morris J following the decision in East Melbourne Group Inc v Minister for Planning,[17] and his Honour’s unpublished reasons for that order dated 2 September 2005. The case concerned an exemption decision made by the then Minister under s 20(4) of the Planning Act. Morris J dismissed both the plaintiff’s claim and a counterclaim brought by the defendants, and made no order as to costs. His Honour was persuaded to depart from the usual rule that costs follow the event because of the Minister’s conduct in justifying her intervention by reference to the Commonwealth Games, rather than the main purpose for which she exercised her powers. In other words, he was of the view that the Minister had misrepresented her reasons for making the exemption decision.[18]
[17]East Melbourne Group Inc. v Minister for Planning (2005) 12 VR 448.
[18]On appeal, the Court of Appeal held that the Minister was bound by her publicly stated reasons for decision, which were wholly implausible and incapable of founding a valid exercise of the exemption discretion: East Melbourne Group Inc. v Minister for Planning (2008) 23 VR 605, [308]–[312], [332] (Ashley and Redlich JJA).
I do not find Morris J’s reasons of assistance because the circumstances in the East Melbourne Group case were quite different from those in this case. Here, there was no suggestion that the Minister’s reasons for decision were colourable. VicRoads freely acknowledged the large old trees error and addressed its significance in detailed submissions to the Minister in support of its proposed Amendment C37. There is no evidence that VicRoads or the Minister was aware of the expiry of the incorporated document before February 2017. In short, there has been no ‘disentitling conduct’ on the part of either defendant. In addition, there was no unsuccessful counterclaim to be taken into account.
I have also had regard to the fact that both defendants made a ‘walk away’ offer to the plaintiffs in late February 2020, to the effect that they would agree to the proceeding being discontinued with no order as to costs. In view of the outcome of the proceeding, this was a reasonable offer.[19] As Osborn J observed in MyEnvironment Inc v VicForests,[20] the making of such offers facilitates cost effective litigation and the early resolution of disputes, and are to be encouraged by the Court.[21] To deny a costs order to the defendants may discourage them, and other defendants in cases of this type, from making reasonable offers of settlement.
[19]Subject to the matters discussed at [29] below.
[20][2012] VSC 111 (MyEnvironment).
[21]MyEnvironment, [17].
I am not persuaded that there are special circumstances in this case that justify a departure from the usual rule that costs follow the event. Accordingly, the plaintiffs will be ordered to pay the defendants’ costs of the proceeding, including any reserved costs.
Should the plaintiffs pay VicRoads’ costs from 28 February 2020 on an indemnity basis?
VicRoads sought an order that its costs be paid on an indemnity basis from 28 February 2020, because the plaintiffs did not accept an offer it had made to settle the proceeding. On 28 February 2020, VicRoads joined with an offer made by the Minister on the same day, to agree to consent to orders to enable the proceeding to be discontinued, or that dismiss the proceeding, with no order as to costs. The offer was open and able to be accepted for seven days, until 5:00 pm on 6 March 2020. The offer was made in accordance with the principle in Calderbank v Calderbank,[22] as applied by the Court of Appeal in Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2).[23]
[22][1975] 3 All ER 333.
[23](2005) 13 VR 435 (Hazeldene).
The plaintiffs did not accept VicRoads’ offer, or the offer made by the Minister. Their solicitor responded in a letter dated 3 March 2020, which commenced:
I acknowledge your letter dated 28 February 2020 on behalf of the First Defendant (Defendant) in the Proceeding. That letter provided my clients with five working days to consider your client’s offer to settle, while ignoring the fact that your client has yet to comply with the Court’s Order that it files and served detailed written opening submissions and a list of authorities by 4 pm on 11 March 2020.
I am instructed by the Plaintiffs to reject your offer to settle the Proceeding on the terms you proposed.
The letter went on to convey the plaintiffs’ counter-offer, to the effect that the parties would consent to the Court making the declarations sought by the plaintiffs, with no order as to costs.
In hindsight, the plaintiffs would have been well advised to accept the offers made by VicRoads and the Minister. However, the critical question in relation to VicRoads’ claim for indemnity costs is whether it was unreasonable in all of the circumstances for the plaintiffs not to accept VicRoads’ offer at the time it was made.[24] Among the factors to be considered in assessing reasonableness are:[25]
[24]Hazeldene, [23].
[25]Hazeldene, [25].
(a) the stage of the proceeding at which the offer was received;
(b) the time allowed to the offeree to consider the offer;
(c) the extent of the compromise offered;
(d) the offeree’s prospects of success, assessed as at the date of the offer;
(e) the clarity with which the terms of the offer were expressed;
(f) whether the offer foreshadowed an application for indemnity costs in the event of the offeree’s rejecting it.
Many of these factors are in VicRoads’ favour. The offer was made in advance of the final directions hearing on 4 March 2020, at which the trial date of 18 March 2020 was confirmed, and after which all parties’ costs increased rapidly. The compromise offered was significant, given that VicRoads was prepared to forego any claim for costs incurred since the proceeding was commenced in October 2016. The offer was in clear terms and foreshadowed an application for indemnity costs if it was not accepted and the plaintiffs did not obtain a more favourable outcome.
However, only seven days were allowed for the plaintiffs to consider the offer. That was in my view an unreasonably short time, in the context of long-running litigation in which the parties’ positions were entrenched. In addition, the letter conveying the offer did not give the plaintiffs any reason to reconsider the merits of their claim. The offer was made after the plaintiffs had filed their written opening submission,[26] but before either defendant had filed its written opening submission.[27] The plaintiffs had to make a decision about the offer without the benefit of the defendants’ written openings — which spelled out, clearly and in detail, why the plaintiffs’ claim could not succeed. In these circumstances, I conclude that it was not unreasonable for the plaintiffs not to accept the offer.
[26]On 28 January 2020.
[27]Due to be filed on 11 March 2020.
It follows that I do not accept VicRoads’ claim for indemnity costs from 28 February 2020.
Disposition
I will order that the plaintiffs are to pay the defendants’ costs of the proceeding, including any reserved costs, on a standard basis. For clarity, the first defendant’s costs include the costs incurred by the Roads Corporation until Head, Transport for Victoria was substituted as the first defendant on 23 March 2020.
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