Maule v Liporoni (No 2)

[2002] NSWLEC 140

Reported Decision: 122 LGERA 216

Land and Environment Court

of New South Wales

CITATION:

Maule v Liporoni & Anor [No. 2] [2002] NSWLEC 140

PARTIES:

APPLICANT:
Susan Jane Maule

FIRST RESPONDENT:
Marco Liporoni

SECOND RESPONDENT:
Gosford City Council

FILE NUMBER(S):

40018 of 2001

CORAM:

Lloyd J

KEY ISSUES:

Costs :- public interest litigation - indemnity costs

LEGISLATION CITED:

Environmental Planning and Assessment Act 1979 s 5A, s 28, s 69(1)(a), s 78A(8)(b) and s 101, 123
Rivers and Foreshores Improvement Act 1948

CASES CITED:

Amacon Pty Ltd v The Council of the Municipality of Concord, NSWLEC, Hemmings J, 2 December 1987, unreported;
Botany Municipal Council v Secretary, Department of the Arts, Sport, the Environment, Tourism and Territories (1992) 34 FCR 412; 76 LGERA 213;
Carver & Anor v Bankstown City Council [1999] NSWLEC 130;
Darlinghurst Residents' Association v Elarosa Investments Pty Ltd & Anor [No 3] (1992) 75 LGRA 214;
Degmam Pty Ltd (in liq) v Wright (No. 2) (1983) 2 NSWLR 354;
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd & Ors (1988) 81 ALR 397;
Latoudis v Casey (1990) 170 CLR 534;
Liverpool City Council v Roads and Traffic Authority and Interlink Roads Pty Ltd [No 2] 75 LGRA 210;
Liverpool City Council v Roads and Traffic Authority and Interlink Roads Pty Ltd (1991) 74 LGRA 265;
Maule v Liporoni [2001] NSWLEC 141;
Morris v Gosford City Council & Anor, NSWLEC, Bignold J, 29 November 1996, unreported;
Oshlack v Richmond River Council (1998) 193 CLR 72;
R v Hickman & Anor; Ex parte Fox & Anor (1945) 70 CLR 598;
Rosniak v Government Insurance Office (1997) 41 NSWLR 608;
Rundle v Tweed Shire Council; Attorney-General of New South Wales Intervening (1989) 68 LGRA 308 ;
Rundle v Tweed Shire Council [No 2] (1989) 69 LGRA 21;
Waverly Council v Refkin Pty Ltd [2000] NSWLEC 124;
Woolworths Limited & Anor v Bathurst City Council & Anor (1987) 63 LGRA 55;
Wyong Shire Council v Darcy Peter Smith & Anor [1992] NSWLEC 134

DATES OF HEARING:

20/06/2002

DATE OF JUDGMENT:

08/12/2002

LEGAL REPRESENTATIVES:

APPLICANT:
Mr J R Dupree (barrister)
SOLICITORS:
L C Muriniti & Associates

FIRST RESPONDENT:
Mr C M Harris (barrister)
SOLICITORS:
Tesoriero Henderson Cotter

SECOND RESPONDENT:
Mr P C Tomasetti (barrister)
SOLICITORS:
P J Donnellan & Co

JUDGMENT:

17

IN THE LAND AND Matter No.: 40018 of 2001

ENVIRONMENT COURT Coram: Lloyd J

OF NEW SOUTH WALES Decision date: 12 August 2002

SUSAN JANE MAULE

Applicant

v

MARCO LIPORONI

First Respondent

GOSFORD CITY COUNCIL

Second Respondent

REASONS FOR JUDGMENT [No. 2]

1. On 19 March 2002, following an eight day hearing, I dismissed the applicant’s claim that sought declarations and orders relating to the validity of a development consent granted to the first respondent (Mr M Liporoni) by the second respondent (Gosford City Council): see Maule v Liporoni & Anor [2002] NSWLEC 25. In dismissing the applicant’s claim I reserved the question of costs.

2. The successful respondents both now seek an order for their costs. Moreover, the order they seek is for costs to be awarded on an indemnity basis. The applicant opposes the making of any order for costs and submits that there should be no order.

3. I need not repeat the detailed facts and the reasons for my decision, which are fully set out in my previous judgment. It is sufficient to note that the proceedings were commenced some eighteen months after the development consent had been publicly notified. Accordingly, s 101 of the Environmental Planning and Assessment Act 1979 (“the EP&A Act”) became relevant. That section provides that the validity of a development consent cannot be questioned in any legal proceedings except those commenced in the Court before the expiration of three months from the date on which public notice thereof was given. This in turn meant that the ordinary grounds of judicial review were not available to the applicant.

4. The applicant nevertheless confronted this hurdle by alleging that the granting of the development consent by Gosford City Council (“the council”) involved jurisdictional error and was made in circumstances which demonstrated mala fides, neither of which were precluded by a provision such as s 101 of the EP&A Act (R v Hickman; Ex parte Fox (1945) 70 CLR 598). The applicant also relied on allegations of fact which would otherwise be excluded from consideration by the principle in R v Hickman, but which, the applicant said, showed that the granting of development consent must have involved jurisdictional error and was made with mala fides.

5. Both the relief claimed by the applicant and the many allegations set out in her Further Amended Points of Claim raised a large number of issues, not all of which were the subject of evidence and submissions. I found that not only was there no jurisdictional error and the allegation of mala fides not established in the granting of the development consent, but also that none of the allegations of fact raised by the applicant were established. Moreover, I found that there was simply no basis for many of the applicant’s allegations.

6. The applicant claimed that there was a mandatory requirement in the EP&A Act for a development application to be made by the owner or have the consent in writing of the owner and the first respondent’s development application did not satisfy this requirement. This claim failed because the first respondent was the owner of the land when his development consent was granted and the council had been notified of this fact. This result was inevitable in the light of the authorities (Woolworths Limited v Bathurst City Council (1987) 63 LGRA 55 and Amacon Pty Ltd v Concord Municipal Council, NSWLEC, Hemmings J, 2 December 1987, unreported).

7. It was alleged that notice of the development application was not given to the owners of an adjoining property. The applicant was unable, however, to point to any duty on the part of the council, either statutory or at common law, to give notice of a development application for a dwelling house to an adjoining owner.

8. It was alleged that the council’s Senior Environmental Health and Building Surveyor, Mr J A B Bruton, who determined the development application under delegated authority, did not have authority to do so. No evidence was tendered to support this allegation, which was in any event contrary to the facts.

9. It was alleged that the council failed to comply with guidelines of the New South Wales National Parks and Wildlife Service (“the Service”). The council’s file, however, which was tendered in evidence, clearly showed that the council consulted the Service regarding the first respondent’s development application and gave consideration to its concerns and guidelines.

10. It was alleged that the council failed to give proper consideration to the fire hazards. It was further alleged that the council’s improper consideration of this issue gave rise to an inference of bad faith on the part of the council. In this respect it was alleged that the first respondent, Mr Liporoni, deliberately misled the council’s Fire Control Officer, Mr R E Miller, as to the location of the proposed house on the land: that is, that Mr Liporoni deceived Mr Miller. I found rather than he was deceived, Mr Miller may have been initially mistaken as to the location of the house on the land; that the council had not failed to properly consider this issue; and that no error of law and no jurisdictional fact was involved.

11. It was alleged that in granting the development consent the council failed to take into account the restriction as to user, failed to comply with the restriction as to user and failed to give notice of any proposed variation, release or modification thereof. This allegation was made despite the fact that the benefit of the restriction was in favour of the council, which was expressly authorised thereby to release, vary or modify the restriction. The allegation was also made despite the fact that s 28 of the EP&A Act and cl 54 of the Gosford Planning Scheme Ordinance 1968 operated to suspend the restriction as to user to the extent to which it was inconsistent with any consent given thereunder. The allegation was further made despite the fact that there was a geotechnical report, a copy of which had been sent to the applicant’s solicitors, which demonstrated that the geotechnical issue to which the restriction as to user was directed, was satisfactorily resolved. I found that there was simply nothing unlawful about the council’s conduct.

12. It was alleged that there was a failure on the part of the council to give proper consideration to its Environmental Officer’s recommendations, particularly in relation to two large Angophora costata trees on the land. This allegation was made despite the fact that the council accepted the Environmental Officer’s recommendation to impose the conditions of consent which required the development to be carried out generally in accordance with the plans, which in turn show the two trees as being retained. I found that there was nothing unlawful in what the council had done and there was nothing approaching mala fides in the council’s conduct from these facts.

13. It was alleged that there was a “river” on the land as defined in the Rivers and Foreshores Improvement Act 1948; that as a consequence the development was “integrated development” as defined in the EP&A Act; and the council had failed to refer the development application to the Department of Land and Water Conservation to obtain any terms of approval or a “Part 3A” certificate pursuant to the Rivers and Foreshores Improvement Act. Apart from the fact that I found that there was no river (as defined) on the land, the allegation was made despite the fact that a permit under Pt 3A of the Rivers and Foreshores Improvement Act had been granted before the proceedings were commenced (thus satisfying the requirement of that Act); and despite the fact that a failure to process the development application as integrated development did not make the development consent invalid, but merely obliged the first respondent to make an independent application for a permit under Pt 3A of the Rivers and Foreshores Improvement Act. I also found that this did not involve any jurisdictional error.

14. It was alleged that there were certain threatened species and their habitats on the land and which were significantly affected by the development. As a consequence there had been a failure to comply with ss 5A and 78A(8)(b) of the EP&A Act, which require a development application in such event to be accompanied by a species impact statement. However, the applicant’s own environmental consultant did not record the presence of any threatened species on or in the vicinity of the subject land, neither did he record any threatened plant species. There was no evidence to suggest that the council by its Environmental Officer did not carry out the eight-part test required by s 5A of the EP&A Act. Moreover, the evidence of that officer was to the contrary the to applicant’s allegations.

15. There was no evidence to support the allegation that the council’s conduct in granting the development consent was unlawful. The applicant accepted that a serious allegation of mala fides as that raised by the applicant required a clear, or cogent, or strict proof. The evidence adduced by the applicant did not, however, come near to suggesting mala fides to the required standard of proof, or at all.

16. In the light of these facts, the respondents submit that an order for indemnity costs should be made. They rely upon the following submissions.

(a) At the time the allegation of mala fides was made, the applicant had no basis for alleging it.

(b) The allegation that the first respondent misled the council’s Fire Control Officer, Mr Miller, as to the location of the proposed house on the land first arose in evidence in reply. It was scandalous for such an allegation to emerge in this way: the applicant had made no such allegation in her Further Amended Points of Claim nor in any of the evidence served in support of her claim.

(c) The applicant adopted a “scattergun” approach in that she alleged that the development consent granted by the council was invalid on every possible basis without discrimination. This included matters for which the applicant plainly had no evidence.

(d) The applicant persevered with assertions even where there was direst evidence to the contrary.

(e) The applicant raised allegations of mala fides/fraud against the respondents which were totally unjustifiable. These were serious allegations. It is an abuse of process to allege mala fides/fraud where there is no evidence to support such allegations.

(f) The effect of s 101 of the EP&A Act was that, if properly advised, the applicant should have known that the proceedings could not be possibly successful.

(g) By letter dated 22 June 2000, before the proceedings were commenced, the first respondent’s solicitors expressly drew the attention of the applicant’s solicitors to the effect of s 101 of the EP&A Act, to the effect of s 28 of the EP&A Act and to the effect of cl 54 of the Gosford Planning Scheme Ordinance relating to the restriction as to user, and that in the event of proceedings being commenced their client will be seeking an order for costs on an indemnity basis.

(h) By its letter dated 23 October 2001 the first respondent’s solicitors asked the applicant’s solicitors to identify those issues which will be pressed in the proceedings and the evidence upon which the applicant will rely. The only response was the service by the applicant’s solicitors three days before the hearing commenced of an “Indigenous Use Report” which raised an issue not previously referred to or particularised; and the service on the day before the hearing commenced of four additional experts’ reports.

(i) When a party so conducts the proceedings by multiplying allegations upon allegations without foundation, as to grossly prolong the litigation, the Court should order costs on an indemnity basis. Mr P C Tomasetti, appearing for the second respondent (the council) referred to Degmam Pty Ltd (in liq) v Wright (No 2) (1983) 2 NSWLR 354 at 358-359; Waverly Council v Refkin Pty Ltd [2000] NSWLEC 124; Wyong Shire Council v Smith & Anor, NSWLEC, Bignold J, 24 December 1992, unreported; Carver & Anor v Bankstown City Council [1999] NSWLEC 130; and Morris v Gosford City Council & Anor, NSWLEC, Bignold J, 29 November 1996, unreported)

17. Mr J R Dupree, appearing for the applicant, makes the following submissions.

(a) The litigation was brought by the applicant to enforce the public law obligations pursuant to the open standing provision in s 123 of the EP&A Act, so there should be no order as to costs. (He referred to Oshlack v Richmond River Council (1998) 193 CLR 72.)
(b) Talbot J, in dismissing the first respondent’s motion for summary dismissal of the proceedings, thought that the applicant had an arguable case ( Maule v Liporoni [2001] NSWLEC 141).
(c) There was no need for the second respondent (the council) to have been a protagonist. (He referred to the joint judgment of Gaudron and Gummow JJ in Oshlack v Richmond River Council at 90, par [46].) Moreover, the only evidence adduced by the council was the tender of its file.
(d) If, notwithstanding the applicant’s primary submission, it is found that this was a private litigation, then the ordinary practice relating to costs in private litigation should apply, which is that costs should be ordered on a party and party basis. (He referred to Latoudis v Casey (1990) 170 CLR 534.)
(e) It cannot be said that the applicant had no prospects of success, which must be looked at the time the evidence was tendered, that is, accepting the applicant’s witnesses’ evidence. Accordingly the applicant had a reasonable expectation of success.

18. It is convenient to first consider whether there should be any order for costs at all. In Oshlack v Richmond River Council the High Court held that the fact that litigation might be described as public interest litigation is not an irrelevant consideration in deciding whether to make an order for costs. But that fact is not, of itself, determinative. It is only one consideration that may be taken into account in determining whether to make an order for costs.

19. In my opinion, the proceedings cannot in any event properly be characterised as public interest litigation. In Rundle v Tweed Shire Council[No. 2] (1989) 69 LGRA 21, the applicant brought proceedings with the support of some other residents of Byrril Creek within the shire of Tweed, against Tweed Shire Council alleging that the council’s use of a pesticide spray (2,4-D pesticide) was in breach of Pt 5 of the EP&A Act. According to the facts described in the principal judgment (see Rundle v Tweed Shire Council; Attorney-General of New South Wales intervening (1989) 68 LGRA 308) the spraying was not without incident, involving a road blockade by the some local residents. The Attorney-General for the State of New South Wales intervened and was represented by senior and junior counsel. In rejecting the submission made by the applicant that the proceedings could be properly characterised as public interest litigation, Bignold J said (at 27):

Another telling feature of the proceedings negativing the suggestion of “public interest litigation” was the fact that despite the wide-scale geographic use by the second respondent of 2,4-D throughout the County district the alleged breach of duty was confined to the spraying of 2,4-D on a noxious plant infestation on but one isolated rural property, of which the applicant was a one-time occupant. This clearly demonstrates that the true nature of the proceedings was to vindicate a public right for the principal benefit of the applicant: cf Wentworth v Attorney-General (NSW) (1984) 154 CLR 518 at 528-529.
Accordingly I reject the applicant’s submission that the proceedings can properly be characterised as “public interest litigation”. …

20. Bignold J ordered the unsuccessful applicant to pay the respondent’s costs.

21. In Liverpool City Council v Roads and Traffic Authority and Interlink Roads Pty Ltd [No. 2] (1992) 75 LGRA 210, the council had brought proceedings against the Roads and Traffic Authority claiming that a determination of the latter’s chief executive to proceed with certain work on the F5 Freeway was in breach of Pt 5 of the EP&A Act. Cripps J found in his principal judgment (Liverpool City Council v Roads and Traffic Authority and Interlink Roads Pty Ltd (1991) 74 LGRA 265) that Liverpool City Council had established that there was a breach of that Act, but in the exercise of the Court’s discretion, the Court declined to make any orders. In opposing an application for costs, Liverpool City Council argued that the litigation should be properly characterised as public interest litigation because it was concerned with an obligation imposed upon a government instrumentality by Pt 5 of the EP&A Act in the context of a major public project and that Liverpool City Council was seeking to protect the interests of its ratepayers. Cripps J said (at 212):

In the judgment, I assumed that the Council was genuine in its claim to represent the interests of certain ratepayers within its municipality. I do not regard that circumstance as justifying, of itself, a characterisation of the litigation as “public interest litigation”. …
Bearing in mind the history of litigation and the time at which it was alleged that the entire assessment process was flawed, it must be asked, on the findings of the Court, “what public interest” was served by the litigation. … As I have said, I accept that the Council is genuine in its claim to represent ratepayers. However, the Council’s claim to represent the “public interest” was not established to be as wide as originally claimed. My conclusion is that the proceedings should not be characterised as “public interest litigation” as that expression must relevantly be understood.

22. In Darlinghurst Residents’ Association v Elarosa Investments Pty Ltd & Anor [No 3] (1992) 75 LGRA 214, Stein J dismissed a challenge to the validity of a development consent granted to the first respondent. In opposing an application for costs the applicant argued that the proceedings were said to be “public interest litigation”. Stein J stated the test as follows (at 215):

Was the interest confined to a relatively small number of members of the Association in the immediate vicinity of the development concerned with their own private amenity? Or was the interest much wider, concerning significant numbers of the public, institutions, professional bodies and including concern for a much wider and significant geographic area?

23. Stein J then turned his attention to the applicant (at 215):

Its membership consists mainly, but by no means exclusively, of residents living proximate to the subject site. While the initial purpose of the formation of the Association was to oppose the development, it has broader public objectives and is involved in other issues.

24. Stein J then turned his attention to the nature of the proceedings (at 216):

While they did not succeed, none of the challenges were specious. Indeed, all were eminently arguable. This much is revealed by my reasons for judgment. All the issues raised were significant ones. They made contributions to the understanding of the Council’s Local Environmental Plan No. 101 in so far as it relates to heritage assessment, the zone objectives, the development application process and Council’s planning discretion, the issue of conditions and finality of the consent as well as the interpretation of the Model Provisions regarding “gross floor area” in relation to the floor space ratio of the proposal. The last-mentioned issue is one which may have value for the assessment of many future development applications by councils who have adopted the Model Provisions to the Environmental Planning and Assessment Act . The issues raised were all serious ones with, for the most part, ramifications wider than the proceedings themselves.
…
The fact of the matter is that the proposed skyscraper is sited in a visually prominent position, by far the tallest building in the area and will impact on areas far beyond Darlinghurst. … It is clear that the challenge by the Association to the consent for the building was representing and expressing far wider objections than the narrow private amenity of residents living in close proximity to the proposal.

25. In applying the above-mentioned cases, I have come to the view that no public interest is served by the litigation in the present case. The applicant is an adjoining landowner to the first respondent. There is no evidence to suggest that the applicant’s claims represented a wider public interest. Unlike the case of Darlinghurst Residents’ Association v Elarosa Pty Ltd, the proposed dwelling house on the first respondent’s land would not have an impact beyond his immediate neighbours. None of the issues raised by the applicant contributed to the understanding of the relevant environmental planning instrument. None of the issues had any value for the assessment of future development applications. None of the issues could be described as eminently arguable. Indeed, some issues were raised despite a complete absence of evidence to support them. The true nature of the proceedings was for the principal benefit of the applicant and to serve her private interest.

26. Even if the proceedings were to be characterised as public interest litigation, that fact alone would not lead to a departure from the usual practice in the exercise of the Court’s discretion as to costs.

27. The usual practice is described in Oshlack v Richmond River Council, in which the High Court considered the scope of s 69(2) of the Land and Environment Court Act, which section provides that costs are awarded in the discretion of the Court. After noting that s 69(2) is in the traditional form McHugh J (with whom Brennan CJ agreed) said (at 96):

[65] Although the statutory discretion is broadly stated, it is not unqualified. It clearly cannot be exercised capriciously. Importantly, the discretion must be exercised judicially in accordance with established principle and factors directly connected with the litigation [In re Elgindata Ltd [No 2] [1992] 1 WLR 1207; [1993] 1 All ER 232 .]
…
[66] By far the most important factor which courts have viewed as guiding the exercise of the costs discretion is the result of the litigation. A successful litigant is generally entitled to an award of costs.

28. McHugh J went on to explain what is meant by the expression the “usual order as to costs” (at 97):

[67] The expression the “usual order as to costs” embodies the important principle that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour. The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party [Latoudis (1990) 170 CLR 534 at 543, per Mason CJ; at 562-563, per Toohey J; at 566-567, per McHugh J; Cachia v Hanes (1994) 179 CLR 403 at 410, per Mason CJ, Brennan, Deane, Dawson and McHugh JJ. ] If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation.

29. McHugh J went on to demonstrate that the traditional exceptions to the “usual order as to costs” focus on the conduct of the successful party disentitling it to the beneficial exercise of the discretion. After referring to Latoudis v Casey (1990) 170 CLR 534, McHugh J said (at 102):

[80] Mason CJ, Toohey J and I were all of the view that one starts with the proposition that a successful party to litigation (the defendant in Latoudis ) can usually expect to receive a costs award in its favour unless its own conduct disentitles it from the benefit of the discretion. It is the conduct of the successful party, and not the conduct or motives of the unsuccessful party, which is relevant to the exercise of the costs discretion [ Similarly, the fact that an unsuccessful plaintiff is funded by legal aid is irrelevant to the exercise of the costs discretion. See Re Minister for Immigration and Ethnic Affairs; Ex parte Qin (1997) 186 CLR 622 at 628-629; Latoudis (1990) 170 CLR 534 at 543, per Mason CJ .] Thus Mason CJ said [Latoudis (1990) 170 CLR 534 at 542-543 ]:
“in exercising its discretion to award or refuse costs, a court should look at the matter primarily from the perspective of the defendant. To do so conforms to fundamental principle. If one thing is clear in the realm of costs, it is that, in criminal as well as civil proceedings, costs are not awarded by way of punishment of the unsuccessful party. They are compensatory in the sense that they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings.”
Toohey J stated [Latoudis (1990) 170 CLR 534 at 565 ]:

“If a prosecution has failed, it would ordinarily be just and reasonable to award the defendant costs, because the defendant has incurred expense, perhaps very considerable expense, in defending the charge.”

His Honour affirmed the point as follows [Latoudis (1990) 170 CLR 534 at 565 ]:
“It is unnecessary to speak in terms of a presumption; it is enough to say that ordinarily it would be just and reasonable that the defendant against whom a prosecution has failed should not be out of pocket”.

His Honour noted that in a particular case [Latoudis (1990) 170 CLR 534 at 565 ]:
“there may be good reasons connected with the prosecution such that it would not be unjust or unreasonable that the successful defendant should bear his or her own costs or, at any rate, a proportion of them.”

His Honour then lists two examples of such "good reasons". Both examples are of disentitling conduct by the defendant (failing to explain conduct before charge laid and unreasonably prolonging proceedings). Toohey J then declared [Latoudis (1990) 170 CLR 534 at 565-566 ]:

“These illustrations are in no way exhaustive but what they point up is that a refusal of costs to a successful defendant will ordinarily be based upon the conduct of the defendant in relation to the proceedings brought against him or her.”

30. Kirby J in Oshlack also accepted (at 121) the compensatory principle and its application to order for costs under s 69(2) of the Land and Environment Court Act 1979. Kirby J further said (at 122):

[134] … The compensatory principle is adequately reflected by the adoption of a general practice by which, ordinarily (including in a case brought by a party under the “open standing” rule and purportedly in the public interest), costs are ordered in favour of the successful party.

31. Although McHugh J (Brennan CJ agreeing) were in the minority in the overall result in Oshlack, the principles explained by his Honour and by Kirby J represent the majority view of the relevant principles that apply in the exercise of the Court’s discretion under s 69(2) of the Land and Environment Court Act.

32. In the present case the applicant failed in every point that she raised. Many of the points she raised had no merit at all, neither was there any evidence to support them. She persisted with arguments that were clearly excluded by s 101 of the EP&A Act. The principal thrust of the applicant’s submissions seems to have been based on a “suspicion” that something may have been wrong in the processing by the council of the first respondent’s development application. In applying the principles which govern the exercise of the Court’s discretion on costs was explained in Oshlack, the most important factor guiding the exercise of the discretion is the fact that the respondents were successful. Importantly, there was nothing in the conduct of the successful respondents which disentitles them from the beneficial exercise of the discretion on costs. The respondents were brought to the Court at the suit of the applicant and to defend serious allegations that were made against them and which, in the result proved to be baseless. These circumstances call for an order for costs in favour of the respondents.

33. I now turn to the respondents’ application for costs on an indemnity basis.

34. In Degmam Pty Ltd (in liq) v Wright (No 2) (1983) 2 NSWLR 354, Holland J considered an application for costs order on an indemnity basis. In making the order sought his Honour said (at 358):

The next question therefore is whether there is a case made out for a special order. I think that there is. I do not wish to repeat what I had to say in my reasons for judgment, about the merits of the defences and causes of action put forward by the defendant or the manner in which she conducted herself in the course of the litigation and in the witness box. It is sufficient to say that the allegations of fact she made as the basis of her defences and causes of action were in my opinion false and deliberately concocted by her in an attempt to deny the plaintiff its rights and to shift all blame and legal liability to the plaintiff from herself to the second cross-defendant. As well as that, she so conducted herself in the proceedings, by multiplying allegation upon allegation, and by prevaricating in the witness box, as grossly to prolong the litigation, thereby to cause the other parties to incur liability for solicitor and client costs far beyond what they could reasonably have expected to incur in litigation of genuine issues. The discretion which the court has as to costs is, as have been said many times, to be exercised judicially, that is to say upon proper grounds and the court will not lightly depart from standard practice in the awarding of costs.

35. In Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd & Ors (1988) 81 ALR 397, Woodward J said (at 401), in a passage that has been subsequently followed:

I believe that it is appropriate to consider awarding “solicitor and client” or “indemnity” costs, whenever it appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law. Such cases are, fortunately, rare. But when they occur, the court will need to consider how it should exercise its unfettered discretion.

36. Cases which have followed Fountain Selected Meats, however, appear to have widened the basis upon which indemnity costs may be ordered. In Botany Municipal Council v Secretary, Department of the Arts, Sport, the Environment, Tourism and Territories (1992) 34 FCR 412; 76 LGERA 213, Gummow J, after citing the above-mentioned passage of Woodward J in Fountain Selected Meats, said (at 415):

However, I accept that the discretion conferred by s 43 is not so circumscribed that an order of this character may be made only against an ethically or morally delinquent party.

37. This approach was accepted by Mason P (with whom Clarke A-JA agreed) in Rosniak v Government Insurance Office (1997) 41 NSWLR 608 at 616:

Later cases have emphasised that the discretion to depart from the usual “party and party” basis for costs is not confined to the situation of what Gummow J described as the “ethically or morally delinquent party” ( Botany Municipal Council v Secretary, Department of the Arts, Sport, the Environment, Tourism and Territories (1992) 34 FCR 412 at 415): see Baltic Shipping Co v Dillon, “Mikhail Lermontov” (1991) 22 NSWLR 1 at 34; Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 233-234. Nevertheless the court requires some evidence of unreasonable conduct, albeit that it need not rise as high as vexation. This is because party and party costs remain the norm, although it is common knowledge that they provide an inadequate indemnity. Any shift to a general or common rule that indemnity costs should be the order of the day is a matter for the legislature or the rule-maker: Huntsman Chemical Co Australia Ltd v International Pools Australia Ltd (1995) 36 NSWLR 242 at 248.

38. The cases relied upon by Mr Tomasetti are decisions of this Court where orders for costs have been made on an indemnity basis. In my opinion, Waverly Council v Refkin Pty Ltd is distinguishable because that was a case where the applicant had discontinued. In Wyong Shire Council v Smith the Court found that the case brought by the applicant was “hopeless”. In Morris v Gosford City Council the applicant informed the Court at the commencement of the hearing that she did not wish to prosecute the proceedings because the council had subsequently granted a further development consent which cured the suggested invalidity of the first development consent, the validity of which the applicant had sought to impugn. Bignold J made an order for indemnity costs because, if the proceedings had been litigated, the respondent’s defence based on s 104A of the EP&A Act (the predecessor to the present s 101) would have meant that the applicant’s claim was statute-bared and there was thus a deliberate decision by the applicant to continue with a claim that was hopeless. Carver v Bankstown City Council was another instance of a discontinuance (on the morning of the hearing).

39. In my opinion, in the exercise of the Court’s discretion under s 69(2) of the Land and Environment Court Act, the order for costs against the applicant should be on an indemnity basis. I have come to this view for the reasons I have previously indicated, which may be re-stated as follows. The applicant adopted a “scattergun” approach, alleging that the development consent was invalid on every possible basis, without regard to whether there was any evidence in support thereof. The applicant made assertions relating to invalidity of development consent although there were no facts to support such assertions and, in some instances, even where the applicant’s own evidence simply did not support her case. The applicant persisted with the allegations of invalidity which were clearly excluded from consideration by s 101 of the EP&A Act, despite that the effect of that section had been drawn to her attention by the first respondent’s solicitors before the proceedings were commenced. The effect of s 101 was that the applicant, if properly advised, should have known that the proceedings could not possibly be successful. The applicant’s allegation of mala fides was made “on suspicion” without any basis for doing so and without any evidence to support such allegation. In my opinion, the making of a serious allegation of mala fides without evidence to support it is equivalent to making allegations of fraud without any basis, amounts to an abuse of process and is deserving of the severest condemnation. The respondents, moreover, were self-evidently put to considerable trouble and expense in meeting the applicant’s groundless claims. As in Degmam Pty Ltd v Wright the applicant so conducted herself by multiplying allegation upon allegation, thereby causing the other parties to incur liability for solicitor and client costs far beyond than what they could reasonably be expected to incur in litigation of genuine issues. As in Fountain Selected Meats the applicant persisted in her claims that had no chance of success and so must be presumed to have brought or continued the proceeding for some ulterior motive, or because of some wilful disregard of the known facts or the clear established law. Even if the applicant’s conduct could not be so described, her conduct was clearly unreasonable.

40. I acknowledge the submission of Mr Dupree that Talbot J, in dismissing the first respondent’s motion for summary dismissal of the proceedings, thought that the applicant had an arguable case. However, Talbot J was solely concerned with the applicant’s allegations set out in the application and in the Amended Points of Claim. His Honour did not have regard to the actual evidence in support of the applicant’s claims. Even so, Talbot expressed the opinion that “in many respects the case can be regarded as a weak one” (Maule v Liporoni & Anor [2001] NSWLEC 141 at par [40]).

41. I refer also to Mr Dupree’s submission that there was no need for the second respondent to be a protagonist. In this respect Mr Dupree relies upon the joint judgment of Gaudron and Gummow JJ in Oshlack v Richmond River Council at 90:

[46]… In a significant number of such litigious disputes, it will, in accordance with the reasoning in R v Australian Broadcasting Tribunal ; Ex parte Hardiman [ (1980) 144 CLR 13 at 35-36. See also Australian Conservation Foundation v Forestry Commission (1988) 76 LGRA 382 at 386; Kerr v Verran (1989) 28 IR 179 at 206; Vidler v Secretary, Department of Social Security (1995) 61 FCR 370 at 382-383 ] , be entirely appropriate for, if not incumbent upon, the local government body not to assume the position of a protagonist and to avoid incurring substantial costs. The position of protagonist will be filled by the party against which injunctive relief is sought and which is the real contradictor in respect of the application for declaratory relief.

42. In the present case, however, the council had been joined as a party by the applicant. It was the council’s decision to grant development consent which was sought to be impugned. Importantly, the applicant made serious allegations of mala fides against the council and against certain officers of the council. The council was thus fully justified in assuming the position of a protagonist so as to protect the integrity of its decision-making and to protect its officers against the unjustified attack of mala fides brought against them.

43. The respondents seek not only an order for the costs of the proceedings but also an order including costs which are incidental to the proceedings. They submit that this is because they have been put to considerable trouble and expense in investigating and meeting the claims raised and particularised by the applicant which were not pressed at the hearing. I agree with the respondents’ submission. Having regard to s 69(1)(a) of the Land and Environment Court Act 1979 (which provides that “costs” includes costs of or incidental to proceedings in the Court) it may not be strictly necessary to do so. Nevertheless, in order to remove any possibility of doubt, I will so order.

44. The Court orders that the applicant pay the respondents’ costs of or incidental to the proceedings on an indemnity basis, including reserved costs and the costs of the motions for costs.

I hereby certify that the preceding 44 paragraphs are a true copy of the reasons for judgment herein of the Honourable Mr Justice Lloyd.

Associate

Dated: 12 August 2002