Melville v Craig Nowlan & Associates

[2002] HCATrans 535

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S109 of 2002

B e t w e e n -

JUDITH MELVILLE

Applicant

and

CRAIG NOWLAN & ASSOCIATES PTY LIMITED

First Respondent

MACLEAN SHIRE COUNCIL

Second Respondent

Application for special leave to appeal

GUMMOW J
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 13 DECEMBER 2002, AT 3.34 PM

Copyright in the High Court of Australia

MR P.W. LARKIN:   May it please your Honours, I appear with MR C.D. NORTON for the applicant.  (instructed by Wroth Wall Solicitor) 

MR P.R. CLAY:   May it please your Honours, I appear with MS S.A. DUGGAN for the first respondent.  (instructed by Carneys Lawyers) 

GUMMOW J:   The Court holds a certificate from the Deputy Registrar that she has been informed by the solicitor for the second respondent, Maclean Shire Council, that the second respondent enters an appearance and submits to the order of the Court, save as to costs.  Yes, Mr Larkin. 

MR LARKIN:   May it please your Honours.  There are two critical matters at issue.  The first is whether the conferral by statute upon a court of a broad discretion to award security for costs abolished all judicially developed guidelines to the exercise of the discretion to award security, and, in particular, whether it abolished ‑ ‑ ‑

GUMMOW J:   I get nervous when I hear that word “guideline”. 

MR LARKIN:   Yes.  What we intend to convey by that word – it is a term of art. 

GUMMOW J:   No, it is not. 

MR LARKIN:   Perhaps ‑ ‑ ‑

GUMMOW J:   That is the problem. 

MR LARKIN:   It has certainly been used, we would say, by each member of this Court in Oshlack’s Case ‑ ‑ ‑

GUMMOW J:   Yes, I know. 

MR LARKIN:    ‑ ‑ ‑ including by your Honour.  Indeed, we intend to use it in the way that your Honour, in a joint judgment with Justice Gaudron, used it.  Oshlack’s Case 193 CLR is at tab 6 of the materials.  Your Honour may be well familiar with it. 

GUMMOW J:   I am not the only person here. 

MR LARKIN:   Yes, indeed.  In that case, each member of the Court, in passages which I can take your Honours to, said that despite the conferral of a general discretion to award costs - indeed, it is another provision of the very same section at issue in these proceedings – nevertheless, it was a proper function for courts to develop what was described by each member of the Court as “guidelines” that guide the exercise of that otherwise broad statutory discretion.  Your Honour the presiding judge and Justice Gaudron said so in paragraph 35 of the judgment.  The issue, I should say, in Oshlack’s Case, was whether one of those guidelines, namely, the well‑known principle that costs follow the event, had so hardened into a rule of law that there was no exception to it, despite the words of the statute, section 69 ‑ ‑ ‑

GUMMOW J:   That is right.  That is why I said I get nervous with the word “guideline”. 

MR LARKIN:   Yes.  What we wish to say in this first point ‑ ‑ ‑

GUMMOW J:   It tends to impose some form of arterial sclerosis on discretions. 

MR LARKIN:   We do not ‑ ‑ ‑

GUMMOW J:   And, more mischievously, to relieve the parties from actually getting to specifics in the particular case. 

MR LARKIN:   Yes, we do not contend that the ordinary guideline or principle, which one can find many statements of, that ‑ ‑ ‑

GUMMOW J:   But it is said against you that everyone in the Court of Appeal was agreed about what the general ambit of power was.  There was a disagreement as to the manner of its exercise here.  If that is right, why should we get involved? 

MR LARKIN:   Because the words “the manner of its exercise” – if it were only a matter of looking at various – if there were no more differences between the majority and the minority than what weight should be attached to different matters, or something of the sort like that, then I would accept ‑ I do accept – that it would raise no matter of principle.  But the manner of the exercise of the discretion did involve matters of principle.  In particular, the guideline, as we would call it, that a natural person who sues will not be ordered to give security for costs, however poor he or she might be, is one which points against the making of an award for security.  The majority held, clearly, in our submission, that it was a factor pointing in favour of the order for security.  There is, therefore, a matter ‑ ‑ ‑

CALLINAN J:   There is always a tension about that, though, is there not?  On the one hand, impecunious litigants should not be denied their day in court, but on the other hand, why should the luxury of their day in court, if they fail, be at the expense of the respondent or the defendant?  Now, I do not know how you resolve that tension.  I do not think any case satisfactorily does. 

MR LARKIN:   What we would say, your Honour, is that there is such a tension, and we would say that, at the end of the day, the tension is between on the one hand, the duty of a court to administer justice according to law and to reach substantively just, sound outcomes, and, on the other hand, the tension is to ensure that people will not be out‑of‑pocket.  There is such a tension; I acknowledge that.

CALLINAN J:   Nothing could be a greater ordeal for some defendants than to be caught up in so‑called “public interest litigation”, for which nobody is taking responsibility because it is said to be public interest litigation.  A defendant or respondent can be put to enormous expense and, I might say, anxiety, whilst this is carried on. 

MR LARKIN:   I accept that a defendant can be put to expense and anxiety.  What I would say is that I embrace your Honour’s proposition that there is a tension.  The fundamental point that we make is that that tension must be resolved.  In this case, it has been resolved, in order to ensure that someone will not be out‑of‑pocket in a manner which defeats, prevents summarily, a case which is acknowledged to be regularly commenced and to be arguable. 

The way to resolve the tension that your Honour spoke of ‑ in the end, if there is a collision between those two matters, priority must be given to the administration of justice, that is, to courts achieving substantive, just outcomes in accordance with law.  At the end of the day, we do not shirk from ‑ ‑ ‑

CALLINAN J:   But you do not know that.  You never know that until the end, except in some very plain cases. 

MR LARKIN:   A just outcome may be dismissal of the action, often will be.  But at least then there will be an adjudication of the merits of the controversy. 

CALLINAN J:   Particularly when you have a rule like General Steel, which means that you do not need much of a case to be permitted to proceed.  So that all sorts of cases get to court, but fail in court, after a full hearing and after an enormous amount of expense has been incurred. 

MR LARKIN:   The converse proposition is that if priority is given in that tension to ensuring that people are not out‑of‑pocket, all sorts of meritorious cases might not get to court. 

CALLINAN J:   It is not only a question of money.  It is a question of anxiety, too. 

MR LARKIN:   I accept that, but the legislation is utterly general in its terms.  It applies to a wide range of circumstances.  It applies not only to circumstances where the litigants here are two equal private persons; it applies to circumstances where they may be commercial competitors; it may be citizen against State; it may be State against citizen.  There are all sorts of situations in which these provisions ‑ ‑ ‑

GUMMOW J:   Yes, but do you say that there could have been no order against you? 

MR LARKIN:   No, your Honour.  What I say is that the case fairly fell within the guideline, which pointed in a particular direction.  It pointed in favour of refusal of an order for security for costs.  That was not something which had achieved arterial sclerosis, or anything of the sort like that.  Once it came to be the fact that the case fell within that guideline pointing in that direction, then it was for the person seeking security to demonstrate some other factor or factors which pointed in the other direction. 

CALLINAN J:   Did the Court of Appeal take the view that your client would not have been seriously directly affected by the proposal? 

MR LARKIN:   I think it took the view that she was not someone that would have fallen within Boyce’s Case.  In other words, she was not someone who had an interest greater than that of the general public. 

CALLINAN J:   She was some distance from the site. 

MR LARKIN:   Indeed. 

CALLINAN J:   Well, why is that not a relevant consideration?  

MR LARKIN:   Because implicit in your Honour’s question is that it is correct to talk in terms of “relevant considerations” and “irrelevant considerations”.  That is not the basis upon which the case below was decided, and it is not the basis upon which we put the case here. 

CALLINAN J:   No, but I asked you, why is that not a relevant consideration against you? 

MR LARKIN:   I would say that section 123 of the statute was enacted in order to achieve all of the objects of the statute. I regret that I omitted to include these in the statutory materials. Perhaps if I could just hand your Honour section 5 of the Environmental Planning and Assessment Act.  The passage that your Honour has in mind was a matter that the majority may have found against me is paragraph 107 at page 70 of the book. 

If I might take your Honour to that finding, for the purpose of answering your Honour’s question, because this is how the majority utilised the matter that your Honour puts to me against the applicant.  Do your Honours have page 70, paragraph 107 of the judgment?  What is said here is:  “There is nothing in the ‑ ‑ ‑

GUMMOW J:   I do not, actually.  Say it again, Mr Larkin. 

MR LARKIN:   I am sorry, your Honour.  It is page 70, paragraph 107 of Justice Heydon’s judgment. 

GUMMOW J:   Yes, thank you. 

MR LARKIN:   What is said is this: 

There is nothing in the specific express words of s 69(3) supporting the claimant’s constructions of that sub‑section. Nor is there in any other part of the Land and Environment Court Act, or in s 123(1) of the Environmental Planning and Assessment Act. The purposes of the legislation no doubt include the purpose that its own provisions on the subject of environmental planning and assessment should be obeyed, and s 123(1) facilitates that purpose. But that purpose can be fulfilled compatibly with security for costs orders being made against some impecunious natural person plaintiffs. If the fact that some impecunious plaintiffs might not be able to prosecute proceedings were to compel a narrow construction of s 69(3), it would be a construction which would be highly artificial.

Now, what their Honours were saying there, and, indeed, in the passages leading up to that, was the point that your Honour put to me, namely, Parliament has enacted a provision which confers a statutory right on any person to bring proceedings.  It was then said by the majority, the fact that you were not specially affected, that someone else may have brought these proceedings is one which points in favour of the making of an order for security for costs. 

CALLINAN J:   What is wrong with that? 

MR LARKIN:   The error is, it is not correct to characterise the purposes of section 123 in the manner that the majority did. The purposes of section 123 include section 5(c), I think it is, which I have just handed to your Honours, namely, one of the objects of this legislation is:

to provide increased opportunity for public involvement and participation in environmental planning and assessment. 

CALLINAN J:   But that does not say anything about who should bear the costs.  And, indeed, as a matter of commonsense, you might ask the question about public interest, when people much more directly affected have not applied or have not sought relief, but your client who is much less directly affected has.

MR LARKIN:   That is so.

CALLINAN J:   Why cannot the court take that into account? 

MR LARKIN:   Your Honour, we would, firstly, not characterise this in the way that your Honour has characterised it.  In fact, the answer to your Honour’s question ‑ ‑ ‑

CALLINAN J:   I am sure you would not. 

MR LARKIN:   Well, in fact, the answer to your Honour’s question is that the applicant believes that there is a matter of general principle which affects her and many people in this part of New South Wales, and that this, from her perspective, is an important test case.

GUMMOW J:   Well, wait a minute.  Can you just look at page 7 of the application book, paragraph 15 in the primary judge’s treatment of it ‑ ‑ ‑

MR LARKIN:   Yes, your Honour. 

GUMMOW J:    ‑ ‑ ‑ which, at first blush, seems to me unexceptionable.  Now, he was not coming out of left field.  Justice Pearlman said things about this, in addition to her Honour.  Justice Lloyd said things about this.  All of it seems correct.  The last sentence seems correct. 

MR LARKIN:   Well, the last sentence was unanimously held to be incorrect, by the majority. 

GUMMOW J:   That may be so.  At the moment, you are seeking special leave.  It is not possible to work out what the strength of the case is. 

MR LARKIN:   Yes, all members of the Court of Appeal held that it was erroneous to say these words: 

in the absence of evidence that the application has strong prospects of success, the respondent is entitled to be provided with security to avoid ‑ ‑ ‑

GUMMOW J:   Yes, that is right, but it is nevertheless a factor that goes into the equation.  It must. 

MR LARKIN:   The strength of the prospects of success. 

GUMMOW J:   Yes. 

MR LARKIN:   And undeniably.  But that is not a matter that is at issue in this case.  The matter that I was seeking to address was the question whether, merely because she was not directly affected in a Boyce v Paddington sense, which ‑ ‑ ‑

CALLINAN J:   Well, much less affected.  I am not putting it in a Boyce v Paddington sense.  Much less affected than people living or carrying on business much closer than your client. 

MR LARKIN:   I do not accept that, and I do not accept that it is a relevant inquiry in the context of this statute.  This case is about the powers of a Council to approve of what we would characterise – this is a matter for the trial that we have not got to – but we would characterise it as the urbanisation of the hinterland in which she resides.  There are matters of general principle which affect many ratepayers, if that characterisation be right.  The statute confers upon her a right to test the lawfulness of the Council’s administrative action. 

GUMMOW J:   Yes, but there are rights and rights. 

MR LARKIN:   Yes, indeed, but nevertheless it is a correct description of the right which she ‑ ‑ ‑

GUMMOW J:   It confers upon her standing. 

MR LARKIN:   It does.  It says, “Any person may bring proceedings”. 

GUMMOW J:   Or to put it another way, it removes an objection that might otherwise be put that she does not have standing. 

MR LARKIN:   I do not accept that. 

GUMMOW J:   I know you do not. 

MR LARKIN:   That matter itself is a matter of general importance and significance, the correct characterisation of the right conferred by section 123.

CALLINAN J:   It does not say, “without being amenable to an order for security for costs”. 

MR LARKIN:   Of course, it does not. 

CALLINAN J:   And you want to read that in. 

MR LARKIN:   No, I do not.  I accept ‑ ‑ ‑

CALLINAN J:   I do not see how you can succeed without reading it in, or some phrase similar to that. 

MR LARKIN:   That would be to fall into precisely the error that the majority fell into.  The majority said, “The words are unqualified; you may not graft onto the end of them words to say that, as a matter of power, no order for security for costs may be made”.  With respect, that is an error, and the reason it is an error is because, take Oshlack’s Case.  The words of the statute were that “the Court may order costs, costs are in the discretion of the Court”.  The contention there was whether a particular circumstance could lead to a departure from the principle that costs should follow the event. 

GUMMOW J:   No, the judge there had made a particular order.  At the end of the day, the result of it all was that the order was upheld. 

MR LARKIN:   In Oshlack’s Case? 

GUMMOW J:   Yes. 

MR LARKIN:   In other words ‑ ‑ ‑

GUMMOW J:   In other words, in the Court of Appeal, it had been overruled. 

MR LARKIN:   Yes, but in Oshlack’s Case, we would say this ‑ ‑ ‑

GUMMOW J:   So we were vindicating the breadth of the discretion, if you like. 

MR LARKIN:   But every member’s reasoning acknowledged that, despite the breadth of the statutory language, nevertheless the principle that costs follow the event was still a guideline which informed the exercise of the discretion.  Every member agreed with that.  Where the majority and the minority departed company was the minority said it had reached the point where it was no longer open to an unsuccessful party to point to some other factor, which would overweigh that pointer and point in the other direction.

GUMMOW J:   I know. 

MR LARKIN:   But everyone acknowledged the possibility that, despite general language, there could be a guide that pointed in a particular direction.  The majority’s reasoning in this case is utterly inconsistent with there being a guide pointing against the exercise – pointing against the grant of security – because they say the general language has abolished all previous judicially developed guidelines.  They say it in terms.  That cannot be right.  It is a matter of very great importance.  For today’s purposes, it is enough if the decision below is attended with doubt.  Not only is there a split decision below.  With respect, it must be at least doubtful that the use of general language abolishes all previous judicially developed guidelines. 

I took the extreme example in the outline.  The fact that the Federal Court in general language is given power to grant injunctions does not mean that all previous judicially developed guidelines relating to the grant of injunctions have been abolished by general language.  The point is, if that be right, the decision below is attended with doubt.  The next question then is, is there a matter of general importance at stake?  Not only is there section 123, the open standing provision in this case.  There are two statutory elements:  general discretion for security for costs plus open standing provision.  There are four jurisdictions in which you have that combination being New South Wales, South Australia, Queensland and federally.  There are many, many dozens of statutes involved. 

Precisely the same reasoning will apply in the Federal Court, when somebody institutes proceedings under the open standing provision in the Trade Practices Act - in the Federal Court, a statutory court, with an identical provision, which permits, in general language, a discretion for security for costs.  It cannot be the law that merely because one has the combination of open standing provision and general discretion to award a security, that all of the previous cases relating to judicially developed guidelines go out the window.  I do not put that they have – I see the light.  I do not put ‑ ‑ ‑

GUMMOW J:   No, you do not.  You can see your opponent.

MR LARKIN:   I am sorry, your Honour.  It is enough to say that the decision below is attended with doubt.  It is also certainly the case that very many statutes and jurisdictions are identical.  For those reasons, the matter is worthy of investigation by this Court.  We would say, one of the most important questions in terms of the administration of justice is who may participate in the administration of it.  That is a matter of importance, warranting attention from this Court.  May it please your Honour. 

GUMMOW J:   Yes, we do not need to hear from you, Mr Clay.

In the Land and Environment Court of New South Wales the applicant contended that a development consent granted by the Maclean Shire Council was invalid because of the Council’s failure to comply with its local environment plan. The applicant was impecunious. The litigation was said to be public interest litigation pursuant to section 124 of the Environmental Planning and Assessment Act 1979 (NSW), (the EPA Act).

The respondents applied to the Land and Environment Court for an order for security for costs. Justice Cowdroy who heard the application allowed it. His Honour ordered that the applicant provide security in the sum of $12,500 and stayed the applicant’s proceedings pending the provision of that security pursuant to section 69(3) of the Land and Environment Court Act 1979 (the LEC Act). That provision provides that the Court may order a party instituting proceedings to give security for the payment of costs that may be awarded against that party. Attention is also to be given to subsections (4) to (7) of section 69.

The applicant sought and was granted leave to appeal against these orders to the New South Wales Court of Appeal.  This was on the grounds that either the order was not within power or that if within power it involved a discretionary error which the Court of Appeal should correct.

The Court of Appeal was of opinion that the plain words of section 69(3) of the LEC Act should not be read down or construed in such a way as to conclude that the Land and Environment Court has no power to make an order for security of costs against an impecunious natural person.

Their Honours were of the further opinion, however, that the discretion of the primary judge miscarried, in particular, in holding that the applicant, in order to resist an order for security for costs, was bound to but did not establish that she had a strong case.  Their Honours, accordingly, exercised their own discretion but were divided as to the result that should follow.  By a majority, the Court of Appeal held that the discretionary matters favouring an order for security outweighed those to the contrary.  In the result, the appeal was dismissed.

In this Court, counsel for the applicant has forcefully put all that could be put in support of the application.  Nevertheless, there is no reason to doubt the correctness of the decision of the Court of Appeal that the Land and Environment Court has jurisdiction to make an order for security for costs in a case such as this and the decision affirmed was a decision involving the exercise of the discretion.  No error of principle on the part of the Court of Appeal has been demonstrated and, accordingly, the special leave application should be dismissed and dismissed with costs.

AT 4.00 PM THE MATTER WAS CONCLUDED