Nerringillah Community Association Inc v Laundry Number Pty Ltd

[2018] NSWLEC 157

Land and Environment Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Nerringillah Community Association Inc v Laundry Number Pty Ltd [2018] NSWLEC 157
Hearing dates:	19 and 21 September 2018
Date of orders:	10 October 2018
Decision date:	10 October 2018
Jurisdiction:	Class 4
Before:	Pepper J
Decision:	See orders at [209].
Catchwords:	COSTS: application for a protective (or maximum) costs order – applicable legal principles and relevant factors – whether matter in the public interest – whether costs proportional - unidirectional order sought – whether quantum of protective costs order sought enough – protective costs order made but amount increased.
Legislation Cited:	Associations Incorporation Act 2009 Byron Local Environmental Plan 1988 Civil Procedure Act 2005, ss 56, 60 Environmental Planning and Assessment Act 1979, ss 9.45, 80 Federal Court Rules 1979 (Cth) Land and Environment Court Act 1979, s 20(2) Shoalhaven Local Environmental Plan 2014, cl 5.13 Standard Instrument – Principal Local Environmental Plan Uniform Civil Procedure Rules 2005, r 42.4
Cases Cited:	Abret Pty Limited v Wingecarribee Shire Council [2011] NSWCA 107; (2011) 180 LGERA 343 Blue Mountains Conservation Society Inc v Delta Electricity [2009] NSWLEC 150; (2009) 170 LGERA 1 Camberlee Investments Pty Ltd v Shoalhaven City Council [2017] NSWLEC 1585 Caroona Coal Action Group Inc v Coal Mines Australia Pty Limited and Minister for Mineral Resources (No 3) [2010] NSWLEC 59; (2010) 173 LGERA 280 Caroona Coal Action Group Inc v Coal Mines Australia Pty Ltd [2009] NSWLEC 165; (2009) 170 LGERA 22 Corcoran v Virgin Blue Airlines Pty Ltd [2008] FCA 864 Delta Electricity v Blue Mountains Conservation Society Inc [2010] NSWCA 263; (2010) 176 LGERA 424 Engadine Area Traffic Action Group Inc v Sutherland Shire Council (No 2) [2004] NSWLEC 434; (2004) 136 LGERA 365 R (on the application of Corner House Research) v Secretary of State for Trade and Industry [2005] 4 All ER 1 Raphael Shin Enterprises Pty Ltd v Minister for Planning [2018] NSWLEC 42 Roden v Bandora Holdings Pty Ltd [2016] NSWCA 220 Sacks v Permanent Trustee Australia Ltd [1993] FCA 502; (1993) 45 FCR 509
Texts Cited:
Category:	Costs
Parties:	Nerringillah Community Association Inc (Applicant) Laundry Number Pty Ltd (First Respondent) Shoalhaven City Council (Second Respondent)
Representation:	Counsel: Ms N Sharp SC with Mr H Grace (Applicant) Ms H Irish (First Respondent) Submitting appearance (Second Respondent)   Solicitors: Herbert Smith Freehills (Applicant) Pikes and Verekers Lawyers (First Respondent) Bradley Allen Love Lawyers (Second Respondent)
File Number(s):	2018/205799
Publication restriction:

Judgment

Costs as a Barrier to Access to Justice in Environmental Matters

1. In Caroona Coal Action Group Inc v Coal Mines Australia Pty Ltd (No 3) [2010] NSWLEC 59; (2010) 173 LGERA 280 Preston J reflected on the barrier to access to justice in environmental litigation occasioned by the usual rule that costs follow the event. It is worth repeating his Honour’s remarks (at [30]-[33]):

30   In Caroona Coal Action Group Inc v Coal Mines Australia Pty Ltd(2009) 170 LGERA 22 at [23], I referred to the extra-curial observation of Toohey J that the usual costs rule was a barrier to access to justice in environmental matters. The observation is worth repeating here:

“‘There is little point in opening the doors to the courts if litigants cannot afford to come in. The general rule in litigation that “costs follow the event” is in point. The fear, if unsuccessful, of having to pay the costs of the other side (often a government instrumentality or wealthy private corporation), with devastating consequences to the individual or environmental group bringing the action, must inhibit the taking of cases to court. In any event, it will be a factor that looms large in any consideration to initiate litigation’: J Toohey and A D'Arcy, ‘Environmental Law – Its Place in the System’ in R J Fowler (ed), Proceedings of the International Conference on Environmental Law. 14-18 June 1989, Sydney, Australia (organised by the National Environmental Law Association of Australia and the Law Association for Asia and the Pacific).”

31    As noted, this observation has been cited with approval by courts in Australia and overseas: see Oshlack v Richmond River Shire Council at 238 per Stein J; Oshlack v Richmond River Council at [114] per Kirby J; R (on the application of Corner House Research) v Secretary of State for Trade and Industry [2005] 1 WLR 2600 at [31]. It has also been cited by judges in their extra-curial writings: see for example Justice P Salmon, “Access to Environmental Justice” (1998) 2 NZ J Envtl L 1 at 13 and Lord Justice Brooke, “Environmental Justice: The Costs Barrier”(2006) 18 J Env L 341 at 346. Others have made like comments: P Sands, “Access to Environmental Justice in the European Community: Principles, Practice and Proposals” (1994) 3(4) RECIEL 206 at 212-213; Sir Robert Carnwarth, “Environmental Litigation – A Way through the Maze?”(1999) 11 J Env L 1 at 9 and Kent v Cavanagh (1973) 1 ACTR 43 at 55 per Fox J.

32    The Environmental Justice Project assessed the extent to which the civil and criminal law system in the United Kingdom satisfied the requirements of the Aarhus Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters. The Report of the Environmental Justice Project in 2004 identified that “the current costs rules represent the single largest barrier to environmental justice” (at [68], p 39). One of the primary concerns was the application of the usual rule that costs follow the event (ie the loser pays the winner's costs): see further C Hatton, P Castle and M Day, “The environment and the law – does our legal system deliver access to justice? A preview” (2004) 6 Envtl L Rev 240 at 247 and N de Sadeleer, G Roller and M Dross, Access to Justice in Environmental Matters and the Role of NGOs, Europa Law Publishing, 2005, pp 152, 196, 200, 209.

33   A subsequent Working Group on Access to Environmental Justice, chaired by Mr Justice Sullivan, noted in its Report dated May 2008 that the general rule that the loser pays the winner's costs is one of the “obstacles to the achievement of access to environmental justice in England and Wales” (at [23], p 13) and “a significant deterrent even to the commencement of a challenge” (at [24], p 13). The Working Group concluded that “the key issue limiting access to environmental justice and inhibiting compliance with Article 9(4) of Aarhus [Convention] is that of costs and the potential exposure to costs” (at [25], p 15): Ensuring access to environmental justice in England and Wales, Report of the Working Group on Access to Environmental Justice, May 2008. 

2. The facts of this case are a testament to the continuing force of his Honour’s observations.

The Applicant to Class 4 Proceedings Seeks a Protective Costs Order

3. The applicant to Class 4 proceedings, Nerringillah Community Association Inc (“the Association”), is an association which was incorporated under the Associations Incorporation Act2009 on 9 March 2018.

4. The first respondent, Laundry Number Pty Ltd (“Laundry Number”), is the owner of Lot 3 DP 858721 known as 77C Nerringillah Road, Bendalong (“the site”), and the beneficiary of a development consent granted by the second respondent to DA17/1264 (“the consent”).

5. The second respondent, Shoalhaven City Council (“the Council”), is the authority that granted the consent.

6. The substantive proceeding is a civil enforcement action pursuant to s 9.45 of the Environmental Planning and Assessment Act 1979 (“EPAA”) and judicial review under s 20(2) of the Land and Environment Court Act 1979 (“LEC Act”) of the Council’s decision to grant the Consent on 13 February 2018. The consent authorised the construction and use of an “eco-tourism facility” at the site.

7. The Association seeks a maximum (protective) costs order capping Laundry Number’s entitlement to costs at $20,000 and the Council’s costs at nothing (it has filed a submitting appearance). The application is made pursuant to r 42.4 of the Uniform Civil Procedure Rules 2005 (“UCPR”).

8. The application was opposed by Laundry Number. The Council did not appear at the interlocutory application.

9. In my opinion, a maximum costs order should be made but for a greater amount than that sought by the Association. In my view, a maximum costs order in the amount of $40,000 should be made with respect to Laundry Number and no costs should be awarded to the Council if the Association is ultimately unsuccessful in the proceedings.

10. As ordered, a detailed agreed statement of facts was before the Court setting out many of the basal facts underpinning the application.

11. The Association relied on two affidavits affirmed by Mr Peter Hudson OAM, the Vice-President of the Association, on 14 August and 13 September 2018, together with three volumes of exhibits.

12. Laundry Number relied upon an affidavit from its solicitor, Mr Joshua Palmer, affirmed on 6 September 2018, together with one volume of exhibits.

13. A very confined number of documents were additionally tendered by the parties.

14. With few exceptions most of the underlying facts were not a matter of controversy.

15. Nevertheless, the hearing of what ought to have been a straightforward application took over a day due in large part to the manner in which Laundry Number chose to run its case, which may have been just, was neither quick nor cheap (see s 56 of the Civil Procedure Act 2005 (“CPA”), especially s 56(3) of that Act), with every point taken and argued to excess.

The Site

16. The site the subject of the consent is located in a small area known as the Nerringillah Valley.

17. The site is within a rural area approximately 8 km west of the village of Bendalong, approximately 28 km north of Ulladulla and approximately 6.7 km east of the Princes Highway.

18. The Nerringillah Valley comprises various properties in addition to the site, and which is zoned RU2 Rural Landscape under the Shoalhaven Local Environmental Plan 2014 (“the SLEP”). Within the RU2 zone “eco-tourist facilities” and camping are permissible with consent.

19. The Nerringillah Valley is surrounded by Conjola National Park. The Conjola National Park is zoned E1 National Parks and Nature Reserves under the SLEP.

20. The site comprises Lot 3 in DP 858721. It is a regular shaped allotment with a total of 10 hectares. The site is located in the upper reaches of the Nerringillah Creek catchment area which is almost completely bounded by Conjola National Park. The site does not, however, directly adjoin Conjola National Park.

21. Vehicular access to the site is gained from Nerringillah Road, where it is necessary to pass through a right of way that crosses Lot 7 DP 858721. The right of way burdens Lot 7 in DP 858721 and benefits 5 lots, including Lots 3, 4, 5, 6 and 7 in DP 858721. It consists of a narrow bitumen sealed road which connects to sections of an all-weather gravel track. The right of way connects to Nerringillah Road (a dirt road), which in turn connects to Bendalong Road and then to the Princes Highway.

Laundry Number Lodges a Development Application for an Eco-Tourist Facility

22. On 13 March 2017 Mr Stephen Richardson of Cowman Stoddart Pty Ltd (“Cowman Stoddart”), on behalf of Laundry Number, lodged the following documents with the Council:

1. development application DA17/1264 (“the DA”) in respect of the site; and

2. a Statement of Environmental Effects prepared by Cowman Stoddart dated March 2017 (“SEE”).

23. The development application sought approval for an “Eco Tourist Facility and Associated Primitive Camping Group (Deferred Commencement Consent)” at the site (“the development”). The estimated cost of the development was $1,646,209.

24. The development was described in a suite of documents and correspondence provided to Council by, or on behalf of, Laundry Number, including:

1. the SEE and its annexures;

2. a Supplementary Submission Development Application DA17/1264 Proposed Eco-Tourist Facility, 77C Nerringillah Road, Bendalong prepared by Cowman Stoddart, dated 20 July 2017, including annexures (“the July Supplementary submission”);

3. a further submission by Cowman Stoddart dated 6 September 2017, including annexures (“the September Supplementary Submission”); and

4. email correspondence and attachments from Cowman Stoddart dated:

1. 16 November 2017;

2. 21 November 2017;

3. 23 November 2017; and

4. 1 December 2017

25. The SEE described the development as:

1. the construction of eco-tourist accommodation comprising two wings, with one wing containing a 12 bedroom bunkhouse accommodating a maximum of 30 people;

2. an accommodation wing attached to a ‘lodge’ containing shared dining and lounge facilities with external decks. These facilities were available for all guests accommodated on the site;

3. the construction of a separate detached one bedroom manager’s residence;

4. the provision of primitive camping throughout the site – limited to only guests of the lodge – as an alternative accommodation experience; and

5. the construction of passing bays along the right of way that crosses Lot 7 DP 858167 to access the site. Negotiations had commenced seeking the landowner’s consent for the construction of these works within the right of way.

26. The SEE described the development in the following terms:

This development application seeks Shoalhaven City Council’s consent for the construction of an eco-tourist facility and associated primitive camping ground. The eco-tourist facility, will comprise a building comprising two wings with one wing containing the accommodation component and the second wing containing shared lounge and dining facilities. The proposal will also include a separate manager’s residence. It is proposed that the development will be known as “Nerringillah Eco-Tourism Lodge” (“the Lodge”). The proposal will also include provision for ‘primitive camping’ however this will be limited to the guests of the proposed eco-tourist facility only as an alternative form of accommodation and experience.

The eco-tourist facility will be used to host a limited number of nature themed functions as an ancillary aspect of the eco-tourist facility. The functions will be held in conjunction with the provision of accommodation to guests with “nature themed accommodation and function packages” offered. Guests of the functions will be provided with information on the ecological and cultural features of the site and a range of tailored nature programs and activities will be offered to guests. A maximum of 20 functions per year will be held at the site.

27. The SEE emphasised that the facility would cater for groups and allow:

…those seeking creative inspiration from nature to connect with, appreciate and interpret the ecological and environmental values of the property and the region. The ecotourism facility will provide accommodation for:

•   Schools for ecology and leadership camps;

•   Church groups for prayer and mediation retreats;

•   Health groups for development sessions of Pilates and Yoga;

•   Cooking groups focussed on bush tucker; and [sic]

•   Family groups during school holidays;

•   Surfing and sporting (golf) groups;

•   Attendees at nature themed functions. / [sic]

28. The SEE further stated that:

…the eco-tourist facility will be used to host nature themed functions (such as weddings, ceremonies and conferences) on 20 occasions during the year, with a maximum of 60 people attending including guests of the accommodation facility.

•   This aspect of the proposal is ancillary to the Eco-tourist facility and annexed to this SEE (Annexure 16) is a legal opinion confirming that to be the case.”

29. A total of 75 submissions were made to the Council regarding the DA, which included 73 objections.

30. On 20 July 2017, Cowman Stoddart submitted the July Supplementary Submission. The July Supplementary submission proposed, amongst other things, the following in regard to the development:

Due to concerns raised by public submissions concerning guests of functions leaving the site late at night following functions and raising traffic safety and noise impact concerns, the amended development application will now seek to allow guests attending functions, who are not staying within the bunkhouse / lodge facility, to camp overnight on Friday and Saturday nights within the primitive camping facilities as an option...

…a maximum of 60 guests will be able to attend the site during any function, with 30 people having to stay in the lodge / bunkhouse. The remaining 30 people will therefore have the option to be accommodated in primitive camping on site…

To further reduce the potential for impacts on local residents…it is now proposed to further reduce the number of functions per year to only eighteen (18) functions (with a maximum of 2 functions during any one month.

31. Thus the number of people who could stay overnight at the site increased from 30 to 60.

32. Prior to the submission of the July Supplementary Submission a legal opinion dated 7 March 2017, was prepared by Pikes and Verekers Lawyers on behalf of Laundry Number. The opinion expressed the view that the use of the eco-tourist facility for hosting events was ancillary and subordinate to the dominant purpose of the development as an “eco-tourist facility”, and therefore, could be disregarded in the characterisation of the development.

33. The opinion was provided prior to the alteration to allow an additional 30 guests attending a function to be accommodated overnight at the campground on the site.

34. The DA was notified on two occasions: first, from 10 April 2017 to 8 May 2017; and second, from 3 August 2017 to 31 August 2017. The Development Assessment Report prepared by the Council stated that:

Council received 75 submissions from 28 households/groups (65 submissions from the same household/multiple submissions) and 2 submissions from the Red Head Villages Association. Of the submissions received from households/groups, 73 raised concerns/objected to the proposal, 1 did not raise concerns/objection and 1 was assessed as a comment (neither and [sic] objection or support letter).

The Determination of the Consent

35. On 22 January 2018, at a meeting of its Development Committee, Council granted the development consent subject to conditions. There were twelve Development Committee members present. Six votes were cast in favour and six votes against. The decision was carried on the casting vote of the chair of the Development Committee.

36. On 30 January 2018 a rescission motion in relation to the Council’s determination to grant the consent was lost. Five votes were cast in favour and eight votes against.

37. On 13 February 2018 the Council sent a Notice to Applicant of Determination of Application to Mr Stephen Richardson (that is, the consent).

38. The consent relevantly stated as follows:

APPROVED USE AND OR DEVELOPMENT:

Integrated for Bushfire Eco-Tourism facility & ancillary camp ground comprising –

Phase 1

1 bedroom manager’s residence that acts as the Stage 1 Fire Refuge and carport.

Primitive camping on site to accommodate a maximum of 30 guests.

On-Site toilet, shower, communal camp kitchen facilities to serve the primitive camping area.

Car parking for 36 vehicles

Onsite sewage management system

Associated works including access/manoeuvring areas, drainage, landscaping and associated infrastructure works.

Upgrading external road works to satisfy Council’s requirements.

Phase 2

Bunk house comprising 12 rooms providing accommodation for 30 people with shared amenities, laundry and attached lodge which will provide shared dining, kitchen, outdoor kitchen, lounge, deck and sanitary facilities.

The bunk house/lodge will act as the permanent fire refuge for the entire development.

The construction of the lodge will enable ecological and culturally themed functions such as conferences and nature themed weddings to be held as part of this second stage.

Up to 18 functions (maximum 60 guests including people accommodated in the facility) per annum with a maximum of 2 per month ancillary to ecotourist accommodation with a prohibition on the use of amplified music at any functions that occur on site.

Primitive camp ground to be available for guests of the lodge / bunkhouse as part of phase 2 as an alternation style of accommodation to the bunkhouse accommodation and to provide overnight accommodation on Friday and Saturday nights for up to an additional of 30 guests attending functions that are not staying in the bunkhouse/lodge.

39. The consent was granted under s 80(3) of EPAA (then in force at the time - now s 4.16(3)), with the Council as the consent authority exercising power through the Development Committee.

40. The consent approved the plans and the documents described in the Table to Condition Part A.2, subject to 71 conditions.

41. The consent was specified to operate from “the date that Council is satisfied that the deferred matter under condition number one (1) has been resolved”. In other words, the development consent was a deferred commencement consent pursuant to s 80(3) of the EPAA (then in force).

42. Relevantly, condition 1 provided that:

1. Pursuant to section 80(3) of the Act, this development application has been determined by granting of 'Deferred Commencement' Consent, subject to the following matter(s) being resolved:

i)    The applicant to provide evidence that land owners [sic] consent has been obtained for a development application for the proposed upgrade works to the Right of Carriageway located over Lot 7 DP 858167, 77G Nerringillah Road, Bendalong as detailed in Bitzios Consulting Revised Traffic Impact Assessment P2919.005L dated 18 July 2017.

The maximum amount of time that Council will allow for these matters to be resolved is three (3) years from the date of this consent.

This consent does not operate until the applicant has satisfied Council with respect to the above matters. Details must be submitted to Council for approval by the Development and Environmental Services Manager.

43. On 4 April 2018 the Council published notice of the development consent in the Milton Ulladulla Times.

The Class 4 Proceedings

44. On 4 July 2018 the Association commenced Class 4 judicial review proceedings in this Court by summons seeking the following relief:

1. a declaration that the whole of the Council’s decision made on 13 February 2018 to grant consent to Laundry Number’s DA for a bushfire eco-tourism facility and ancillary camp ground was invalid;

2. an order setting aside the consent;

3. an injunction restraining Laundry Number from relying on the consent; and

4. costs.

45. The summons raises three grounds for review, namely, that:

1. the Council erred in characterising the development as an “eco-tourist facility” with the meaning of the SLEP since as an objective matter, the design was not such as to minimise bulk, scale and overall physical footprint and any ecological or visual impact. This was asserted to be an error of jurisdictional fact (“ground 1”);

2. the Council erred in failing to find that the function centre use was an independent purpose and not ancillary to the eco-tourist facility purpose. For this reason, the entire development should have been treated as a prohibited development. This was also asserted to be an error of jurisdictional fact (“ground 2”); and

3. there was no evidence before the Council upon which it could have reached a state of satisfaction of the matter specified in cl 5.13(3)(b), (f) and (h) of the SLEP. Specifically, there was no evidence to support the conclusion that the upgrades required by the right of way would not have adverse impacts upon the environment (“ground 3”).

The Application for Protective Costs Orders

46. On 18 July 2018 a letter was sent from Mr Peter Briggs of Herbert Smith Freehills, on behalf of the Association, notifying each respondent that the Association intended to apply for a protective costs order.

47. By notice of motion filed 14 August 2018 the Association sought the following maximum costs orders:

1. an order that the maximum costs that may be recovered by Laundry Number in these proceedings is $20,000 and that no costs can be recovered by the Council;

2. in the alternative to order 1, an order that the maximum costs that may be recovered by the respondents in these proceedings be such sum as is specified by the Court upon determination of this motion; and

3. further and in the alternative to orders 1 and 2, an order that the maximum costs that may be recovered by Laundry Number in relation to the notice of motion is $3,000, and that no costs can be recovered by the Council.

48. Laundry Number opposes the making of any maximum costs order in the proceedings.

49. The Council has entered a submitting appearance in the proceedings, save as to costs.

50. During oral argument the Association, correctly, in my view, all but conceded that if it failed to obtain either orders 1 or 2, then it could not succeed with respect to order 3.

The Association and its Members

51. The committee of the Association comprises:

1. Mr Peter Winkler, President;

2. Mr Hudson OAM, Vice President;

3. Ms Jennifer Whitmarsh, Secretary;

4. Mr Paul Baldwin, Treasurer;

5. Mr Col Cheetham, Public Officer and Committee Member;

6. Mr Henry Musidlak, Committee Member; and

7. Ms Jennifer Cleary, Committee Member.

52. The site is surrounded by five other Nerringillah Road properties:

1. 77B (the residential address for 25 years of Mr Hudson OAM, the Association’s Vice President);

2. 77D (the residential address of the Association’s President, Mr Winkler);

3. 77E (the residential address of the Association’s Public Officer and Committee Member, Mr Cheetham);

4. 77H; and

5. 237C (the residential address of the Association’s Secretary, Ms Whitmarsh).

53. And 77F Nerringillah Road is the residential address of Mr Baldwin.

54. Mr Hudson OAM and his neighbours (a total of 15 residents) have met since 26 March 2017 to discuss this development.

Legislative Basis for a Protective Costs Order and the Relevant Factors in Making Such an Order

55. The source of the Court’s power to grant the protective costs orders sought by the Association is r 42.4 of the UCPR, which provides as follows:

42.4   Power to order maximum costs

(1) The court may by order, of its own motion or on the application of a party, specify the maximum costs that may be recovered by one party from another.

(2)   A maximum amount specified in an order under subrule (1) may not include an amount that a party is ordered to pay because the party:

(a)   has failed to comply with an order or with any of these rules, or

(b)   has sought leave to amend its pleadings or particulars, or

(c)   has sought an extension of time for complying with an order or    with any of these rules, or

(d)   has otherwise caused another party to incur costs that were    not necessary for the just, quick and cheap:

(i) progress of the proceedings to trial or hearing, or

(ii) trial or hearing of the proceedings.

(3) An order under subrule (1) may include such directions as the court considers necessary to effect the just, quick and cheap:

(a)   progress of the proceedings to trial or hearing, or

(b)   trial or hearing of the proceedings.

(4)    If, in the court’s opinion, there are special reasons, and it is in the interests of justice to do so, the court may vary the specification of maximum recoverable costs ordered under subrule (1).

56. The discretion conferred by r 42.4 of the UCPR must be exercised in conformity with the obligations imposed by ss 56 to 60 of the CPA (Delta Electricity v Blue Mountains Conservation Society Inc [2010] NSWCA 263; (2010) 176 LGERA 424 at [93] and [136] per Beazley P). As Basten JA noted in that case with respect to the relationship between r 42.4 of the UCPR and ss 56-60 of the CPA (at [185]):

185 The relationship between r 42.4 in the UCPR and ss 56-60 of the Civil Procedure Act 2005 (NSW), which are partly reflected in r 42.4(3), supports the view that a costs capping order may properly be made to “curb the tendency of one or all parties to engage in disproportionate expenditure on legal costs”, and to maintain “[p]roportionality of costs to the value of the result”: see Sherborne Estate (No 2): Vanvalen v Neaves [2005] NSWSC 1003; 65 NSWLR 268 at [26] and [30] (Palmer J). However, it does not follow that those are the only circumstances in which an order can be made; rather they reflect the concerns which arose in that case. (It is not necessary for present purposes to consider whether his Honour was correct in concluding that an order could only be made prophylactically and not at the time of making a final costs order: at [31].)

57. Sections 56 and 60 of the CPA relevantly provide as follows:

56   Overriding purpose

(1)    The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.

(2)    The court must seek to give effect to the overriding purpose when it exercises any power given to it by this Act or by rules of court and when it interprets any provision of this Act or of any such rule.

…

60   Proportionality of costs

In any proceedings, the practice and procedure of the court should be implemented with the object of resolving the issues between the parties in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute.

58. Rule 42.4(1) of the UCPR confers power on the Court to specify the maximum costs that may be recovered by one party from another. Rule 42.4(2) provides safeguards for the party whose costs entitlement is capped. A further protection is provided by r 42.4(4), which allows a Court to vary the quantum of any maximum costs order sought if there are special circumstances warranting a variation.

59. The first case in which this Court made a protective costs orders was Blue Mountains Conservation Society Inc v Delta Electricity [2009] NSWLEC 150; (2009) 170 LGERA 1. In Blue Mountains Pain J ordered that the maximum costs order that each party could recover from the other was $20,000. The underlying matter was a complex civil enforcement proceeding in which a community group alleged that the respondent electricity company had breached the conditions of its licence by polluting a river. In Blue Mountains it was found that the costs would likely be considerable.

60. Her Honour found that the considerations identified in R (on the application of Corner House Research) v Secretary of State for Trade and Industry [2005] 4 All ER 1 and Corcoran v Virgin Blue Airlines Pty Ltd [2008] FCA 864 respectively, provided useful guidance. In Blue Mountains Pain J quoted (at [49]) with approval the following passage from Corner House (at [74]):

49    At [74] the governing principles relevant to the making of PCOs were set out as follows:

(I) A PCO may be made at any stage of the proceedings, on such conditions as the court thinks fit, provided that the court is satisfied that: (i) the issues raised are of general public importance; (ii) the public interest requires that those issues should be resolved; (iii) the applicant has no private interest in the outcome of the case; (iv) having regard to the financial resources of the applicant and the respondent(s) and to the amount of costs that are likely to be involved it is fair and just to make the order; and (v) if the order is not made the applicant will probably discontinue the proceedings and will be acting reasonably in so doing. (2) If those acting for the applicant are doing so pro bono this will be likely to enhance the merits of the application for a PCO. (3) It is for the court, in its discretion, to decide whether it is fair and just to make the order in the light of the considerations set out above.

61. In Corcoran the relevant factors were identified as (at [6]):

6 The parties agree on many of the factors to be taken into account in the exercise of the Court’s discretion to make an order under rule 1. As discussed in the authorities which consider O 62A r 1 and the equivalent provision in the Federal Magistrates Court Rules, the factors include:

•    the timing of the application (Sacks v Permanent Trustee Australia Ltd[1993] FCA 502; (1993) 45 FCR 509 at 511 per Beazley J; Flew v Mirvac Parking Pty Ltd [2006] FMCA 1818 at [48] per Barnes FM; Minns v State of NSW (No. 2) [2002] FMCA 197 at [9] per Raphael FM]);

•    the complexity of the factual or legal issues raised in the proceedings (Hanisch at 387 per Drummond J; Dibb v Avco Financial Services Limited[2000] FCA 1785 at [15] per Sackville J);

•    the amount of damages that the applicant seeks to recover (Hanisch at 387) and the extent of any other remedies sought (Flew at [48]);

•    whether the applicant’s claims are arguable and not frivolous or vexatious (Flew at [15]);

•    the undesirability of forcing the applicant to abandon the proceedings (Woodlands v Permanent Trustee Company Limited [1995] FCA 1388; (1995) 58 FCR 139 at 148 per Wilcox J; Flew at [9]); and

•    whether there is a public interest element to the case (Woodlands at 146; Flew at [23], [47]).

62. In Blue Mountains Pain J decided the case having regard to the following factors (at [56]-[68]):

1. the timing of the application;

2. whether the claim appears arguable;

3. whether the matter constitutes public interest litigation;

4. whether the plaintiff has a private interest;

5. whether the proceedings will continue if the protective costs order is not made;

6. are counsel for the applicant acting pro bono;

7. the parties’ financial means; and

8. whether the making of such an order is rewarding inefficient litigation.

63. In determining to make a protective costs order, Pain J found that (at [56]-[69]):

1. the proceedings were in the nature of a test case;

2. the proceedings were in the public interest;

3. the applicant, a community group concerned with environmental protection, would derive no financial benefit from the proceedings;

4. the proceedings would not continue if the maximum costs order was not made;

5. counsel would act pro bono;

6. the respondent, a large state government corporation, would not suffer financial hardship if the application was made; and

7. a protective costs order should not be lightly made at an early stage in proceedings since all the issues are not known.

64. Her Honour’s judgment in Blue Mountains was upheld on appeal in Delta. The Court of Appeal implicitly endorsed the factors identified as relevant by Pain J at first instance by reference to, amongst other cases, Corner House, Corcoran and Caroona Coal Action Group Inc v Coal Mines Australia Pty Ltd [2009] NSWLEC 165; (2009) 170 LGERA 22.

65. In Delta Beazley P referenced Preston J’s judgment in Caroona extensively. Her Honour’s remarks demand quotation (at [79]-[83]):

79 Subsequent to the decision in this matter, Preston CJ considered an application for an order under r 42.4 in the Caroona Coal Action Group matter. His Honour observed, at [16], that the purpose of a maximum costs order was to facilitate access to justice, which could be impeded where the costs of litigation were high, including where a party feared a costs order where the costs were likely to be high. That is the position in this case.

80    Preston CJ said, at [18], that a maximum costs order was one means of achieving proportionality of costs. This comment was directed at proportionality as between the amount of costs and the complexity of proceedings. In other words, costs were often disproportionately high in non-conflict proceedings, or where the amount involved in the litigation was not high. His Honour instanced Family Provision Act proceedings as a good example: see Sherborne. His Honour considered that a maximum costs order in such situations fulfilled the court’s duty under the Civil Procedure Act, s 56.

81 However, his Honour observed that ensuring proportionality of costs did not always have the effect of achieving access to justice. A party might be deterred from bringing complex proceedings because of costs considerations. His Honour said, at [21]:

“A maximum costs order may alleviate this barrier by protecting the beneficiary of the order from exposure to legal costs beyond the maximum amount specified in the order.”

82    His Honour observed, at [23], that public interest litigation was a category of litigation “where the fear of an adverse costs order may impede access to justice”. Nonetheless, his Honour considered that it was important not to over-generalise. As he noted at [27], not all public interest litigation would be discontinued if the court declined to make a maximum costs order. A public interest litigant may have access to financial resources sufficient to fund the public interest litigation.

83 Preston CJ also observed, at [27], that there was a risk of over-generalising the beneficial effect the making of a maximum costs order may have on facilitating access to justice. In this regard, his Honour noted that commonly, in making a maximum costs order, the Court considered that fairness required that a maximum costs order should be bidirectional, or multi-directional, so that all parties to the proceedings had the benefit of the order. However, his Honour considered that an order could be uni-directional, that is, made in favour of one party only. This view is contrary to the Federal Court decisions of Sacks and Maunchest and to the approval of those decisions in Muller. This issue did not arise on the appeal in this case. I expressed my view in Sacks. However, I accept that this may be a matter that remains open for argument.

66. In dissent Beazley P held that the broad discretion afforded to Pain J under r 42.4 of the UCPR had miscarried because her Honour had not given express consideration to the question of proportionality of any proposed maximum costs order to the costs likely to be incurred by the appellant. This was considered by her Honour to be an element of the dictates of justice (at [164]-[165]). Alternatively, the issue could be characterised as one of “disproportionality between the order made and the reasonable estimate of the appellant’s costs” (at [166]-[167]).

67. In the majority, however, Basten JA held that (at [216]-[219]):

216    Her Honour accepted that making an order in the terms proposed would adversely impact on the financial interests of Delta. Because the adverse impact assumed that Delta would be successful and would receive a favourable costs order, her Honour’s assessment of the prejudice to Delta was probably overstated. Her Honour also made an assessment, as she was required to do, of the likelihood of the proceedings not being pursued, if an order were not made. That assessment has not been shown to be unreasonable or otherwise flawed. Given her further conclusions that the case was reasonably arguable, that the applicant had acted reasonably in pursuing it, and that it was public interest litigation, there was a sound basis for making a protective costs order in the amount proposed.

217    The amount itself was not unreasonable. If the Society had obtained legal aid, Delta would have been limited to recovering an amount of $5,000 from the Legal Aid Commission: Legal Aid Commission Act 1979 (NSW), s 47. Why legal aid is not available is not known. Nevertheless, as illustrated by Woodland, the existence of such a scheme and its consequences if engaged, may be a permissible consideration, even in circumstances where the scheme does not operate.

218    The lack of proportionality between the costs permitted to be recovered and the likely final bill does not carry the weight sought to be placed on it by Delta. As noted above, the principle that any person may bring proceedings to prevent a breach or threatened breach of environmental protection laws will be seriously undermined if some protection against large costs bills is not available. Important public interest disputes are often complex and based on expert evidence. Public-minded citizens may well be able to obtain donations of time and expertise from professional witnesses and lawyers, but will find it less easy to raise funds to meet the costs of the other party.

219    In the past, such litigation was sometimes undertaken by people of no means, rendering it unlikely that a successful respondent which obtained an order for its costs would ever be likely to recover those costs. It is preferable that litigation be conducted by responsible entities and that the final arrangements with respect to recovery be transparent.

68. Macfarlan JA, agreeing with Basten JA (at [222]), further opined (at [223]):

223    I add the following comments upon the matter that is treated by Beazley JA in her judgment as of particular significance (see [164] – [167] above). That is the relationship between the amount of costs the subject of the order made at first instance and the costs likely to be incurred by the appellant in the proceedings. First I emphasise my agreement with the comments of Basten JA on that issue (see [218] – [219] above). Secondly, my view is that it is in any event apparent from [67] of the judgment of the primary judge that in considering whether, and determining that, a maximum costs order should be made in a particular amount, the estimate in evidence of the costs likely to be incurred by the appellant was at the forefront of her Honour’s mind. In those circumstances it cannot be said that her Honour failed to have regard to the relevant matter.

69. I would therefore add to the factors identified as relevant by Pain J in Blue Mountains, the proportionality of the maximum costs order sought and the reasonableness of the estimate of the applicant’s costs.

70. Finally, it should be observed that the factors identified above are not exhaustive and their application will vary depending on the circumstances of each case. As was noted by Preston J in Caroona (at [31]):

31   …the factors relevant to the exercise of the discretion to make a maximum costs order will vary depending on the circumstances of the case and of the plaintiff and what is necessary to facilitate access to justice in that case. The factors that may be relevant to cases in which the issues might be simple or the matter in dispute of lower value, where disproportionality of costs is the critical concern, will differ or have different weight to the factors that may be relevant to large litigation, including much public interest litigation, where the stakes are high given the importance and complexity of the matters in dispute, where the critical concern is ensuring access to justice and the potential stultifying effect of the fear of an adverse costs order.

71. Similarly, after referring to Preston J’s remarks (quote above) in Caroona, Beazley P stated in Delta (at [85]-[86]):

85    Preston CJ observed that the factors enumerated in Corcoran and Corner House may, in an appropriate case, provide guidance, but should not be elevated to become fixed criteria governing the exercise of the discretionary power to make a maximum costs order. As his Honour observed, all of the factors will not be relevant in all cases. In addition, some factors may take on different importance depending upon the circumstances. His Honour explained this as follows:

“[36] … For example, the complexity or simplicity of the factual or legal issues may take on different significance depending on the nature and subject matter of the proceedings and the aspect of access to justice that is relevant, such as achieving proportionality of costs or alleviating the deterrent effect of the fear of an adverse costs order. Some of the factors have the potential for misdirecting the court from considering the critical issue of access to justice. Examples are whether there is any private interest in the proceedings or whether the plaintiff’s counsel is acting pro bono. In the end, the critical question for the court is whether or not making a maximum costs order facilitates or impedes access to justice in the particular case.”

86    For myself, I would add the following to his Honour's remark. When reference is made to access to justice in the particular case, I am of the opinion that regard must be had not only to the facilitation of the bringing of proceedings, but also the just disposition of the proceedings as between the parties.

A Protective Costs Order Should be Made

72. When the factors above are applied to the circumstances of this application, a sound basis for the making of a maximum costs order becomes apparent.

The Timing of the Application

73. The consent was granted on 13 February 2018, the summons was filed on 4 July 2018 (an amended summons was filed on 6 August 2018) and the notice of motion seeking a maximum costs order was filed on 14 August 2018. On any view, the application has been sought early in the proceedings and without delay (and therefore, without sizable legal costs already having been incurred).

74. Although the absence of tardiness by the Association means that no response to the amended summons has been filed and the issue of the necessity for a view or the need for expert evidence have been determined (see Pain J in Blue Mountains at [56]), the extensive response by Laundry Number to this application has afforded the Court with a sufficient understanding of the matters likely to be raised in the proceedings. This is discussed further below.

75. Having said this, given the confined nature of the claim, I am not concerned that the application has been filed too early so that the issues between the parties have not sufficiently crystallised (Blue Mountains at [56] and [69]).

Whether the Claim Appears Arguable

76. The Association submitted that the issues arising in the substantive proceeding were of relatively narrow compass, were fairly arguable and “enjoyed good prospects of success”.

77. The Court is not required to determine whether or not the case made by the Association enjoys “good prospects of success”, or even to make an assessment as to the prospects of the case above whether the claims are arguable.

78. Laundry Number disagreed with the Association’s assessment and expended considerable effort in an attempt to demonstrate that the Association’s prospects were “poor” notwithstanding the concession in its written submissions that “on their face, grounds of challenge such as these are not inarguable”.

79. The lengths to which Laundry Number went to demonstrate that the Association’s claims were not arguable had the real tendency of establishing the very opposite.

80. For the reasons that follow, I am satisfied that the Association’s claims are arguable.

81. Although described as, in part, a civil enforcement claim, the proceedings are a judicial review case with three grounds of review. The first two grounds assert that jurisdictional fact requirements were not satisfied and the third ground is that there was no evidence in support of a particular finding.

82. Laundry Number sought to diminish the Association’s claims globally by arguing that each ground simply raised a question of fact. But lying behind the jurisdictional fact claims are important questions of statutory construction. The absence of a jurisdictional fact goes to the absence of a precondition to the exercise of power by the decision-maker, in this case the Council. The no evidence ground is not dissimilar.

Ground 1 is arguable

83. In the amended summons ground 1 was stated as follows:

Ground 1 – absence of jurisdictional fact: not an ‘eco-tourist facility’

12 The proper characterisation of the Proposed Development as an ‘eco-tourist facility’ (within the meaning of the SLEP) is a jurisdictional fact that must exist to enliven the Second Respondent’s power to grant the Development Consent.

13 The Second Respondent erred when characterising the Proposed Development as an ‘eco-tourist facility’ because the Proposed Development was not ‘designed to minimise bulk, scale and overall physical footprint and any ecological or visual impact’ as required by sub-paragraph (c) of the definition of ‘eco-tourist facility’ under the SLEP.

14    In the premises of paragraphs 12 and 13 above, the purported decision of the Second Respondent to grant the Development Consent was ultra vires.

84. The expression “eco-tourist facility” is defined in the Dictionary to the SLEP to mean:

eco-tourist facility means a building or place that:

(a) provides temporary or short-term accommodation to visitors on a commercial basis; and

(b)   is located in or adjacent to an area with special ecological or cultural features, and

(c)   is sensitively designed and located so as to minimised bulk, scale and overall physical footprint and any ecological or visual impact.

It may include facilities that are used to provide information or education to visitors and to exhibit or display items.

Note. See clause 5.13 for requirements in relation to the granting of development consent for eco-tourist facilities.

Eco-tourist facilities are not a type of tourist and visitor accommodation - see the definition of that term in this Dictionary.

85. Relevantly, cl 5.13 of the SLEP provides as follows:

5.13   Eco-tourist facilities

(1)  The objectives of this clause are as follows:

(a)     to maintain the environmental and cultural values of land on which development for the purposes of eco-tourist facilities is carried out,

(b)     to provide for sensitively designed and managed eco-tourist facilities that have minimal impact on the environment both on and off-site.

(2)  This clause applies if development for the purposes of an eco-tourist facility is permitted with development consent under this Plan.

(3)  The consent authority must not grant consent under this Plan to carry out development for the purposes of an eco-tourist facility unless the consent authority is satisfied that:

(a)     there is a demonstrated connection between the development and the ecological, environmental and cultural values of the site or area, and

(b)     the development will be located, constructed, managed and maintained so as to minimise any impact on, and to conserve, the natural environment, and

(c)     the development will enhance an appreciation of the environmental and cultural values of the site or area, and

(d)     the development will promote positive environmental outcomes and any impact on watercourses, soil quality, heritage and native flora and fauna will be minimal, and

(e)  the site will be maintained (or regenerated where necessary) to ensure the continued protection of natural resources and enhancement of the natural environment, and

(f)     waste generation during construction and operation will be avoided and that any waste will be appropriately removed, and

(g)     the development will be located to avoid visibility above ridgelines and against escarpments and from watercourses and that any visual intrusion will be minimised through the choice of design, colours, materials and landscaping with local native flora, and

(h)     any infrastructure services to the site will be provided without significant modification to the environment, and…

86. The term “eco-tourist facility” has been referred to in some judgments but in none of the cases has its meaning been the subject of any detailed consideration.

87. Thus in Raphael Shin Enterprises Pty Ltd v Minister for Planning [2018] NSWLEC 42 the term was referred to in the context of an application for the ordering of a separate question (at [3] and [14]-[19] per Molesworth AJ). No analysis or construction of “eco-tourist facility” was, however, undertaken by his Honour in that case.

88. Likewise, in Camberlee Investments Pty Ltd v Shoalhaven City Council [2017] NSWLEC 1585 Martin SC had to determine if a development proposal was an “eco-tourist facility” satisfying the requirements of cl 5.13 of the Shoalhaven Local Environment Plan 2014. But the Senior Commissioner determined the matter solely on its merits and was not called upon to construe the term in making her decision.

89. Finally, in Roden v Bandora Holdings Pty Ltd [2016] NSWCA 220 the Court of Appeal was tasked with determining, amongst other things, whether the approved development was for a “tourist facility” prohibited under the relevant zone of the Byron Local Environmental Plan 1988 (“BLEP”). In that case Basten JA quoted the Dictionary definition of “tourist facilities” under the BLEP (at [7]):

7.    The land was zoned under the Byron LEP as “1(a) General Rural Zone”. Amongst the prohibited purposes of development was that identified as “tourist facilities”. The Byron LEP contained a definition of “tourist facilities” in the Dictionary (referred to in cl 5(1)) in the following terms:

“tourist facilities” means an establishment providing holiday accommodation or recreation and may include a boat shed, boat landing facility, holiday cabin, hotel, house-boat, marina, motel, playground, primitive camping ground, restaurant, water sport facility or a club used in conjunction with any such facility.

90. His Honour then set out the definition of “rural tourist facility” under the BLEP (at [12]):

12.    … it is convenient to set out first the definition of “rural tourist facility”:

"rural tourist facility" means an establishment providing for low-scale holiday accommodation, or used for recreational or educational purposes and may consist of a bed and breakfast establishment, boat landing facilities, environmental facilities, holiday cabins, horse riding facilities, a picnic ground, a primitive camping ground or a restaurant or the like.

91. In respect of the characterisation of the definitions, Basten JA held that (at [24]-[25]):

24.    Finally, the characterisation of the definitions was based on a false premise. Each definition included two limbs. The first commenced with the word “means”, which is apt to indicate an exhaustive and not merely an illustrative meaning. That meaning may comply with the ordinary English meaning of the defined phrase, or it may not: in either case, it is the statutory language which is to be applied in the instrument. That part of each definition is exhaustive, although the language in it, which is not otherwise defined, may involve evaluative judgment.

25.    It is the second limb of each definition, giving examples of what may be found within the first limb, which was the subject of the discussion in the judgment below as to whether it was exhaustive or illustrative. The primary judge concluded that the word “includes” in the definition “tourist facilities” was intended to give an exhaustive statement of the uses covered by that definition.

92. With great respect to his Honour, the reasoning in Roden does not conclusively settle the question of the proper construction of the term “eco-tourist facility” in the SLEP (and nor was it intended to be).

93. The definition of “eco-tourist facility” in the SLEP may be contrasted with the definition of “hotel or motel accommodation” in the same instrument:

eco-tourist facility means a building or place that:

(a)  provides temporary or short-term accommodation to visitors on a commercial basis, and

(b)  is located in or adjacent to an area with special ecological or cultural features, and

(c)  is sensitively designed and located so as to minimise bulk, scale and overall physical footprint and any ecological or visual impact.

It may include facilities that are used to provide information or education to visitors and to exhibit or display items.

…

hotel or motel accommodation means a building or place (whether or not licensed premises under the Liquor Act 2007) that provides temporary or short-term accommodation on a commercial basis and that:

(a)     comprises rooms or self-contained suites, and

(b)     may provide meals to guests or the general public and facilities for the parking of guests’ vehicles,

but does not include backpackers’ accommodation, a boarding house, bed and breakfast accommodation or farm stay accommodation.

94. In the RU2 Zone hotel or motel accommodation is prohibited.

95. Shortly put, the Association’s argument was that the Council gave “lip service” rather than serious attention to limb (c) of the “eco-tourist facility” definition in the SLEP, and therefore, did not reach the state of satisfaction mandated by cl 5.13(3) of the SLEP when granting consent.

96. The matters contained in limb (c) of the definition were referred to in evidence before the Council but, the Association submitted, the Council failed to have proper regard to the specific considerations contained in that limb of the definition of the term.

97. Both parties took the Court to material to make good their assertions under this ground (see, for example, the consent, the s 79C Assessment Report, the SEE, the material before the Development Committee at its meeting on 22 January 2018, including extensive attachments, and various objections to the proposed development that were before the Council).

98. There can be no doubt that the proposed development will have a sizable footprint. The buildings alone account for a total gross floor area of slightly under 1 km2. Further, there are 33 vehicle spaces that are spread over two large bitumen areas. The management system requires two large effluent disposal areas and one water quality control pond. There are also six large water tanks, and infrastructure associated with a solar power system. In addition, there is a primitive campground together with associated infrastructure. At the location of the primitive campground there is an amenities block with a kitchen and four toilets. An existing shed with a proposed extension for a verandah is adjacent to the new amenities block.

99. It could, moreover, reasonably be anticipated that the development will attract substantially greater volumes of vehicles than is presently the case in the area where the site is located. So much so was evidenced by the Traffic Assessment Report.

100. It was for these reasons that Mr Hudson OAM opined in his affidavit why (speaking on behalf of the Association) he did not consider that limb (c) of the definition was satisfied insofar as the development was not “sensitively designed”.

101. According to the Association, limb (c) of the definition of “eco-tourist facility” requires that each word be read disjunctively, that is, each of the “bulk”, “scale”, “overall physical footprint”, “ecological impact” and “visual impact” must be “minimised”, with the word “minimised” being given some work to do. Limb (c) therefore contemplates smaller, rather than larger, scale developments. This is, the Association submitted, the only way that the matters expressly identified in limb (c) of the definition can be “minimised”. The proposed development was therefore of a scale that fell outside the scope of an “eco-tourist facility”.

102. The predominant focus in the material before the Council in respect of limb (c) was, the Association argued, the fact that the buildings would be constructed in an environmentally sustainable way and would make use of renewable resources. This was not sufficient, however, to make the proposed development an “eco-tourist facility” as defined.

103. By contrast, Laundry Number submitted that:

1. the Association had misconstrued the term “eco-tourist facility” by interpreting it in a manner that had regard to the purpose or use of the proposed development;

2. having regard to all the material before the Council, it could not be said that it had erred in its evaluative judgment that the proposed development involved sensitively designed minimisation as required. What was necessary, and what the Council had engaged in, was a qualitative and quantitative appreciation of the proposed development, both at an overall level and at a constituent level. There was nothing impermissible in this approach;

3. ground 1 only challenged the location and not the design of the development (confirmed by the Association’s response to a request for particulars on 9 August 2018); and

4. the evidence of Mr Hudson OAM could not assist the Court in conducting the evaluative exercise required and it was, in any event, inadmissible.

104. On the material before the Court, the Association’s assertions were more than tenable. It is not necessary at this early stage of the proceedings to resolve to finality the question of the proper construction of the term “eco-tourist facility”; whether the Council afforded the necessary elements of limb (c) of the definition mere “lip service”; or even to determine the admissibility of Mr Hudson’s OAM evidence. Nor is it necessary to determine if ground 1 has ‘strong’, ‘good’ or ‘high’ prospects of success. All that I must be satisfied of is that the Association’s claims in support of ground 1 are arguable.

104. The Council was required to have regard to all of the constituent elements of the definition of “eco-tourist facility” and to determine whether it was satisfied that the proposed development was such a facility. On the evidence before me, it was a matter of genuine debate as to whether the Council had reached, or was capable of reaching, the requisite state of satisfaction required under cl 5.13(3) of the SLEP, having regard to what the Association contends was the correct interpretation of the term “eco-tourist facility”. It was not necessary for this Court in this application to determine conclusively whether cl 5.13(3) gave rise to a jurisdictional fact or whether that fact could be established. Again, on any view, the issue is arguable.

105. Nor was it necessary to determine whether the proposed development ought to be properly characterised as an “eco-tourist facility”. The question is plainly arguable.

106. Similarly, assuming that the proposed development is an “eco-tourist facility”, then whether or not Council reached the requisite state of satisfaction of the matters contained in cl 5.13(3) of the SLEP was also arguable. The Council did have regard to material referencing and relevant to the matters contained in limb (c) in the definition of “eco-tourist facility” in granting consent. It was arguable that this material, and the Council’s consideration of it, was sufficient to exercise its power to grant consent.

107. The fact that, as currently framed, ground 1 only refers to “design” and not to “location” makes no material difference to the conclusion that ground 1 is arguable. In any event, the Association has foreshadowed an application to amend ground 1 to include a reference to “location”, its omission explained by way of typographical error (although it is noted that this reasoning is somewhat inconsistent with the answer to particulars referred to above). Indeed an application to amend was made by the Association during the hearing of the application but was quickly withdrawn upon opposition from Laundry Number without the Court having an opportunity to rule upon it.

108. Finally, and for the sake of completeness, the Association adduced evidence before the Court (contained in both of Mr Hudson OAM’s affidavits and a letter from the Office of Environment and Heritage to Laundry Number dated 4 January 2017) in support of an allegation that Laundry Number had unlawfully cleared native vegetation at the site. This appeared to be in anticipation of an argument by Laundry Number that the proposed development was sensitively designed and located in conformity with the definition of “eco-tourist facility” given the nature of the site and its lack of vegetation. At this nascent stage of the proceedings, neither the argument nor the evidence was particularly compelling and very limited weight was placed on it. At the risk of repletion, however, the allegation was not unarguable and the ultimate admissibility of, and weight to be attributed to, the evidence at the final hearing will be a matter for the trial judge.

Ground 2 is arguable

110. Absent particulars, ground 2 was framed in the amended summons in the following terms:

Ground 2 – absence of jurisdictional fact: ‘function centre’ is a separate and dominant use

15 Development for the purposes of a ‘function centre’ is prohibited as an innominate use under Zone RU2 of the SLEP

…

16 The Proposed Development is characterisable as a ‘function centre’ as that term is defined in the Dictionary to the SLEP.

17   The Council erred:

a.    in failing to find that the ‘function centre’ use was an independent, dominant use; and,

b.    in finding that the ‘function centre’ use was subordinate and/or ancillary to the Site’s use as an ‘eco-tourist facility’.

…

18 The Second Respondent does not have jurisdiction to grant consent with respect to prohibited development. The purported decision of the Second Respondent to grant the Development Consent is ultra vires because the proposed ‘function centre’ use is prohibited under Zone RU2 of the SLEP …

111. As to the second ground of review, the Association submitted that one of the purposes of the development was as a “function centre”, which was defined in the Dictionary of the SLEP as “a building or place used for the holding of events, functions, conferences and the like”. Use of the site as a “function centre” was prohibited under Zone RU2 of the SLEP.

112. The Association relied upon Abret Pty Limited v Wingecarribee Shire Council [2011] NSWCA 107; (2011) 180 LGERA 343 where Beazley P stated that (at [54]):

54    …where part of the premises is used for a purpose which is subordinate to the purpose of the use of another part, it is legitimate to disregard the former and to treat the dominant purpose as that for which the whole is being used: see Foodbarn. Chamwellwas also an example of this proposition. The same principle applies where the dominant and servient purposes both relate to the whole and not to separate parts. In FoodbarnGlass JA also noted that where premises are used for two or more purposes, none of which subserves the others, if any one purpose which is independent and is not incidental to the other purpose is prohibited, the planning ordinance is being disobeyed.

113. According to the Association, the function centre use was a wholly independent use, and not merely ancillary to the use of the site as an “eco-tourist facility” because:

1. it was the use of the function centre which justified the accommodation of an 30 extra people during a function;

2. while the eco-tourist lodge may “provide accommodation to people interested in a [sic] gaining an appreciation for the special ecological and cultural values of the site”, it also provided accommodation to other people interested in staying at the lodge who might have little or no interest in the gaining an appreciation of these values;

3. it was unclear what it would mean for a function, conference or wedding, to be “ecologically”, “culturally” or “nature” themed. Simply describing an event as “ecologically”, culturally” or “nature” themed did not mean that the event would necessarily have any meaningful connection to ecology, culture or nature, or that the event would promote an appreciation or understanding of these matters. In any event, there was no requirement that any of the functions, conferences or weddings be “ecologically”, “culturally” or “nature” themed; and

4. when events were hosted at the site, the “function centre” use would not help to further and promote the “eco-tourist facility” use. The purpose of the function centre was not to serve the guests of the “eco-tourist facility”. By contrast, it was the purpose of the “eco-tourist facility” to serve the guests of the “function centre” by providing them with accommodation.

114. Laundry Number submitted that ground 2 requires judicial determination of whether the development (which includes a maximum of 18 functions per annum in conjunction with accommodation) falls within the purpose of, or is ancillary to, the “eco-tourism facility” and campground. It criticised the Association for inverting the question to be determined.

115. Laundry Number also sought comfort in the Pikes and Verekers’ legal opinion dated 7 March 2018 that the use of the eco-tourist facility for hosting events was ancillary and subordinate to the dominant purpose of development as an “eco-tourist facility”, and therefore, could be disregarded in the characterisation of the development.

116. But this advice, given as it was to the Council prior to the July Supplementary Submission proposing to double the number of overnight guests at the site, merely highlights the arguable nature of the characterisation task underpinning this ground of review. The ground does not, in my opinion, slide impermissibly into merits review, as suggested by Laundry Number.

Ground 3 is arguable

117. In the amended summons, the third ground of review was in the following terms:

Ground 3 – no evidence: clause 5.13 of the SLEP

19 The Second Respondent does not have the power to grant development consent for the purpose of an ‘eco-tourist facility’ (as defined in the SLEP) unless it is satisfied of the matters contained in clause 5.13(3) of the SLEP.

20 There is no evidence on which the Second Respondent could have based its assessment of the mandatory considerations contained in subclauses 5.13(3)(b), (f) and (h) of the SLEP with respect to the Proposed Development, including with regard to the proposed upgrades to the right of way.

21 The Second Respondent erred with respect to its jurisdiction by purporting to be satisfied of matters in clauses 5.13(3)(b), (f) and (h) of the SLEP in the absence of any evidence which could have formed the basis for that satisfaction.

118. Put another way, the Association submitted that there was no evidence upon which the Council could have been satisfied of the matters in cl 5.13(3)(b), (f) and (h) of the SLEP because the proposed upgrade works to the right of way used to access the site were not included in any of the relevant material before the Council. The Council was clearly aware that works were both required and proposed, to improve right of way to gain access to the site (which comprised of a gravel track).

119. After conceding the arguable nature of this ground by stating that “arguably, Ground 3 is inarguable”, Laundry Number relied upon s 80(4) and (5) of the EPAA (in force at the time) to submit that because the deferred commencement consent required a development application for the proposed upgrade works to the right of way, the fact that the detail of these works was not before the Council at the time it made its determination to grant the consent, did not matter.

120. But merely because a development application is required in respect of these works did not obviate the need for the Council to be satisfied of the matters in cl 5.13(3) of the SLEP prior to the exercise of its power to grant consent. Provision of the latter did not obviate the need for evidence to enable the Council to consider and be satisfied of the former. The Council’s state of satisfaction nevertheless had to exist. The issue of whether or not the Council could be satisfied of the matters contained in cl 5.13(3) on the material before it is matter that is more than arguable.

Whether the Proceeding is Public Interest Litigation

121. The next question that occupied a substantial portion of the Court’s time was whether the proceeding could be characterised as public interest litigation.

122. Since Blue Mountains (at [59] and see also Delta at [115]-[123] and [202]) there have been a number of cases dealing with what constitutes public interest litigation. In the leading decision of Caroona Preston J, building on the observations of Lloyd J in Engadine Area Traffic Action Group Inc v Sutherland Shire Council (No 2) [2004] NSWLEC 434; (2004) 136 LGERA 365 (at [15]), identified and explained the relevant factors as follows (at [38]-[46]):

38    A review of the costs decisions reveals that courts have referred to a variety of considerations to determine whether litigation can properly be characterised as having been brought in the public interest. Lloyd J in Engadine Area Traffic Action Group Inc v Sutherland Shire Council (No 2) [2004] NSWLEC 434; (2004) 136 LGERA 365 at [15] summarised five considerations:

“(a)    The public interest served by the litigation: Darlinghurst Residents’ Association v Elarosa Investments Pty Ltd (No 3) (1992) 75 LGRA 214 at 215; Liverpool City Council v Roads and Traffic Authority (No 2) (1992) 75 LGRA 210.

(b)    Whether that interest is confined to a relatively small number of members from the group or association in the immediate vicinity of the development, concerned with their own private amenity; or whether the interest is wider, involving a significant number of members of the public and concern for a wider and significant geographic area: Darlinghurst Residents’ Association at 215; Oshlack at 80-81.

(c)    Whether the applicant sought to enforce public law obligations: Oshlack at 80 [20].

(d)    Whether the prime motivation of the litigation is to uphold the public interest and the rule of law: Oshlack at 80 [20].

(e)    Whether the applicant has no pecuniary interest in the outcome of the proceedings: Oshlack v Richmond River Shire Council (1994) 82 LGERA 236 at 246.”

39    These five considerations have been used to characterise the litigation in Anderson v NSW Minister for Planning (No 2) at [15]; Minister for Planning v Walker (No 2) [2008] NSWCA 334 at [6]-[9]; Sharples v Minister for Local Government (No 2) [2009] NSWLEC 62 at [5], [11]–[19]; affirmed in Sharples v Minister for Local Government [2010] NSWCA 36 at [115], [116] and [123]; and Hastings Point Progress Association Inc v Tweed Shire Council (No 3) at [25], [42] and implicitly at [11].

40    Four points can be made about these considerations. First, the considerations focus on the aspect of the public interest of enforcing public law. This is explicit in considerations (c) and (d) and implicit in (e) and probably (b). The focus on this aspect of the public interest is consistent with the rationale for departure from the usual costs rule, to which I have earlier referred, of ensuring access to justice for citizens seeking to enforce public law, including environmental law.

41   Secondly, the considerations should not be seen or applied as a code for characterisation of litigation as being brought in the public interest. They are merely considerations which, if answered in a particular way, may indicate that the proceedings could be characterised as being brought in the public interest. Other considerations may also be relevant to be considered.

42    Thirdly, the considerations are relevant not only to the characterisation of litigation as having being brought in the public interest, which is the first of the three steps in the process of determining whether departure from the usual costs rule is justified; they are also relevant to the second and third steps of that process namely, whether there is something more than the mere characterisation of the litigation as being brought in the public interest and whether there are any countervailing factors that speak against departure from the usual costs rule. Lloyd J’s summary was of the considerations referred to in the prior cases, including the Oshlack decisions, and these considerations addressed not only the issue of characterisation but also whether there was something more than that characterisation and any countervailing reasons.

43    Fourthly, it is not necessary in order to characterise litigation as being brought in the public interest to answer each of these considerations in a particular way. For example, in consideration (b), the fact that the public interest is confined to a small section of the community does not necessarily deny characterisation of the litigation as being brought in the public interest. As Jacobs J noted in Sinclair v Maryborough Mining Warden (1975) 132 CLR 473 at 487, “the smallness of the section of the public may affect the quantity or weight of the public interest … [but] it does not affect the quality of that interest.”

44    In consideration (d), the fact that the motivation of the litigant may not primarily be to uphold the public interest, but may involve some private interest, also does not necessarily deny characterisation of the litigation as being in the public interest. As Kirby J noted in Oshlack v Richmond River Council at [140], “[t]he issue is not the subjective motivation of the litigant but the public or private character of the litigation”.

45    Similarly, in consideration (e), the existence of some private, pecuniary interest in the outcome of the litigation does not necessarily deny characterisation of the litigation as being in the public interest. As I noted in Caroona Coal Action Group Inc v Coal Mines Australia Pty Ltd [2009] NSWLEC 165; (2009) 170 LGERA 22 at [27], “litigation can still properly be characterised as being in the public interest, notwithstanding it also may advance private interests”: see Nettheim v Minister for Planning and Local Government (No 2), (NSWLEC, Cripps CJ, 28 September 1988, unreported) at 3-5; Darlinghurst Residents’ Association v Elarosa Investment (No 3) (1992) 75 LGRA 214 at 216; Alliance to Save the Hinchinbrook Inc v Cook [2005] QSC 355 at [11].

46    Hence, it is not necessary to answer these considerations in a particular way in order for litigation to be characterised as being in the public interest and, conversely, it is not necessary, if the considerations are answered in a different way, to characterise the litigation as not being in the public interest. Nevertheless, the answers to these considerations may be relevant in the second and third steps in the process of determining whether departure from the usual costs rule is justified.

The public interest served by the litigation

123. In the present case, the unchallenged evidence of the public interest served by the litigation was given by Mr Hudson OAM, on behalf of the Association. In this context it must be noted that Mr Hudson OAM has a very long-standing involvement in protecting the environment in the part of the South Coast near Nerringillah, and in particular, Conjola National Park.

124. As is apparent from all of the evidence, the public interest served by this litigation is:

1. to protect Conjola National Park which, although not adjoining the site, is nevertheless in close proximity to it;

2. to protect the environment surrounding the site and Conjola National Park, including Nerringillah Valley;

3. to protect the waterways located within the site, in particular, Nerrindillah Creek;

4. to protect the amenity of the Nerringillah Valley and the properties located in it; and

5. to ensure the integrity of the Council’s decision-making processes and to uphold the planning laws of this State.

Wide public interest

125. Mr Hudson explained the evolution of the Association in his written evidence. In March 2017, he met with his neighbours to discuss the proposed development. He submitted an objection to the development to Council to capture the concerns raised. Shortly after the consent was granted on 7 March 2018, the neighbours met again under the banner of the “Nerringillah Valley Community Alliance”, an unincorporated association.

126. On 9 March 2018 the Association was registered as an incorporated association. At the time of registration, the Association had 19 members. After incorporation, the Association initiated a recruitment drive to expand its membership to, as Mr Hudson OAM frankly acknowledged, “demonstrate that there was widespread community concern” about the development. And as at 3 July 2018, the Membership Register of the Association recorded 84 members.

127. The objects of the Association are:

To preserve and protect the aggregate of surrounding things, conditions, influence, and the social and cultural forces that shape the lives of the people in the Nerringillah precinct that adjoins the Conjola National Park.

128. As described above, five of the seven members of the Executive Committee of the Association live on Nerringillah Road.

129. As Mr Hudson deposes, only 21 members are from Bendalong and 15 are from the surrounding suburbs. The balance of members are from other suburbs and some are from interstate.

130. Laundry Number stridently argued that the Association was “essentially a local group whose real aim is to preserve their existing amenity” and that there was no wider public interest present in the proceedings. It took the Court to a number of objections made by people living in close proximity to the site to demonstrate its point. Any public interest was confined to a relatively small number of members from the Association who lived in the immediate vicinity of the development. Further, it could be inferred that these members would derive a benefit if the consent was invalidated. Laundry Number was particularly critical of the membership drive that occurred after the consent was granted and it submitted that it took place with the purpose of ensuring that the Association’s membership was comprised of members outside the immediate vicinity of the development.

1. the Association’s solicitor/client (that is, the costs of Herbert Smith Freehills) costs will be capped at $20,000, plus GST, plus disbursements;

2. Ms Sharp SC has entered into a conditional costs agreement with the Association and has agreed to charge her NSW Crown Rates of $470 an hour and $4,700 per day, plus GST; and

3. Mr Grace has entered into a conditional costs agreement with the Association and has agreed to charge his NSW Attorney-General Rates of $285 and $2,140 per day, plus GST.

167. Inaugural members of the Association and those who live close to the site pledged to contribute further funds to the conduct of the proceedings, which will bring the total amount of money available to fund the litigation to $40,000. Of this, $20,000 is required to pay the solicitor’s discounted fees. This leaves a balance of $20,000, which is the basis for the Association seeking a maximum costs order of $20,000.

168. Aside from an initial consultancy fee of $5000 for the preparation of a brief to lawyers, and further limited amounts for printing and the Court filing fee, all legal work performed for the Association by their legal representatives until the filing of the summons has been conducted on a pro bono basis. Mr Hudson OAM believes that $104,250 in pro bono advice has been provided to the Association by its legal representatives.

169. If the Association succeeds in the proceedings it expects to recover its party/party costs, including solicitors’ costs, plus GST, plus disbursements and the Association’s senior and junior counsels’ fees, including GST, from the respondents from the commencement of these proceedings.

170. The evidence of Mr Hudson OAM, disclosed that for a three day hearing (including a view), counsel’s fees for appearing for the Association would be approximately $41,040 ($61,040 including Herbert Smith Freehills’ fees). Assuming a four day hearing, this would increase the costs to approximately $47,880 and for a five day hearing the amount would be $54,720 ($74,720 including Herbert Smith Freehills’ fees).

171. It should be noted, however, that this estimate did not include an amount for any expert evidence.

172. The Association has incurred a contingent liability of approximately $21,800 for counsels’ fees in respect of the protective costs application.

173. The Laundry Number’s party/party costs have been estimated by Mr Palmer to be as follows:

29.   It is my opinion, on the basis of my experience in similar matters, that these proceedings can be dealt with on the documents, without need for a view by the Court or recourse to expert evidence. In my estimation, should the hearing proceed in that way, the hearing will occupy 2 days.

30.   If the matter were to proceed as outlined in paragraph 29, it is my estimation based on my experience that the likely amount recoverable by Laundry Number on a party-party basis were it to be successful in the proceedings would be in the order of $50,000 including solicitors’ fees, counsel’s fees, disbursements and GST.

31.   Should the matter proceed with a site view this would add a day to the length of the hearing.

32.   Should the matter proceed with expert evidence, this would in my estimation add a half a day to the hearing. Expert evidence would also add to preparation time, and would incur the costs of the expert.

33.   Should the matter proceed with a view, in my estimate this would increase the party-party costs recoverable by Laundry Number by $9,900 including solicitors’ fees, counsel’s fees, expert’s fees and GST.

34.   Should the matter proceed with expert evidence in a single area of expertise, in my estimate this would increase the party-party costs recoverable by Laundry Number by $20,000 including solicitors’ fees, counsel’s fees, expert’s fees and GST.

174. The Association believes a view of the site would assist the Court at the final hearing. This is opposed by Laundry Number. If the Court orders a view, then this will plainly increase the cost of the litigation. At this preliminary stage it is too early to indicate if a view is necessary, although the Court notes that they are uncommon in judicial review proceedings.

175. Similarly, the Association indicated, albeit tentatively, that expert town planning evidence may be necessary. Laundry Number was somewhat equivocal in this regard, although it noted that if the Court permitted such evidence to be adduced (leave would have to be sought by the Association) then it would be required to be met by it. Again, the need for expert evidence will increase the cost of the proceedings.

176. Furthermore, given the manner in which Laundry Number ran this application it is unlikely that, even absent a view or the necessity to call expert evidence, this matter would conclude in two days.

177. Assuming that the proceedings took four days to be heard (including expert town planning evidence, which is heard concurrently in this Court and a view), given the estimates contained in Mr Palmer’s affidavit, the proceedings could therefore cost Laundry Number approximately $90,000.

178. But if there is no view and no expert evidence, and if the matter is conducted efficiently, then assuming a two day hearing (in my opinion, run efficiently the matter should be able to be heard comfortably in two days given the confined nature of the legal issues raised), the evidence of Mr Palmer indicates that the matter would cost Laundry Number $50,000.

179. Two additional matters must, however, be noted:

1. first, during the hearing of the application the Association gave an undertaking that it would transfer $20,000 (the amount of the maximum costs order it seeks) to the trust account of Herbert Smith Freehills. This has now been done; and

2. second, at the conclusion of the hearing, counsel for the Association informed the Court that Herbert Smith Freehills had entered into a contingent costs agreement with the Association capped in the amount of $20,000.

180. Importantly, this latter agreement means that if the Association loses, in addition to the $20,000 already held in trust by Herbert Smith Freehills, an additional $21,874 is potentially available to the Association to satisfy any adverse costs order made against it (the Association’s counsel has entered into a conditional costs agreement with it). This also limits Laundry Number’s exposure to pay legal costs if the Association is successful in its claim insofar as the costs of Herbert Smith Freehills will be capped at $20,000.

181. In response, Laundry Number:

1. denied that the Association, or its members, were of limited means. Notwithstanding that the Association’s financial position was $21,849 as at 13 August 2018, Laundry Number argued against the submission that the group has “limited financial resources”. Because its financial position is funded by donations from people in “the very local vicinity”, there was no evidence to establish impecuniosity on the part of those people, and therefore no evidence that the Association was impecunious;

2. noted that the Association’s senior and junior counsel were not acting pro bono;

3. asserted that the Association’s application was premised on speculation that there would be no prejudice suffered by Laundry Number (it was not a large state government corporation or a public authority); and

4. submitted that the Association was not asking the Court to ensure proportionality of costs insofar as the Association expected to recover costs from other parties without limitation. In other words, it complained that the costs cap sought was unidirectional and not bi-directional in nature.

182. Dealing with each of Laundry Number’s contentions in turn, first, it is true that the financial position of the members behind the Association is not known. However, in the face of the Association’s uncontroverted evidence of impecuniosity and in the absence of any evidence to the contrary, the Court accepts the Association’s claim that it is a litigant of limited financial means.

183. Second, it is also true that upon the filing of the summons the Association’s counsel have ceased to act pro bono (see Blue Mountains at [65]). But until this juncture the Association has benefited from pro bono legal assistance, and thereafter, the Association’s solicitors have agreed to cap their legal costs at $20,000 on a contingent basis and counsel are acting on a contingency basis at reduced rates. All of these steps will significantly reduce any financial exposure on the part of the respondents if they are ultimately subjected to an adverse costs order.

184. In Blue Mountains the fact of counsel acting on a purely pro bono basis rather than on a conditional costs basis was a matter taken into account (at [65]), and not a decisive consideration. Indeed, Pain J referred to Corner House (at [74]) where it was stated that protective costs orders take many forms, including where applicants expect to have their reasonable costs reimbursed if they succeeded.

185. Third, the cost of the development is identified as being over $1.6 million and it is proposed that the development will operate as a commercial enterprise. It may be inferred, in the absence of any evidence furnished by Laundry Number either way, that the making of a protective costs order will not cause undue financial hardship to it.

186. Fourth, protective costs orders, although courts commonly make maximum costs orders bidirectional (Caroona at [28]), they need not be (there is nothing in the language of r 42.4 to the contrary).

187. As Preston J observed in Caroona (at [30]):

30   As the Report notes, therefore, maximum costs orders that take the form of imposing bidirectional or multidirectional capping orders and requiring only modest legal representation, may disadvantage a public interest litigant. The public interest litigant may be deprived of access to lawyers and experts that might otherwise have been prepared to act on a contingency basis (the incentive for the lawyers and experts being that they would recover their full professional fees and not be restricted to only a modest proportion). Restricting the nature and extent of legal representation may also deprive the public interest litigant of the benefit of experienced and able senior counsel and give rise to an unjust disparity in the quality of legal representation between the plaintiff (who is restricted in its legal representation) and the defendants (who are unrestricted in their legal representation). The public interest litigant may also be deprived of funds that might otherwise have been provided by a litigation funder (the incentive for the litigation funder again being recovery of full fees and usually some proportion of any monetary judgment sum). The public interest litigant who is ultimately successful in the proceedings also suffers because the costs cap may prevent full recovery of legal costs, causing either the public interest litigant or their lawyers and experts to subsidise access to justice. For non-governmental organisations, lawyers and experts, who act in the public interest, such subsidisation is not sustainable.

188. But the Court would be cautious, in my view, before making a unidirectional costs order (see the view expressed by Beazley P in Delta at [83]).

189. In Sacks v Permanent Trustee Australia Ltd (1993) 45 FCR 509 Beazley J (as she then was) said the following in declining to make a maximum costs order under O 62A of the Federal Court Rules 1979 (Cth) (at 513):

Finally, it is important to bear in mind the intended effect of O 62A, r 2. The Order is specifically framed so as to inure for the potential benefit of both parties and not only for the benefit of the party bringing the application. The party who actually receives the benefit is the successful party. In this case, whilst the notice of motion is framed in compliance with the provisions of O 62A, it seems to me that the applicant is in fact seeking to have the benefit of such an order should he be unsuccessful, but that he does not necessarily propose that the respondents have the same benefit. As I have already stated, the applicant, in his substantive application, has made a claim for compensation for the time and effort which he has expended and will need to expend in the preparation of the proceedings. In addition, he makes a claim for loss of income and opportunity costs. He also makes a claim for costs. He did not argue that his claim for compensation and loss of income and opportunity costs be in any way restricted as he proposes the claim for costs should be. If the applicant wishes to pursue his claim for compensation, he is free to do so. However, in my opinion, he should not have the benefit of a rule designed to treat parties equally, in circumstances where he seeks to expose the opposing party to an unlimited claim for compensation for time and effort expended in the preparation of the proceedings, a great deal of which would, in a case where a solicitor was separately retained to act for the party, in fact be part of the party and party costs in the proceedings. It seems to me that the effect of what the applicant seeks to do is to potentially limit his own liability for the payment of legal costs, yet not give a like benefit to the respondents. For that reason also, I do not consider this to be an appropriate case in which to make an order under O 62A.

190. The facts in Sacks are very different to the facts, and cause of action, at the core of the present case, and her Honour’s statement ought to be read, in my respectful opinion, in the context of the distinguishing features of that case.

191. Laundry Number’s submission, while compelling, nevertheless overlooks the windfall gain that has already accrued to it in the event that it fails in this litigation, namely, that it will not have to pay any of the Association’s legal fees prior to the summons being filed, and that thereafter, the legal fees incurred will be at a discounted rate.

192. In my view, while generally weighing against the making of a protective costs order, the seeking of a unilateral costs order in these proceedings is not fatal to the application, although, as explained below, it is a significant factor in the Court increasing the amount of the maximum costs order sought in this instance.

The Reasonableness of the Parties’ Estimate of Costs

193. In my opinion, apart from the length of time it might take for the matter to be heard (more rather than less) the estimates given by the parties of the likely costs that they would incur were reasonable.

194. Thus assuming the worst case scenario of a four day matter (which would include a view and an expert town planning report), the fees incurred by the Association would be approximately $95,000 (allowing approximately $20,000 for expert town planning evidence, based on Mr Palmer’s evidence) and approximately $90,000 for Laundry Number.

195. To the Association’s costs of a four day hearing must be included the amount of $21,800 for counsel’s appearance on this application. The amount of legal fees Laundry Number has incurred to date is not known.

196. But it must be recalled that these estimates are premised on a four day hearing and absent the need for a view or expert evidence, these amount (excluding what has been incurred to date) will, on the parties’ evidence, be substantially less.

Proportionality of Costs

197. In my view, the fee estimates given above, even for a four day hearing, are not sufficient to establish disproportionality of costs to the importance, complexity and subject matter of the proceedings warranting the refusal to make a protective costs order (see s 60 of the CPA and see also Caroona at [63]). This is particularly so when regard is had to the cost of the development (estimated to be $1.6 million) and the fact that the development will be run as a commercial enterprise.

Whether Rewarding Inefficient Litigation

198. There is nothing in the manner in which the Association has conducted the litigation to date that suggests that the making of a maximum costs order would reward the inefficient conduct of the litigation (Blue Mountains at [68]). On the contrary, the only cause for concern in this regard arises from Laundry Number’s conduct in the running of this application.

199. In any event, this argument ignores, as Pain J stated in Blue Mountains (at [68]), inbuilt protections contained in r 42.4(2) and (4) of the UCPR and ss 56(4) and 98 of the CPA. These should ensure that the Association conducts the litigation responsibly and efficiently.

Laundry Number’s Proposed Orders if a Protective Costs Order is Made

200. If the Court determined to make a maximum costs order, then Laundry Number submitted that:

1. fairness dictated that the costs cap should be bidirectional;

2. in determining the amount of the costs cap under r 42.4(1) of the UCPR, the Court exercise its discretion to limit the extent and nature of the legal representation the Association has to “modest” representation, “such as a solicitor and/or a single advocate of junior counsel”; and

3. under r 42.4(3) of the UCPR the Court make appropriate directions governing the preparation for, and conduct of, the hearing, including that there be no expert evidence and no view of the site.

201. The complaint with respect to the unidirectional nature of the maximum costs order has been dealt with above.

202. Similarly, given the discounted nature of the fees being charged by the legal representatives of the Association, an order restricting that legal representation is unwarranted, in my view. Such an order would disadvantage the Association. Ms Irish, appearing for Laundry Number, although not senior counsel, is a very experienced practitioner in environmental law, with well over 30 years’ experience in this field of law, including a brief period as an Acting Commissioner in this Court. Ms Sharp SC and Mr Grace, although no doubt very competent, have considerably less experience in environmental law. Mr Grace, for example, was only called to the Bar in 2016 and his previous work experience has been as a commercial lawyer.

203. As to the demand by Laundry Number that there by no view and no expert evidence, it is premature to make such an order. The Association has not come to a final position on either. In any event, the Association will have to make an application to the Court to seek either, and it will be at this point, having regard to all of the available evidence then, that the Court must determine whether to exercise its discretion to make the relevant order sought. As for the making of any further orders, this will be a matter for the List Judge when the matter is next before the Court.

The Amount of the Protective Cost Order Should be Increased

204. Although the Association seeks to cap its costs if unsuccessful at $20,000, the Court has the power, in the exercise of its discretion to make a maximum costs order, to vary this amount (r 42.4(1) and (4) of the UCPR and order 2 of the notice of motion).

205. In my opinion, having regard to the interests of justice and all the circumstances of this application, it is appropriate to increase this amount to $40,000. This is because:

1. the order sought by the Association is unidirectional;

2. the matter has the potential to become more complex, and therefore, more costly than the parties initially envisaged. That is to say, the matter may necessitate a view and the filing of expert town planning evidence, and therefore, take longer to hear than was originally anticipated by the parties; and

3. as a result of Herbert Smith Freehills entering into a conditional costs agreement with the Association capped in the amount of $20,000, there is an additional sum of $21,874 available to meet any adverse costs order against the Association if it is unsuccessful. Increasing the protective costs order by an additional $20,000 will therefore not stifle the litigation (it was not suggested otherwise by the Association).

Costs of the Motion

206. In light of the conclusion that I have reached above, it is not necessary for me to deal with order 3 of the Association’s notice of motion dealing with the costs of the motion.

206. These being Class 4 proceedings where costs generally follow the event, Laundry Number should, despite its opposition to such an order being made, pay the Association’s costs of the motion.

Conclusion and Orders

208. While a maximum costs order is never lightly made, especially a unidirectional protective costs order, taking into account all of the relevant factors discussed above, and having regard to the interests of justice, I consider that it is an appropriate exercise of my discretion to make such an order, albeit in an amount greater than that sought by the Association.

209. The Court therefore makes the following orders:

1. pursuant to r 42.4 of the UCPR the maximum amount of costs that may be recovered by Laundry Number from the Association in these proceedings is $40,000;

2. pursuant to r 42.4 of the UCPR no costs may be recovered by the Council from the Association in these proceedings;

3. Laundry Number is to pay the Association’s costs of the motion;

4. the exhibits are to be returned; and

5. the matter is to be listed for further directions before the List Judge on 19 October 2018.

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Amendments

11 October 2018 - Correction of Second Respondent's Representation

09 July 2019 - Paragraph to heading

Decision last updated: 09 July 2019