Nonferral Recycling Pty Ltd v EPA (No 2)
[2023] VSC 383
•6 July 2023
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
JUDICIAL REVIEW AND APPEALS LIST
S ECI 2021 02279
| NONFERRAL RECYCLING PTY LTD (ACN 135 601 348) | Plaintiff |
| v | |
| ENVIRONMENT PROTECTION AUTHORITY | Defendant |
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JUDGE: | GARDE J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF JUDGMENT: | 6 July 2023 |
CASE MAY BE CITED AS: | Nonferral Recycling Pty Ltd v EPA (No 2) |
MEDIUM NEUTRAL CITATION: | [2023] VSC 383 |
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COSTS — Final orders — General principles — EPA substantially successful in challenge to clean up notices — Award of costs — Relevant issues — Award of 80% of EPA’s costs at the standard rate.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr H Carmichael with Ms J Dodd | Johnson Winter Slattery |
| For the Defendant | Mr T Howard SC with Ms S Pathan | Victorian Government Solicitor’s Office |
HIS HONOUR:
Introduction
On 2 June 2023, I delivered judgment in this proceeding.[1] I ordered that EPA and Nonferral file and serve outlines of submissions setting out the orders which arise from the judgment and submissions as to costs.[2] Both have done so.
[1]Nonferral Recycling Pty Ltd v Environment Protection Authority [2023] VSC 292 (‘judgment’).
[2]The same expressions and definitions are used in this ruling as are used in the judgment.
Final orders
Both parties have submitted forms of declarations, which they contend should be made. The respective declarations have similar effect. I prefer the form of declaration suggested by the EPA. It is simpler than that suggested by Nonferral and does not attempt to set out the chain of reasoning that led to the making of the declaration. The proper place for the chain of reasoning is in the judgment.
I will make a declaration in the following form:
The Court declares that the baled spoil and aluminium foil packaging offcuts derived from foil manufactured by GlaxoSmithKlein present in a stockpile on the site at 35 Swainston Road, Shepparton East at the time the defendant issued the plaintiff with Clean Up Notice ID 90009938 (‘clean up notice’), dated 24 July 2019 (‘Glaxo foil material’), was not ‘waste’ as defined in the Environment Protection Act 1970 (Vic) at the time the clean up notice was issued, and that the clean up directions set out in clean up notice do not apply to the Glaxo foil material.
The proceeding will be otherwise dismissed.
EPA’s costs submissions
EPA submitted that:
(a) it was the successful party, having succeeded on the most important issues in the proceeding;
(b) almost all of the lay and expert evidence was directed to these issues, including at the trial;
(c) Nonferral was successful in relation to a single, marginal issue relating to the offcuts;
(d) this issue occupied very little time; and
(e) the observations made by the Court in the judgment highlighted the very small part that the issue of the offcuts played in the proceeding.[3]
[3]Judgment, [622]–[632].
Nonferral’s costs submissions
Nonferral submitted that:
(a) there are special circumstances in accordance with the principles stated by the majority of the High Court in Oshlack v Richmond City Council which justify a departure from the ordinary rule that the unsuccessful plaintiff should pay the defendant’s costs on the standard basis;[4]
[4](1998) 193 CLR 72; see also Ruddock v Vadarlis (No 2) (2001) 115 FCR 229; North Australian Aboriginal Legal Aid Service Inc v Bradley (No 2) [2002] FCA 564 (‘Bradley’), [80–[97] (Weinberg J).
(b) the decision of the Court of Appeal in Dasma Environmental Pty Ltd v Environment Protection Authority[5] stated important new law concerning the jurisdictional foundation of the EPA’s exercise of regulatory functions and process under the Environment Protection Act 1970 (Vic) (‘Act’);
[5][2022] VSCA 248 (‘Dasma’).
(c) there was a fundamental public interest in resolving a contested question of statutory construction that impacts the lawful exercise of statutory power;
(d) the proceeding was effectively a test case concerning the fundamental distinction between ‘waste’ on the one hand, and scrap metal/second-hand goods, on the other;
(e) the Court settled the contents of a statement of issues under s 50(2) of the Civil Procedure Act 2010 (Vic) prior to the trial,[6] with the result that the statutory subject matter arising for contravention was under the Act, and not the successor statute, the Environment Protection Act 2017 (Vic) (‘2017 Act’); and
(f) the issues raised by Nonferral were material to its rights and interests in the ordinary course of its continuing business.
[6]Judgement, [18].
As to EPA’s submissions, Nonferral responded:
(a) the trial was conducted in the light of the pleaded declarations of right sought by Nonferral, which were refined and simplified in the revised form of declaratory relief sought in final submissions;
(b) there were factual distinctions between Nonferral’s acquisition of the lead and aluminium materials when compared with the offcuts;[7]
[7]Judgment, [662]–[632].
(c) the characterisation of the offcuts was not a ‘marginal’ issue;
(d) EPA failed to adduce responsive evidence as to the characterisation of the offcuts; and
(e) EPA’s failure to lead separate evidence or argument dealing with the offcuts was the reason why the issue of the offcuts occupied very little time and attention.
Nonferral then submitted that:
(a) while Nonferral sought the benefit of declarations of right in pursuit of private rights, it did so against the EPA, a government body. This weighs in favour of an order requiring it to bear its own costs in public interest litigation;[8]
[8]Referring to Environment Victoria Inc v AGL Loy Yang (No 2) [2023] VSC 86, [9(b)].
(b) both the decisions in Dasma and the judgment will have significant precedential effect in the interpretation of the definition of ‘waste’ in the 2017 Act;
(c) the need to interpret statutory provisions is a matter that can lead to the view that there are ‘special circumstances’ that justify a departure from the usual rules for the award of costs;[9]
[9]Bradley, [85].
(d) considerable costs were incurred by Nonferral in relation to EPA’s late reliance on the witness statement of Ms Karevski, which delayed the presentation of expert evidence in the trial;
(e) EPA continued to press reliance on Ms Karevski’s evidence until the last possible moment but ultimately placed no weight or reliance on her expert evidence;
(f) Nonferral was obliged by EPA to assemble an evidentiary trail of documents to show whether lead materials were delivered to scheduled premises at Braeside or Laverton;[10] and
(g) the issue occupied considerable time and could have been addressed through an agreed statement of facts.
[10]Referring to judgment, [424].
As a result, Nonferral submitted there should be no order as to costs, or if the Court did not accept this submission, an order that Nonferral pay one half of EPA’s costs on the standard basis, or offsetting orders as to costs balancing the parties’ respective entitlements.
Relevant principles
The relevant principles governing the exercise of the court’s discretion with respect to costs have been stated on many occasions. EPA adopted the summary of the relevant principles set out in Melbourne Property Group Investments (MPGI) Pty Ltd as trustee for the MPGI Trust v Knight 43 Martin Street Pty Ltd (No 2),[11] where I stated:
The Court has a broad discretionary power to make orders as to costs. The Court’s discretion is unfettered, but is exercised judicially upon facts connected with the litigation and not by reference to irrelevant or extraneous considerations. Although costs are in the discretion of the Court, the ordinary rule is that in the absence of sound reasons to the contrary a successful litigant should receive his or her costs. The purpose of an order for costs is to compensate the successful party and not to punish the unsuccessful party.
The principle that a party successful in litigation is entitled to an award of costs is grounded in reasons of fairness and policy. If the litigation had not been brought or defended by the unsuccessful party, the successful party would not have incurred the costs which it did.
Where there are a multiplicity of issues and mixed success has been enjoyed by the parties, the Court may take a pragmatic approach to costs, taking into consideration the success or lack of success of the parties on an issue basis. Such an approach will primarily be a matter of impression and evaluation. The Court also has the power to set the division of costs to reflect to an appropriate degree the success of the parties on the relevant issues, but also to reflect, at the end of the day, that the plaintiff was successful.[12]
[11][2022] VSC 195, [14] – [16].
[12]Citations omitted.
I will apply these principles.
Analysis
I now turn to the most significant matters raised by the parties for consideration in the exercise of the discretion as to costs. They were:
(a) degree of success;
(b) public interest;
(c) the evidence of Ms Karevski; and
(d) transport and consignment evidence.
Degree of success
There can be no doubt that EPA was the successful party on the main issues relating to lead and aluminium materials. These issues attracted very extensive lay and expert evidence in a trial which continued for 18 sitting days. EPA called six lay witnesses, four of whom were from interstate, and three expert witnesses. The report and evidence of one expert witness (Ms Karevski) was not ultimately relied on. Nonferral called three lay witnesses, including Mr Rigoli, and six expert witnesses. The parties relied on affidavits and expert reports, and a court book and supplementary court book of around 6,000 pages. Nonferral was successful in showing that its baled aluminium offcuts were not ‘waste’, which occupied only a minor part of the judgment, while EPA demonstrated that the lead and aluminium materials were ‘waste’. Overall, EPA was the successful party on the issues which occupied most time and cost in of the proceeding. Nonferral was successful as to an issue of much less importance, but which still had to be decided.
Public interest
The proceeding arose out of clean up notices served by EPA on Nonferral on 11 April 2017 and 24 July 2019 relating to Nonferral’s business activities conducted at 35 Swainston Road, Shepparton East. Nonferral complied with the notices in some respects but failed to remove the lead and aluminium materials as required by the 2017 and 2019 notices. EPA issued criminal proceedings against Nonferral and Mr and Ms Rigoli in the Magistrates’ Court in July 2019 for failing to comply with the 2017 notice. This proceeding was, by consent, adjourned sine die at a directions hearing on 28 June 2021 on Nonferral’s application when Nonferral indicated that it intended to bring Supreme Court proceedings challenging the 2017 notice.
Likewise, criminal proceedings brought by EPA in January 2021 in relation to Nonferral’s failure to comply with the 2019 notice were adjourned sine die in July 2021 shortly after the commencement of this proceeding. The proceeding sought a range of declarations, including that the 2017 and 2019 notices were beyond power and unenforceable.
The proceeding was intended to protect the private interests of Nonferral and the Rigolis from criminal prosecutions brought by EPA against them. It sought to protect Nonferral’s business interests as a dealer in metals and other materials. It was not a test case, or a proceeding issued by Nonferral in the public interest, or a proceeding issued and conducted for altruistic reasons.
While there may be a level of environmental and industry interest in the meaning and construction of the definition of ‘waste’ and related provisions as found in the Act, this does not alter the fact that the proceeding was issued and conducted to protect the private interests of Nonferral and the Rigoli family.
Evidence of Ms Karevski
On the fourth and fifth days of the trial, EPA indicated that it sought to rely on the report and witness statement of Ms Karevski, a laboratory analyst. The late production of a report and affidavit of Ms Karevski filed 16 November 2022 caused delay in the conduct of the trial, and the need for the report and affidavit to be considered by the expert witnesses retained by both Nonferral and EPA. Ultimately, EPA decided not to rely on Ms Karevski’s report and evidence.
I accept Nonferral’s submission that it was occasioned additional costs by reason of the late filing and reliance on Ms Karevski’s evidence, including costs incurred in:
(a) reviewing Ms Karevski’s report, affidavit and associated materials;
(b) briefing experts to respond to Ms Karevski’s report, including a further expert conclave and joint report;
(c) preparation and appearances by counsel to cross-examine Ms Karevski when the trial resumed in February 2023; and
(d) preparation of closing address in respect of Ms Karevski’s evidence.
In my view, it is fair and just to make allowance in any costs order against Nonferral for the costs and expenses incurred by it in relation to Ms Karevski’s evidence.
Transport and consignment evidence
Prior to and during the trial, Nonferral spent considerable time in preparing extensive documentary evidence of communications between Rod Burgess of Global and George Hatzimihalis of Global Resource and EPA licensing officers as to the source and transportation of the lead materials and the related statutory consignment authorisations and approvals issued by EPA. Nonferral submitted that it subsequently demonstrated that most of the loads received at the unlicenced premises at Shepparton were first received at Braeside or Laverton, and that EPA did not cross-examine Mr Burgess or Mr Siapkas to any significant degree on these matters. It said that it would have been better if the parties had prepared an agreed statement of facts on these matters.
I am not satisfied that any deduction or discount should be allowed against the award of costs to EPA by reason of these matters. There was a significant amount of doubt as to what had happened between Global and Global Resource and Nonferral which gave rise to the receipt of large quantities of lead and aluminium materials at the unlicenced premises at Shepparton. While EPA gave approval for the materials to be transported to the Victorian licensed premises at Braeside and Laverton, they ultimately finished up elsewhere.
Nonferral desired to prove as part of its case concerning the lead and aluminium materials that they passed through the licensed premises before being redirected to the unlicensed premises. How the redirection occurred was relevant to Nonferral’s case. Ultimately Nonferral’s case failed because the lead and aluminium materials were ‘waste’ as defined in s 4(1) of the Act. I am not persuaded that any allowance should be made in favour of Nonferral by reason of the costs incurred by Nonferral relating to transport or consignment matters.
Conclusion
I am satisfied that EPA, as the largely successful defendant in the proceeding, is entitled to the costs of the proceeding at the standard rate subject to any proper allowances in favour of Nonferral. I am also satisfied that some allowance should be made for Nonferral’s success concerning the baled aluminium offcuts, and for the additional costs occasioned to Nonferral by the late introduction of Ms Karevski’s evidence on which EPA did not ultimately rely.
In making allowance in the costs order it is appropriate to deduct a proportion of the costs to be awarded to EPA rather than make offsetting cost orders. Offsetting cost orders would give rise to a difficult and complex taxation, as there would be no clear distinction or demarcation between the costs ordered in favour of the opposing parties. A global approach is much to be preferred. Making due allowance for the matters I have mentioned, I will make an order for EPA’s costs of and incidental to the proceeding to be taxed by the Costs Court at the standard rate and when taxed be paid as to 80% by Nonferral.
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