Randren House Pty Ltd v Water Administration Ministerial Corporation (No 5)

Case •

[2019] NSWLEC 63

•

16 May 2019

No judgment structure available for this case.

Land and Environment Court


New South Wales

Medium Neutral Citation: Randren House Pty Ltd v Water Administration Ministerial Corporation (No 5) [2019] NSWLEC 63
Hearing dates: 14 May 2019
Date of orders: 16 May 2019
Decision date: 16 May 2019
Jurisdiction:Class 4
Before: Molesworth AJ
Decision:

See orders at [72]

Catchwords: COSTS - applicants unsuccessful in judicial review proceedings - whether departure from usual costs rule justified - whether litigation can be characterised as public interest litigation - whether additional circumstances exist - whether there are any countervailing considerations - public interest not established
COSTS - successful respondents seek award of costs on indemnity basis - offer of compromise - offer to forgo costs - whether offer truly a compromise - relevance of alleged “little or no prospect of success” - whether conduct of proceedings unreasonable - applicants ordered to pay indemnity costs since offer date
Legislation Cited: Civil Procedure Act 2005 (NSW), ss 11, 98
Land and Environment Court Rules 2007 (NSW), r 4.2
Uniform Civil Procedure Rules 2005, rr 1.7, 20.26, 42.1, 42.15A, 59.3
Water Management Act 2000, s 336
Cases Cited: Anderson v NSW Minister for Planning (No 2) [2008] NSWLEC 272
Arnold v Minister Administering the Water Management Act 2000 ((No 6) [2013] NSWLEC 73
Buddhist Society of Western Australia (Inc) v Shire of Serpentine-Jarrahdale [1999] WASCA 55
Calderbank v Calderbank [1975] 3 All ER 333
Caroona Coal Action Group Inc v Coal Mines Australia Pty Ltd (No 3) [2010] NSWLEC 59; (2010) 173 LGERA 280
Engadine Area Traffic Action Group Inc v Sutherland Shire Council (No 2) [2004] NSWLEC 434; (2004) 136 LGERA 365
Fabre v Lui (No 2) [2015] NSWCA 312
Harvey v Minister Administering the Water Management Act 2000; Tubbo Pty Ltd v Minister Administering the Water Management Act 2000 (No 2) [2008] NSWLEC 213
Hastings Point Progress Association Inc v Tweed Shire Council (No 3) [2010] NSWCA 39
Maurice Tarabay v Fifty Property Investments Pty Ltd [2009] NSWSC 951
Mees v Kemp (No 2) [2004] FCA 549
Minister for Planning v Walker (No 2) [2008] NSWCA 334
Muswellbrook Shire Council v Hunter Valley Energy Coal Pty Ltd (No 4) [2019] NSWLEC 56
Nature Conservation Council of New South Wales Inc v Minister Administering the Water Management Act (2005) 137 LGERA 320 [2005] NSWCA 9
Oshlack v Richmond River Council (1998) 193 CLR 72, [1998] HCA 11
Randren House Pty Ltd v Water Administration Ministerial Corporation [2017] NSWLEC 151
Randren House Pty Ltd v Water Administration Ministerial Corporation (No 3) [2018] NSWLEC 106
Randren House Pty Ltd v Water Administration Ministerial Corporation (No 4) [2019] NSWLEC 5
Save the Ridge Inc v Commonwealth [2006] FCAFC 51
Sewell v Zelden (No. 2) [2010] NSWSC 1181
Wentworth v Rogers [1999] NSWCA 403
Category:Costs
Parties: Randren House Pty Ltd (First Applicant)
Paul Andrew Andrews (Second Applicant)
Water Administration Ministerial Corporation (First Respondent)
State of New South Wales (Second Respondent)
Minister Administering the Water Management Act 2000 (Third Respondent)
Representation:

Counsel:
Mr P E King, barrister (Applicants)
Ms Z Heger, barrister (Respondents)

  Solicitors:
Andrews & Associates (Applicants)
Crown Solicitor’s Office (Respondents)
File Number(s): 161999 of 2016
Publication restriction: No

TABLE OF CONTENTS

Background

Overview of the parties’ respective positions.

The power of the Court to order costs

Were the proceedings brought in the public interest?

Determination of the “public interest” question

Should the Respondents’ costs be paid on an indemnity basis?

Poor prospects of success as a basis for an indemnity costs order

Unreasonable Conduct as a basis for an indemnity costs order

Orders

JUDGMENT

Background

  1. The primary judgment in this matter was handed down by me on 15 February 2019, being Randren House Pty Ltd v Water Administration Ministerial Corporation (No 4) [2019] NSWLEC 5 (Randren House (No 4)). For the background to these proceedings, reference should be had to that primary judgment and so it is unnecessary to repeat it in this judgment.

  2. The eighth order in Randren House (No 4) reserved the costs of the overall proceedings and set up a process by which the parties could confer in order to propose appropriate further orders with respect to the making of submissions on the question of costs, including the timing thereof. The outcome of this process led to orders made by the Registrar of the Court on 4 March 2019 requiring the filing of any evidence and submissions by each party, on specified dates, in support of their respective applications regarding costs. Each party also had leave to reply to the other parties’ submissions.

  3. Subsequently, both the Applicants and Respondents filed submissions on costs and the Applicants filed submissions in reply. The Respondents also filed an affidavit of Mr Patrick Mullane, affirmed 18 April 2019. At the hearing, the affidavit of Mr Mullane was read into evidence and an exhibit marked “Exhibit PM-2” was tendered into evidence. Exhibit PM-2 comprised a large folder of copy documents, amounting, in total, to some 425 pages of material.

  4. It is to be noted that the issues regarding costs determined in this judgment are apart from, and additional to, other cost determinations which were made by me pursuant order 2 and order 4 as set out at the conclusion of Randren House (No 4). Those cost orders respectively related to two applications made after the primary hearing had closed and judgment was reserved. The first was with respect to an application made by the Applicants on 9 August 2018 to file supplementary submissions in reply, which I refused. The second was with respect to a motion, filed 14 September 2018, brought by the Applicants to reopen their case in order to file supplementary evidence prepared by Mr Paul Andrews (the Second Applicant) and Mr James Purcell (additional to their affidavits and oral evidence received during the primary hearing). The latter application was the subject of a further day’s hearing on 28 September 2018. This motion was also dismissed in the primary judgment. This judgment on costs does not readdress the cost issues determined in Randren House (No 4), the subject of orders 2 and 4. Those orders remain in place.

Overview of the parties’ respective positions.

  1. The parties sought orders at the opposite ends of the costs spectrum.

  2. Despite the Applicants being wholly unsuccessful as far as relief is concerned, failing to obtain any of the orders they sought, whilst acknowledging that the general rule is that a wholly successful party should receive their costs unless good reason is shown to the contrary, they submitted that the proceedings constituted public interest litigation and so, consequently, they were entitled to the benefit of an order which simply provides for each party to pay their own costs of the proceedings.

  3. In stark contrast, in circumstances where the Respondents were entirely successful, the Respondents submitted that the proceedings could not be characterised as having been brought in the public interest. They submitted that the circumstances do not justify a departure from the ordinary rule that costs follow the event. The Respondents further submitted that the Applicants should pay the Respondents’ costs on an indemnity basis under s 98 of the Civil Procedure Act 2005 (the Civil Procedure Act): either from the commencement of the proceedings; or, alternatively, on an ordinary basis up to and including 21 August 2017, being the date that an Offer of Compromise was made in accordance with Pt 20 r 20.26 of the Uniform Civil Procedure Rules 2005 (UCPR), and on an indemnity basis thereafter.

The power of the Court to order costs

  1. The power of the Court to order costs is in s 98 of the Civil Procedure Act. Section 98(1) provides:

(1)   Subject to rules of court and to this or any other Act:

(a)   costs are in the discretion of the court, and 

(b)   the court has full power to determine by whom, to whom and to what extent costs are to be paid, and 

(c)   the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis.

  1. The relevant rules of court are in Pt 42 of the UCPR. Part 42 r 42.1 provides:

Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs.

  1. The Land and Environment Court has adopted specific court rules, including in relation to costs of proceedings in certain classes of its jurisdiction, which can prevail over r 42.1 of the UCPR to the extent only of any inconsistency between them: Civil Procedure Act, s 11 and UCPR, r 1.7 and Sch 2. Part 4 r 4.2 of the Land and Environment Court Rules 2007 (the Rules) is an illustration. Rule 4.2(1) provides:

(1)   The Court may decide not to make an order for the payment of costs against an unsuccessful applicant in any proceedings if it is satisfied that the proceedings have been brought in the public interest.

  1. This rule is only applicable to proceedings in Class 4 of the Court’s jurisdiction; therefore, it is applicable to these proceedings.

  2. Briefly stated, the Court preserves its discretion to make an order other than “costs follow the event” if it considers it appropriate to do so. The parties before me do not dispute that the Court is so empowered and agree that one factor affecting the discretion is whether the proceedings have been brought in the public interest.

Were the proceedings brought in the public interest?

  1. The Applicants seek an order that each party bear its own costs on the basis that the proceedings were brought in the public interest. They rely r 4.2 of the Rules. Although unclear, the Respondents’ counsel submits that the Applicants were also putting an alternative submission that the Court should make the order under s 98 of the Civil Procedure Act and/or r 42.1 of the UCPR, based on common law principles.

  2. The Respondents relied upon the decision of Lloyd J in Engadine Area Traffic Action Group Inc v Sutherland Shire Council (No 2) [2004] NSWLEC 434; (2004) 136 LGERA 365, in which the Court summarised five considerations relevant to determining whether the litigation could be characterised as public interest litigation. Lloyd J’s approach has been cited many times with approval, most recently by Robson J in Muswellbrook Shire Council v Hunter Valley Energy Coal Pty Ltd (No 4) [2019] NSWLEC 56 (Muswellbrook) at [57]. Preston CJ, in Caroona Coal Action Group Inc v Coal Mines Australia Pty Ltd (No 3) [2010] NSWLEC 59; (2010) 173 LGERA 280 at [38]-[46], set out the five considerations and then provided a useful analysis of their application:

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.

  1. The Respondents correctly submitted that the case law was well established that, for the purposes of s 98 and/or r 42.1, characterising proceedings as being brought in the “public interest” does not, in and of itself, necessarily constitute special circumstances warranting departure from the ordinary rule that costs follow the event. Correctly, in my opinion, reliance was placed up Minister for Planning v Walker (No 2) [2008] NSWCA 334 at [9] and Hastings Point Progress Association Inc v Tweed Shire Council (No 3) [2010] NSWCA 39 at [26] (Hastings Point). Again correctly, the Respondents submitted that something more is required, referring to Anderson v NSW Minister for Planning (No 2) [2008] NSWLEC 272 at [8]-[10] (Anderson). With respect to Hastings Point, the Respondents relevantly extracted the following passage from the judgment of Basten JA (with whom McColl JA agreed), wherein, at [11], it was stated that, although the proceedings were brought predominantly in the public interest, the ordinary rule should nevertheless apply having regard to the following:

There are three particular factors which militate in this case, against departure from that rule. First, the defendant is a commercial enterprise, and not the State or a governmental authority. Secondly, the question of public interest was not one having broad ramifications for the community at large, or even for the protection of the natural environment. It involved a relatively discrete point of interpretation involving the operation of a local environmental plan in the context of the EP&A Act. It may thus be contrasted with a case, such as Ruddock v Vadarlis, which involved issues of constitutional importance regarding the executive power of the Commonwealth, on the one hand, and issues of liberty of the individual, on the other. Thirdly, the matter was not entirely without consequence for the private interests of members of the Association. Most, if not all, were local residents and overdevelopment would affect the amenity of the area within which they lived and owned property. Although they were not personally applicants in the proceedings, nor liable for the debts of the incorporated Association, for this purpose one is entitled to look behind the legal structure of the applicant to identify whose interests, both legal and financial, may be affected in a practical sense.

  1. From Anderson, the Respondents extracted the following pertinent passage wherein Biscoe J observed, at [11]:

The new LECR r 4.2(1) does not prescribe that, in addition to the public interest, there must be a factor leading to the conclusion that there are special circumstances justifying departure from the usual costs rule. Hence, such special circumstances are not a mandatory prerequisite to the exercise of the discretion to depart from the usual order as to costs in public interest cases. However, in my opinion, the discretion under the new rule is only enlivened if departure from the usual costs order is justified. The public interest consideration alone may be of such moment or magnitude as to ground that justification. An example might be an unsuccessful proceeding, based on a good arguable case, brought to stop or limit the development of one of the last habitats of an endangered species. In most cases, however, I expect it would also be necessary to establish special circumstances additional to the public interest in order to enliven the discretion. In such cases the practical application of the new rule would not be different from the pre-existing position. For example, in F & D Bonaccorso Pty Ltd v City of Canada Bay Council (No 5) [2008] NSWLEC 235 the case properly proceeded upon the common ground that special circumstances had to be shown.

  1. Thus, the Respondents correctly submitted, where the Court concludes that proceedings were brought in the public interest, for the purposes of r 4.2 that may, but will not necessarily, be enough to justify a departure from the ordinary rule. As Biscoe J observed, in most cases it would also be necessary to establish special circumstances additional to the public interest in order to enliven the discretion. Correctly, the Respondents submitted that the Applicants bear the onus in this regard.

  2. The Respondents also pointed out that it has been said that “the courts must be very careful to see that the concept of public interest litigation does not become an umbrella for the exercise of discretion as to costs on an unprincipled and haphazard and unjudicial manner” - Hastings Point at [48] citing Buddhist Society of Western Australia (Inc) v Shire of Serpentine-Jarrahdale [1999] WASCA 55; Mees v Kemp (No 2) [2004] FCA 549 at [19]; Save the Ridge Inc v Commonwealth [2006] FCAFC 51 at [6]. In Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11, as part of his principle (6) at [134] (page 123), Kirby J pointed out that the authorities made it clear “that litigants espousing the public interest are not thereby granted an indemnity for costs or a ‘free kick’ in litigation.”

  3. The Respondents submitted that the Applicants challenged the validity of several decisions that affected the Applicants only, namely:

  1. paragraph 9A of the Second Further Amended Points of Claim (SFAPOC), filed on 10 July 2018, challenged the First Respondent’s decision, made on 28 September 2012, to vary the conditions of Randren House Pty Ltd’s (Randren) licence;

  2. paragraph 9B of the SFAPOC challenged the alleged decision to “place the Applicant’s water source comprising the billabong in the Lake paddock … into the proposed Murrumbidgee Western Water Source”; and

  3. paragraph 9D challenged the decision by the State of New South Wales (the Second Respondent) to “impose conditions and/or not include discretionary conditions in respect of WAL 33313”.

  1. Consequently it was said that the Applicants’ contention that the proceedings were brought in the public interest could only be made in relation to the balance of the allegations: namely, paragraphs 8A, 8B, 8C, 8D, 8E, 9C, 9E, 9F, and 12. However, the Respondents further submitted that, even in respect of those pleadings, the Applicants have not demonstrated, as they must, given that they bear the onus, the proceedings were brought in the public interest. The Respondents relied on five arguments, which I now set out in full, to which I respond seriatum.

  2. First, the Respondents submitted that the mere fact that those allegations raised questions of the proper construction of the Water Management Act 2000 (the Water Management Act), and the Minister’s duties thereunder, does not, per se, establish that the proceedings were brought in the public interest. In Anderson, Biscoe J said at [13]:

Much civil litigation concerns the public interest, including most constitutional and administrative law matters and some ordinary civil actions: Oshlack at [71] per McHugh J. If characterisation as public interest litigation were sufficient reason to depart from the usual order as to costs, that order would cease to be usual in large areas of litigation.

  1. I agree with the Respondents’ summation and adopt Biscoe J’s observation in Anderson. To argue that legislation should be correctly adhered to is at the core of most litigation wherein litigants argue that their preferred interpretation ought to be adopted as being correct. It is probably a task asked of most judges in most cases. To arrive at a clear or understandable interpretation of legislation, which may give guidance in practice to those subsequently seeking to, or who are required to, understand it, will always be in the public interest. Is that outcome, bringing clarity to the application of the water management laws to the particular circumstances of the Applicants, the something special or something extra which is necessary to confirm public interest? I do not believe so. In Randren House (No 4), I merely confirmed how the Water Management Act is to be interpreted, taking the lead, as I must, from prior judgments in which the legislation was examined, in particular Arnold v Minister Administering the Water Management Act 2000 (No 6) [2013] NSWLEC 73 and Nature Conservation Council of New South Wales Inc v Minister Administering the Water Management Act (2005) 137 LGERA 320 [2005] NSWCA 9.

  2. The Applicants’ counsel took a contrary view, submitting that the Court’s decision was “a very important decision that your Honour had to make” (Transcript 3:22-32). In his initial written submissions on costs, at paragraph 4, counsel for the Applicants expressed the view, “the case is the first of its kind in a Court dedicated to environmental issues in particular water issues which are of great current significance”. The Court disagrees: it is neither the first of its kind, nor were the findings particularly novel, necessarily restricted as they were to the pleadings in a Class 4 judicial review as they related to the particular circumstances of the water licence held by the Applicants within the unregulated water management system.

  3. I am cognizant of the discussion in previous cases which confirm that there is not a rigid rule requiring special circumstances under r 4.2(1); rather, there should be a justifiable case to depart from the usual costs order. Biscoe J explained, in Anderson at [10]-[11], his understanding of the task required of the Court in exercising its discretion.

10   Yet even the general principle that there has to be something more than the public interest is not rigid; for the nature of the public interest, of itself, may be of such moment or magnitude as to be sufficient to depart from the usual order as to costs. As noted in Oshlack (1998) 193 CLR 72at [42], Liversidge v Anderson [1942] AC 206 at 283 is a celebrated example of “a matter of very general importance” - the liberty of the subject in time of war - in which it was inappropriate for the successful defendant (the Secretary of State) to seek costs against the incarcerated, unsuccessful plaintiff. There was no suggestion that any additional factor was necessary.

11 The new LECR r 4.2(1) does not prescribe that, in addition to the public interest, there must be a factor leading to the conclusion that there are special circumstances justifying departure from the usual costs rule. Hence, such special circumstances are not a mandatory prerequisite to the exercise of the discretion to depart from the usual order as to costs in public interest cases. However, in my opinion, the discretion under the new rule is only enlivened if departure from the usual costs order is justified. The public interest consideration alone may be of such moment or magnitude as to ground that justification. An example might be an unsuccessful proceeding, based on a good arguable case, brought to stop or limit the development of one of the last habitats of an endangered species. In most cases, however, I expect it would also be necessary to establish special circumstances additional to the public interest in order to enliven the discretion. In such cases the practical application of the new rule would not be different from the pre-existing position. For example, in F & D Bonaccorso Pty Ltd v City of Canada Bay Council (No 5) [2008] NSWLEC 235 the case properly proceeded upon the common ground that special circumstances had to be shown.

  1. At [13], in Anderson, Biscoe J went further, highlighting that “public interest” is a nebulous concept.

13   “The public interest” is a nebulous concept unless given further content of a legally normative nature: Oshlack v Richmond River Council (1998) 193 CLR 72 at [30] per Gaudron and Gummow JJ. Much civil litigation concerns the public interest, including most constitutional and administrative law matters and some ordinary civil actions: Oshlack at [71] per McHugh J. If characterisation as public interest litigation were sufficient reason to depart from the usual order as to costs, that order would cease to be usual in large areas of litigation. The expression “in the public interest” requires a consideration of the subject matter, scope and purpose of the statutory enactment in which it is contained: O’Sullivan v Farrer (1989) 168 CLR 210 at 216 per Mason CJ, Brennan, Dawson and Gaudron JJ.

  1. The second proposition put on behalf of the Respondents was that, although the Applicants assert that proceedings were primarily brought for the public interest in “preventing inundation damage along Yanco Creek then and into the future” (Applicants’ submissions on costs at paragraph 13), this is not established on the evidence and in some respects is contradicted by the nature of the relief sought. In particular, the Respondents drew the Court’s attention to the following relevant considerations:

  1. as noted above, paragraphs 9A and 9D concerned decisions, or alleged decisions, concerning the Applicants only. They concerned conditions of Randren’s water licence, and whether or not those decisions were set aside would have no bearing on any alleged environmental damage arising from the operation of Yanco Creek. In other words, even if the Applicants had been successful in setting aside these decisions, it would not have addressed any alleged environmental damage. The only effect they would have had is to convert Randren’s licence from an unregulated licence to a regulated licence;

  2. paragraph 9B related to whether or not the Lake Paddock water source was placed within the Murrumbidgee Western Water Source (the MWWS), which, in turn, impacted on whether it was dealt with under the regulated or unregulated water sharing plans. Again, whether or not it was valid to deal with the Lake Paddock in this way can have no bearing on any alleged environmental damage; rather, it only affected whether the licence was treated as a regulated or unregulated licence; and

  3. paragraphs 9C, 9E and 9F concerned the validity of decisions to make or extend the various unregulated and regulated water sharing plans. As the terms of those paragraphs reveal, the complaint was that the regulated water sharing plans were made without including the Lake Paddock water source within its scope. Again, even if the Applicants had been successful in having those decisions declared invalid, that would not have halted any alleged environmental damage. Rather, it would have only affected whether the licence was treated as a regulated or unregulated licence

  1. The Respondents correctly pointed out that these matters are reflected in the Court’s observations in Randren House (No 4) at [534]-[535]:

534 The Applicants repeated, throughout the ARS, that the Applicants’ long maintained concern was with respect to environmental harm to the dependent ecosystem, which the Court accepts on the evidence as including Lake Paddock. However, with the Court accepting the evidence of Mr Purcell (as it does) regarding the harmful consequences of continual inundation, and doing so after carefully considering submissions to the contrary from the Respondents, the mere fact that concern was expressed does not change a critical fact. As the Court finds it, whether the waters flowing along Yanco Creek are regulated or unregulated, or whether Lake Paddock is either within or outside the regulated system, there is no material differential when it comes to the environmental protection concerns expressed by the Applicants. Likewise, there is no material differential with respect to obligations applying to decision-makers under the Water Management Act whether the water source concerned is within a regulated or unregulated system.

535   In circumstances where there has been a failure, as the Court has found, on the part of the Applicants to establish that there is a differential, as far as the environment is concerned, between the extant circumstances of Lake Paddock being within the unregulated water management system as distinct from being placed within the supposedly more desirable regulated system, the Court has had cause to reflect whether there is in fact truth in the Respondents’ suggestions, set out earlier at [532] and [533], that the underlying concern is more about securing a more valuable tradeable water right. At first the Court surmised that there was an “elephant in the room”, the desire to have more tradeable water rights that was being adroitly avoided, however, with the Applicants’ failure to demonstrate why, environmentally, there is a material distinction between the two systems, that elephant’s presence is now palpably more obvious.

  1. The Respondents’ third proposition focused on the pecuniary objectives of the Applicants which emerged in the course of the primary hearing. The Respondents asked the Court to note that Randren was the holder of the water licence (Applicants’ Tender Bundle, Exhibit R, pages 1-6, 8), and thus had a direct financial interest in whether it was categorised as unregulated or regulated. The Second Applicant is a director and shareholder of Randren, and thus also had a direct interest in that issue.

  2. Relying upon the affidavit of Mr Mullane, affirmed 18 April 2019 (see earlier at [3]), it was submitted that a regulated licence of the kind which the Applicants sought to have is potentially of significant value - perhaps in the order of $2 million: see affidavit of Mr Mullane at paragraph 53. The Court notes that the affidavit of Mr Mullane was read into evidence without objection from the Respondents (Transcript 14 May 2019, 11:14), and counsel for the Respondents did not seek to cross-examine Mr Mullane on his evidence.

  3. The Respondents also submitted that, in the course of the primary hearing, the Applicants’ expert, Mr Hutchison, had accepted that regulated entitlements were much more valuable and easier to trade than unregulated entitlements (primary hearing, Transcript 115.41-43]. Although the Second Applicant claimed, in his affidavit, that the denial of a regulated entitlement would lead to environmental damage (affidavit of Mr Paul Andrews, 28 January 2016 at paragraph 32), the Respondents reminded the Court that, under cross-examination, he was unable to articulate how the status of the licence would affect the degree of environmental damage (primary hearing, Transcript 163.38-164.14). The Respondents further reminded the Court of the Respondents’ oral submissions during the primary hearing, extracted at [532]-[533] in Randren House (No 4), in which a letter from the Applicants to the Minister argued the case for their property to be brought within the regulated water system without mentioning any environmental concerns. On the basis of this material, the Respondents submitted that the dominant purpose in bringing the proceedings, at least insofar as paragraphs 9A to 9F of the SFAPOC are concerned, was the Applicants’ private interests in the value of the water licence.

  4. In the light of the foregoing, the Court considers that various passages in the judgment of Jagot J, in Harvey v Minister Administering the Water Management Act 2000; Tubbo Pty Ltd v Minister Administering the Water Management Act 2000 (No 2) [2008] NSWLEC 213 (Harvey), are somewhat apposite to the case before me. Recast to fit the precise circumstances of the case before me, Jagot J’s conclusions in Harvey could be my conclusions in this case with respect to the public interest argument of the Applicants:

4 The Minister submits that the important purpose of the usual order as to costs should not be overlooked, referring to the observations in Oshlack v Richmond River Shire Council (1998) 193 CLR 72 at [67]). According to the Minister: - (i) the proceedings cannot be viewed as public interest litigation. The applicants brought the proceedings for their private interests, specifically, in order to have a much agonised over plan declared invalid so that the applicants might obtain a larger share of a limited natural resource that would inevitably be at the expense of others, (ii) comparison with the factors considered relevant in the first instance decision in Oshlack (recorded in (1998) 193 CLR 72 at [20]) exposes the difference in the circumstances in that and the present cases, (iii) the applicants’ case was arguable and interesting but the Minister was a mere respondent to the proceedings. The Minister did not obtain any benefit by defending the proceedings either in the sense referred to in CSR v Eddy or otherwise. But for the applicants’ challenge there was no uncertainty about the legislative provisions so the benefit argument was circular …

5   …

6   The applicants in the present case sought to vindicate their asserted entitlement to a greater share of the groundwater source than allocated to them under the water sharing plan as amended by the amendment order. As the Minister submitted, unlike the facts in Oshlack: - (i) on the evidence it cannot really be doubted that the applicants’ prime motivation was their own commercial position, (ii) the applicants had a substantial amount to gain from the proceedings, and (iii) it is not apparent that a significant number of members of the public shared the applicants’ stance about the water sharing plan and its amendment (although some did, as the other proceedings pending in this Court disclose). In these circumstances the real issue seems to be whether the proceedings resolved questions of sufficient general importance as to the future interpretation and administration of the water management provisions so as to found an exercise of discretion on costs in the applicants’ favour. The closest analogy in this Court is probably the decision in Engadine Area Traffic Action Group Inc v Sutherland Shire Council (No 2) (2004) 136 LGERA 365 (at [21] in particular). See also Save the Ridge Inc v Commonwealth (2006) 230 ALR 411 at [12].

7 I accept that the procedural fairness arguments in the present proceedings raised matters of importance to the future administration of the plan making part of the Water Management Act. Accordingly, there were “important and difficult questions of law affecting many people” raised in and resolved by the litigation (Save the Ridge at [14] citing Construction, Forestry, Mining and Energy Union v Queensland Coal and Oil Shale Mining Industry (Superannuation) Ltd (2003) 132 FCR 516). I do not consider that fact, or any of the other matters relied on by the applicants, sufficient to deprive the Minister of the benefit of an order for costs. The questions, while important to this area of resource management and difficult, were not novel and did not involve any fundamental category of rights. These considerations must be weighed with the matters referred to above, namely, that the applicants were seeking to vindicate rights of a commercial character, stood to gain substantially from the litigation, in circumstances where it is by no means apparent that many members of the public or people affected by the water sharing plan also adopted the applicants’ stance that the applicants are entitled to be allocated a greater share of the groundwater. Further, the Minister’s legitimate interest as a party who has successfully defended the challenge to the validity of the amendment order to be compensated for the costs that would not otherwise have been incurred is also relevant.

8   The circumstances of the present proceedings do not indicate that it is appropriate to make any order other than the usual order as to costs.

  1. Lest my adoption of Jagot J’s conclusion in Harvey be interpreted as somewhat harsh, I remain of the view that had the Applicants been truly concerned for the environment of Lake Paddock, as perhaps the Second Applicant originally sincerely expressed his concerns, it nevertheless remains a fact that the Applicants subsequently chose not to comply with a licence condition to construct a regulator to stem the flow of waters from Yanco Creek. If the concern for the environment was the primary consideration or motivation, then any reasonable person would have at least trialled the regulator control method suggested by the authorities. I restated my concerns during the costs hearing, commencing at Transcript 5:47

HIS HONOUR: But I also said, Mr King, in my judgment that if in fact there had been compliance with the requirement, the regulator had been put in place and it failed to meet the measure that it was designed for, then you had - your clients had an opportunity to go back and say, “Well look, the regulator approach isn’t working.” Because your clients, in effect, failed to test what was required of them under their condition, no-one was the wiser.

KING: That’s right. What your Honour has basically said is that we adopted the wrong approach.

HIS HONOUR: You didn’t comply with the law in a sense that there was a requirement.

  1. I have formed the view that the Applicants’ decision not to install the required regulator was far more than adopting a “wrong approach” and, for the purposes of this cost judgment, it was far more than simply a disinclination to comply with the requirements of a condition of their licence; rather, it was a revealing indicator of priorities. Rather than take a recommended measure that might have protected the environment of Lake Paddock, to at least trial it and see if it worked, the Applicants decided to pursue a course, year after year, of challenging the status of their water licence. Continually complaining that their licence was not in the regulated water management system, as distinct from the unregulated system, reveals to me that, in truth, their primary concerns were not as Mr King has described them, but, rather, personal self‑interest in securing a more tradeable commodity. Along the way, as the environmental conditions of Lake Paddock continued to deteriorate, a fact which I have accepted on the evidence, the Applicants may have come to regret that change; nevertheless, they simply continued to blame the water management authorities for not placing the waters (specifically the water body known as Lake Paddock) the subject of their unregulated water system licence into the regulated system. The wider “public interest” of the course the Applicants chose to pursue is not apparent.

  2. The fourth proposition put by the Respondents was that there is no evidence that there were other landholders on the Yanco Creek who were affected by any of the impugned decisions in the same or similar way as the Applicants alleged to have been affected. It was submitted that absence of evidence counts against the proceedings having been brought in the public interest on behalf of some or all landholders on the Yanco Creek. The Respondents submitted that, even if the Court were to infer that decisions regarding the operation of Yanco Creek would have affected other landholders on the creek (eg paragraphs 8A to 8D of the SFAPOC), there is also no evidence that the complaints made by the Applicants represented the views of other landholders. The Applicants ultimately sought a declaration that the Yanco Creek be operated at a lower level. The Court accepts that it is possible that other landholders could have opposed such relief, as it may have adversely affected the water available to those landholders to irrigate their properties (noting that while the Applicants did not use the water on their land for irrigation (primary hearing, Transcript 151.48-49; 173.8-11), other landholders likely did).

  3. Although the Court ruled against the Applicants reopening their case after judgment was reserved in the primary hearing, in order to reach that conclusion at [97] of Randren House (No 4), and so disallow the admission of new evidence, it is apparent from that judgment, at [80]-[96], that the Court had to consider the material to the extent necessary in order to conclude whether or not to allow or dismiss the motion. The evidence of the Second Applicant, in his affidavit of 3 September 2018 (at paragraph 8) (which was the subject of the Applicants’ unsuccessful application to reopen its case), was that, when faced with a proposal said to affect the water levels on Yanco Creek, “[s]ome but not all of the local farmers were concerned about loss of water to their farms …”. Other landholders may also have taken a different view as to whether lowering the level of Yanco Creek would have had an adverse effect on water available for environmental purposes. It is certainly the Court’s expectation that, had the case been allowed to be reopened, it was more than likely (indeed only reasonable) that the Respondents would have been permitted to file their own evidence addressing the matters described by the Second Applicant. It is open to presume, given that the Second Applicant referred to other farmers with differing views, that the Respondents might have put evidence to that effect, demonstrating that an alteration of the flow level in Yanco Creek in its upper reaches may have had unwelcome impacts lower down its course. This is, of course, supposition on the Court’s part, but it goes to the point that it cannot be said that there was public interest in the Applicants’ judicial review proceedings which were necessarily focused on decisions said to directly affect their interests.

  4. Finally, the Respondents correctly drew the Court’s attention to the fact that the proceedings were brought pursuant to Pt 59 of the UCPR, not pursuant to any “open standing” provision (cf Hastings Point at [4]; Oshlack at [90]). Although the Applicants cited s 336 of the Water Management Act at the very end of the primary hearing and in the course of the costs hearing, that provision was not pleaded in the Second Further Amended Summons (the SFAS) filed on 23 July 2018 or in the SFAPOC. Again, the Court agrees with the Respondents’ submission that, even if the proceedings had been brought under s 336, that does not, per se, establish that they were brought in the public interest, having regard to the matters outlined above. The point is, however, mute, as the proceedings were not brought via that pathway.

Determination of the “public interest” question

  1. For the reasons set out following each of the Respondents’ arguments as to why the Applicants’ proceedings should not be considered to have been brought in the public interest, the Court has concluded that the Applicants have failed to satisfy the onus resting with them to convince the Court that there is justification to disturb the usual practice of ordering that the costs of the entirely successful Respondents should be paid by the Applicants. The Court does not characterise the proceedings as being public interest litigation.

  2. Lest it be thought that the Court, in reaching this conclusion, has ignored the Applicants’ submissions that in a number of respects the Applicants were successful in the primary hearing regarding certain factual matters, it has not. I acknowledge that, contrary to the submissions of the Respondents in the course of the primary hearing, the Applicants succeeded in satisfying the Court that Lake Paddock was a dependent ecosystem of Yanco Creek and that, by reason of higher level flows of Yanco Creek, there had been, over many years, continual inundation of Lake Paddock causing environmental degradation. The “success” of the Applicants in establishing those matters does not alter the fact that the Respondents were entirely successful in the proceedings, given that the Applicants’ case for the relief that they sought was dismissed in every respect. In this regard, I agree with a passage from submissions quoted by Robson J, at [52] in Muswellbrook, finding it to be a correct summary of the law relevant to this issue.

… unless a particular issue or cluster of issues is clearly dominant or separable, courts ordinarily order costs to the successful party without attempting to differentiate between those issues on which it was successful and those on which it failed: Waters v P C Henderson (Aust) Pty Ltd[1994] NSWCA 338; (1994) 254 ALR 328, applied in BostikAustralia Pty Ltd vLiddiard(No 2)[2009] NSWCA 304 at [38].

  1. The Court having determined that it would not be correct to characterise the Applicants’ proceedings as public interest litigation, it now falls to me to determine whether all or any of the costs which are to be paid to the Respondents should be awarded on an indemnity basis.

Should the Respondents’ costs be paid on an indemnity basis?

  1. The Respondents seek an order that the Applicants pay the Respondents’ costs on an indemnity basis for the following reasons:

  1. first, having regard to the offer made by the Respondents on 21 August 2017, which was rejected by the Applicants;

  2. further or alternatively, having regard to the fact that, properly advised, the Applicants should have realised that their contentions had little to no prospect of success; and

  3. further or alternatively, having regard to the way the Applicants have conducted these proceedings, which was productive of unreasonable cost and delay.

  1. On 21 August 2017, the Respondents made an offer to the Applicants in accordance with r 20.26 of the UCPR or, alternatively, pursuant to the principles in Calderbank v Calderbank [1975] 3 All ER 333: affidavit of Mr Mullane at paragraph 4. The offer was that there be judgment for the Respondents, with no order as to costs. The offer also included notice that any failure to accept it would be relied upon by the Respondents in making submissions on costs. The offer was not accepted

  2. The Court notes that the offer was made in accordance with r 20.26 of the UCPR. The consequence is that Div 3 of Pt 42 of the UCPR applies. In particular, r 42.15A is triggered, which has the effect that, unless the Court orders otherwise:

  1. the Respondents are entitled to an order against the Applicants for the Respondents’ costs of the claim, to be assessed on an ordinary basis up to 21 August 2017; and

  2. the Respondents are entitled to an order against the Applicants for indemnity costs on and from 22 August 2017.

  1. The Respondents correctly submitted that the offer involved a genuine element of compromise because it included an order that each party bear its own costs. In Fabre v Lui (No 2) [2015] NSWCA 312, at [6], the Court recognised that a respondent’s offer to bear its own costs could constitute a genuine compromise, unless no significant costs had been incurred. This approach is permitted under the rules, noting that, under r 20.26(3), an offer may propose judgment in favour of the defendant with no order as to costs. The Respondents submitted that the relevant circumstances were:

  1. that the Applicants’ allegations lacked merit and were likely to be dismissed with an order that the Applicants pay the Respondents’ costs; and

  2. by the time the offer was made, the Respondents had already incurred significant costs in defending the proceedings which had been on foot since 2015. Mr Mullane’s evidence is that, by 21 August 2017, the Respondents had incurred $116,354.21: see affidavit of Mr Mullane at paragraph 5.

  1. It was submitted that the Respondents’ offer was not just an attempt to trigger the application of Div 3, it was a genuine attempt to compromise the proceedings by forgoing the Respondents’ entitlement to be paid any portion of the $116,354.21 worth of costs incurred to that date.

  2. In those circumstances, the Respondents submitted that they are entitled to be paid their costs on an ordinary basis up to and including 21 August 2017, and on an indemnity basis thereafter.

  3. In response, the Applicants submitted, in their submissions in reply at paragraph 9, that the Offer of Compromise was not genuine, as the Respondents were not prepared to compromise their position. They asserted that the Respondents had refused to mediate and had opposed every aspect of the Applicants’ case that had been properly brought before the Court. In response to this submission, counsel for the Respondents strenuously objected, informing the Court that a conciliation conference had been conducted, but that no agreement was reached. Mr King, counsel for the Applicants, replied that the Respondents weren’t prepared to shift on any issue so they had effectively not genuinely sought to compromise. Reviewing what appears to have occurred, it seems to be clear that a conciliation conference did occur, but neither party was prepared to concede their case. That is a frequent outcome of such processes. It is not proper to describe this exercise as a refusal to mediate on the part of the Respondents, if the only option that the Applicants were prepared to accept was capitulation on the primary elements of their case.

  4. An analysis of the history of the proceedings, contained in the affidavit of Mr Mullane of 18 April 2019, in particular paragraphs 7 to 33, reveals that, in the course of the multiplicity of interactions between the parties over a 26‑month period from the filing of the Summons (Judicial Review) on 22 June 2015 to the service of the Offer of Compromise on 21 August 2017, the proceedings were far from inactive, both inside the courtroom and outside. Being one of the Judges of this Court who had been called upon to the determine issues regarding pleadings and case management during this period, not the least being the hearing before me on 14 March 2017 to consider a Notice of Motion filed by the Respondents to strike out defective pleadings and then a later hearing on 25 May 2017 to consider an Applicants’ motion to amend the Points of Claim and for the Respondents, a request for further better particulars, it is clear that much costly legal work had been conducted prior to the Offer of Compromise. In confirmation of that statement, in Randren House Pty Ltd v Water Administration Ministerial Corporation [2017] NSWLEC 151 (Randren House No 1), I observed, at [16]:

In the period spanning from 22 June 2015 (the commencement of the proceedings) and 4 August 2017, the final hearing of these proceedings has been delayed by a succession of procedural disputes between the parties. In this period, the matter came before the Court on no less than 15 occasions.

  1. The Applicants submitted that it was hardly reasonable to expect them to have accepted the Offer of Compromise when it was served on 21 August 2017, just a few weeks after the Points of Defence had been filed by the Respondents. How could they be expected to see that there might be reasons to compromise so soon after becoming aware of the Respondents’ case to be mounted against them? The Court rejects that rhetorical question which was part of the Applicants’ submissions. In the context of 26 months of active litigation, including, most materially, a strike-out application from the Respondents in relation to some of the Applicants’ pleadings and the pressing of the request for further and better particulars, it should have been apparent to the Applicants that their proceedings were likely to face an uphill battle. Certainly, in the hearings before me prior to the Offer of Compromise, the Respondents’ counsel never failed to stress the flaws in the Applicant’s case. In those circumstances, an offer that parties walk away, each absorbing their costs, should be considered to be a genuine offer to compromise.

  2. For the Applicants to respond by not only rejecting the Respondents’ Offer of Compromise, but to then serve their own Offer of Compromise (Exhibit PM2 paragraphs 6 to 9), which, save for not pressing for the payment of their costs, sought the Respondents to capitulate on all the key claims being pressed by the Applicants, was, in the circumstances, ill-advised and at their peril.

  3. In the circumstances, the Court has concluded that the Respondents should be entitled to their costs to be paid on an indemnity basis from 22 August 2017.

  4. However, the Respondents then submitted that there were sound reasons why they should be entitled to have their costs paid on an indemnity basis from the time the proceedings were commenced.

Poor prospects of success as a basis for an indemnity costs order

  1. First, the Respondents submitted an argument based on what they considered to be the poor prospects of success, which they said should have been apparent to the Applicants, if not from the outset then early in the proceedings once the Respondents raised their multiple concerns. There is no doubt that the Court may order indemnity costs where a party has maintained proceedings that they should have known had no real prospect of success. That is an uncontroversial proposition: Maurice Tarabay v Fifty Property Investments Pty Ltd [2009] NSWSC 951 at [17]; Sewell v Zelden (No. 2) [2010] NSWSC 1181 at [48]-[53]. The Court considers that the onus rests with the party asserting that the prospects were so poor, to convince the Court that the other party should have known of their poor prospects and should have realised that the responsible course would have been to withdraw or at least meaningfully compromised.

  2. It was submitted that the Applicants, properly advised, should have realised from the outset that their claims had no real prospect of success. In this respect the Respondents relied on the reasons given in the Randren House (No 4) as to the merits of the Applicants’ various claims. With reference to paragraphs in my primary judgment, a summary of the points highlighted by the Respondents in support of this argument is as follows:

  1. the allegations in paragraphs 8A and 8C: the Applicants were unable to establish when the alleged decisions were made. The Court observed: “in circumstances where the Court has not been informed, with any particularity, of what Decision 1 was, by whom it was said to have been made, when it was said to have been made, and has no idea what material was or was not before the decision-maker, it is problematical in the extreme for the Court to determine with any certainty in any respect whether the decision-maker acted reasonably in accordance with the duty to be understood from the combined s 9 and s 5 provisions”: at [296]. It should be noted that, as early as 14 March 2017, in a hearing before Molesworth AJ to strike out parts of the Applicants’ pleadings, the Respondents submitted that it was “simply not possible for the respondents to identify what those decisions are”: affidavit of Mr Mullane at paragraph 23;

  2. the allegations at paragraphs 8B and 8D: the Court observed that “many details required by the Court to determine the Applicants claim are imprecisely identified or are simply absent”: at [309];

  3. the allegation at paragraph 9A: the Court concluded the Applicants had “no prospect of success” and their case was “entirely unsustainable”: at [347];

  4. the allegation at paragraph 9B: the Court concluded the Applicants had failed to establish that such a decision was in fact made: at [369];

  5. the allegation at paragraph 9C: the Court concluded that this claim was time barred by s 47 of the Water Management Act (at [418]). The Court said that in any event the claim was “without merit” and was “firmly of the view” that the Applicants’ case had no prospect of success: at [419];

  6. the allegation at paragraph 9D: the Court rejected the claim for the reasons given at [433] to [439];

  7. the allegation at paragraph 9E: the Court concluded that the claim was time barred by s. 47 of the Water Management Act 2000 and in any event dismissed it for the reasons given at [456] to [463];

  8. the allegation at paragraph 9F: the Court concluded that the claim was time barred by s 47 of the Water Management Act (at [527]) and in any event dismissed it for the reasons given at [549]-[560]; and

  9. the allegations in paragraph 12, which depended upon s 100 of the Constitution applying to State laws when the authorities are clear in establishing that it only applies to Commonwealth laws. The Court had also indicated in the course of the hearing that the claim was liable to be struck out (see Judgment at [568]), yet the Applicants nevertheless persisted with it.

  1. The difficulty for a Court in considering such a submission is to contemplate whether there should be a distinction between the party and the party and their professional advisers, such as their lawyers. This issue arises from the qualification that quite properly appears in the Respondents’ submissions: “properly advised”. What is the situation if a party had not been properly advised? How is the Court to know, or is it to be presumed? Few litigants take steps to commence and then persevere with litigation without receiving ongoing professional advice. So the determination of whether prospects of success are poor or strong will clearly be the subject of advice to the party. In our legal system it is rare for a distinction to drawn between a party simpliciter and a party plus lawyer, unless there is clear evidence of a lack concurrence. In the absence of a reason to sever one from the other, the question whether a party should have known that their prospects of success were so poor that they should have discontinued the proceedings has to be accepted as being an assessment of “the party” as a cohesive whole: the litigant and their lawyers. If in fact the lay litigant feels they have been led astray, and thereby feel aggrieved, then that must be a matter for the lay litigant and not the Court unless there is a clear basis to warrant a different course.

  1. Amongst the many flaws in the Applicants’ case, the most clear-cut of the “poor prospect” examples is the s 100 Commonwealth Constitution argument. In the circumstances, the Court is of the view that the item in the Respondents’ summary, in [53] above, is a clear instance of a hopeless point that should never have been pressed. The same constitutional argument had been pressed in other similar litigation and had been dismissed. That case law was well known. Almost from the outset of proceedings, this Court had, on a number of occasions, pressed the Applicants’ counsel to explain how it could be that the argument was still to be pressed. In Randren House Pty Ltd v Water Administration Ministerial Corporation (No 3) [2018] NSWLEC 106, I said, at [16]:

16. With respect to these three bases, I have chosen to put to one side and not address the third basis upon which the Applicants say the expert evidence is necessary, that being to assist the Court to understand how it might interpret, or perhaps apply, the words “reasonable use of rivers for conservation or irrigation” in s 100 of the Commonwealth Constitution. Although I am yet to hear full argument from either party regarding that aspect of the Applicants’ case, at this point in the proceedings I remain at a loss to understand how there is any basis for the s 100 case to be put. I sought an explanation from counsel for the Applicants as to how the decisions in question in this case could give rise to the alleged constitutional infringement, specifically, how the decisions in question might be interpreted as actions (or perhaps inactions) of the Commonwealth. Counsel for the Applicants did not provide me with a sufficient answer to enlighten me. Considering Ground 7 of the Further Amended Summons and paragraph 12 in the Further Amended Points of Claim, in the context of the Respondents’ brief response being paragraph 12 in their Points of Defence, I am presently of the view that this alleged Constitutional breach component of the Applicants’ case is vulnerable to being justifiably struck out. Accordingly, it would be inappropriate to consider this component of the Applicants’ case as a justification to allow an exception to be made with respect to allowing expert evidence to be considered in these judicial review proceedings.

  1. The wisdom of hindsight is wonderful thing. A number of the other bases set out in [53] above for the proposition that it should have been apparent to the Applicants that their prospects of success were poor have considerable merit. However, having to conclude that the Applicants were “properly advised” on each point does concern the Court. To make such an order on this ground, especially if I am to be at ease in ordering them to pay indemnity costs from the outset of the proceedings, I must be firmly of the opinion that in the course of the first 26 months, to the date of the service of the Offer of Compromise, the Applicants ought to have known that their case was so poor that they should not have been proceeding. I am troubled whether I can arrive at a position which is fair, in circumstances where the Applicants themselves might have been naïve or, quite possibly, ill-advised. In the circumstances, I will not make an order for indemnity costs to be paid on the basis of the “prospects of success” argument.

Unreasonable Conduct as a basis for an indemnity costs order

  1. The Respondents put a further argument to justify an order for indemnity costs based on an assertion of unreasonable conduct on the part of the Applicants. There is no doubt that indemnity costs may also be awarded where a party has engaged in conduct causing unreasonable delay or expense - Wentworth v Rogers [1999] NSWCA 403.

  2. The history of these proceedings has been set out in the primary judgment (Randren House (No 4)). They were commenced on 22 June 2015 and, since then, various aspects of the Applicants’ conduct has led to unreasonable delay or expense as follows.

  3. First, there have been significant difficulties in the Applicants’ pleading and particularising their claims. The Respondents’ attempted to seek further particulars of the Applicants’ claim in the period 15 July 2015 to 25 May 2017, as set out in the affidavit of Mr Mullane at paragraphs 7 to 31. This included the Respondents filing a motion for summary dismissal or to strike out defective pleadings: affidavit of Mr Mullane at paragraph 22. Argument was heard on the motion, and orders were made by consent for the Applicants to serve Amended Points of Claim. However, those Amended Points of Claim were still defective, and the Respondents declined to consent to them being filed. The Applicants filed a Notice of Motion seeking leave to file the draft Amended Points of Claim, and the motion was listed for hearing before me on 25 May 2017 (affidavit of Mr Mullane at paragraphs 27 to 29), following which further orders were made for the Applicants to file an Amended Points of Claim and to respond to the Respondents’ requests for particulars.

  4. As said earlier, in the period 22 June 2015 to 4 August 2017, the matter came before the Court on no less than 15 occasions on various issues concerning, inter alia, document production and pleadings. On 4 August 2017, more than two years after the commencement of the proceedings, the Court listed the matter for hearing on 27-30 November 2017.

  5. The Applicants made a further attempt to amend their summons in October 2017. That application was made at a very late stage, given the proceedings were at that time listed for final hearing on 27‑30 November 2017. The Respondents objected to leave being granted, and sent the Applicants a letter explaining the reasons for this: affidavit of Mr Mullane at paragraph 35. The Applicants nevertheless persisted in the application for leave to amend (which I dismissed) in my judgment of 9 November 2017, at [63]-[66]: affidavit of Mr Mullane at paragraph 36.

  6. The amendments to the Applicants’ pleadings continued throughout the course of the hearing in July 2018, with the Applicants filing the SFAPOC on 10 July 2018 and a Second Further Amended Summons on 23 July 2018: affidavit of Mr Mullane at paragraphs 37 to 39.

  7. Secondly, the Respondents submitted that the Applicants have engaged in unreasonable requests for the production of documents. On 23 October 2017, over two years after the proceedings had been commenced and a month before the hearing scheduled for 23-27 November 2017, the Applicants issued a Notice to Produce calling for 17 categories of documents: affidavit of Mr Mullane at paragraph 40. On 27 October 2017, the Respondents wrote to the Applicants explaining the defects in the notice and inviting the Applicants to withdraw it: affidavit of Mr Mullane at paragraph 41. Again, the Applicants persisted with the notice, resulting in the Respondents having to file a motion to set aside the Notice to Produce (save for items 9 to 12).

  8. That motion was initially listed for hearing on 3 November 2017 but, having regard to various matters raised by the Applicants on that date (including its motion seeking to join Water NSW and the Minister Administering the Water Management Act 2000 and to file a Further Amended Summons), that hearing was conducted as a directions hearing and the motion was listed for hearing on 8 November 2017.

  9. In my judgment of 9 November 2017, I excused the Respondents from production save for items 9 to 12. In respect of items 2-8 and 15-17, I concluded that the Applicants had not established a legitimate forensic purpose and that seeking production of the broad categories of documents amounted to an “unacceptable (and, additionally, extremely late) fishing expedition that effectively seeks discovery of unspecified documents in the mere hope that some of the relevant documents will assist with the Applicant’s case”: at [56]. I observed that seeking production of such documents at such a late stage “constitutes an unacceptable disruption at a critical stage of the proceedings”: at [57]. In respect of item 1, I concluded that this was an “abuse of process in that it seeks to circumvent previous decisions of the Court not to make formal orders as to discovery”: at [59]. In respect of item 13, I concluded that there was no compelling reason why the “original” map was required and in any event the Respondents had nothing further to produce: at [60]. In respect of item 14(1A), I concluded there was no legitimate forensic purpose: at [61].

  10. Thirdly, the Applicants made a belated application for my recusal on the first day of the hearing on 27 November 2017. Neither the Court nor the Respondents had received any prior notice of this application: affidavit of Mr Mullane at paragraph 44. It was dismissed by me in my judgment of 21 December 2017.

  11. Not only was the application misconceived, but it had the consequence that the remaining hearing days of 28 to 30 November 2017 were vacated. Obviously this resulted in the Respondents incurring wasted costs in relation to the preparation of the hearing in November 2017. Further, as the Respondents’ counsel was required to take an extended period of leave, the Respondents had to incur the costs of briefing new counsel for the purposes of the hearing in July and August 2018

  12. Fourthly, the Respondents submitted that the Applicants made unmeritorious attempts to reopen the proceedings after the conclusion of the hearing in August 2018. On 9 August 2018, the Applicants notified the Respondents that they sought to lodge further written submissions: affidavit of Mr Mullane at paragraph 47. On 15 August 2018, the Respondents invited the Applicants to agree to a timetable for the submissions while noting that the Respondents objected to leave being granted to lodge those submissions and foreshadowing the Respondents’ intention to seek indemnity costs in respect of responding to the submissions: affidavit of Mr Mullane at paragraph 48. In the primary judgment, the Court refused leave to the Applicants to make those submissions: at [76]-[79]. The Court noted, at [78]: “In circumstances where the hearing had finished, it was inappropriate for the Applicants’ counsel to further reflect on how the Applicants’ case had been argued and to then seek to expand upon, or nuance, what appeared to be an ‘evolving argument’”.

  13. Fifthly, on 14 September 2018, the Applicants served the Respondents with a motion seeking leave to adduce further evidence: affidavit of Mr Mullane at paragraph 50. On 27 September 2018, the Respondents wrote to the Applicants explaining in detail why the application was misconceived and foreshadowing an intention to seek indemnity costs. In the primary judgment, the Court refused leave to the Applicants to adduce such evidence: at [91]‑[97].

  14. For all of those reasons, the Respondents submitted that the Applicants have conducted these proceedings in a manner which unreasonably perpetuated delay and cost. The Respondents submitted that this conduct warrants an order that the Applicants pay the Respondents’ costs from the commencement of the proceedings on an indemnity basis. I have decided that had I not awarded costs on an indemnity basis due to the rejected Offer of Compromise, I would have ordered costs on an indemnity basis because of unacceptable conduct. However, as much of the unacceptable conduct overlaps with the period since the date of the Offer of Compromise, in my discretion I have decided to leave the award of indemnity costs to the period since that offer. In the circumstances, I consider that sufficient.

  15. The final question is whether the Court should vary its orders 2 and 4 made on 15 February 2019. It was the Court’s understanding, at the conclusion of the hearing on 15 February 2019, that what was left “alive” was the general order for costs, not the specific orders 2 and 4 which had been accepted by the parties. Unfortunately, it appears that no transcript was made of the final exchanges regarding costs at the conclusion of that hearing, as the transcript provided to the Court simply includes the original order 8 which was abandoned. In the circumstances, both I, and I suspect the Applicants, came to the costs hearing the subject of this judgment, with the understanding that orders 2 and 4 were in place and what was left to resolve were the costs for the rest of the proceedings. As that was the Court’s understanding, for reasons of fairness I do not propose to now vary those orders. In the exercise of my discretion, the indemnity costs order will not apply to those post reservation of judgment “events” the subject of orders 2 and 4.

Orders

  1. The orders of the Court are:

  1. The Applicants are to pay the costs of the Respondents up to and including 21 August 2017, including all reserved costs incurred prior to that date, on an ordinary basis;

  2. Save for the costs the subject of Orders 2 and 4 made 15 February 2019, the Applicants are to pay the costs of the Respondents incurred after 21 August 2017 on an indemnity basis, including all reserved costs incurred after that date;

  3. The Applicants are to pay the costs of the Respondents incurred in addressing the applications for costs on an ordinary basis; and

  4. Upon request to the Registry, the parties may retrieve their exhibits which they respectively tendered in the course of the primary hearing and in the hearing on costs the subject of this judgment.

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Decision last updated: 17 May 2019

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