Rural Funds Management Limited v The Minister Administering the Water Management Act 2000

[2016] NSWLEC 94

Land and Environment Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Rural Funds Management Limited v The Minister Administering the Water Management Act 2000 and Anor [2016] NSWLEC 94
Hearing dates:	13 May 2016
Date of orders:	26 July 2016
Decision date:	13 May 2016
Jurisdiction:	Class 1
Before:	Moore J
Decision:	At [18]
Catchwords:	COSTS – Applicant unsuccessful – costs ordinarily follow the event – whether special circumstances warranting departure from the ordinary position – special circumstances found – First Respondent to pay costs of Applicant and Second Respondent
Legislation Cited:	Land and Environment Court Rules, r 3.7
Cases Cited:	Latoudis v Casey (1990) 170 CLR 534
Category:	Costs
Parties:	Rural Funds Management Limited (Applicant) The Minister Administering The Water Management Act 2000 (First Respondent) Rosella Sub TC Pty Limited (Second Respondent)
Representation:	Counsel: Mr R Beasley SC/Ms A Knox (Applicant) Mr J Hutton/Ms R Mansted (First Respondent) Mr A Leopold SC/Mr C Colquhoun (Second Respondent)   Solicitors: Sparke Helmore (Applicant) Office of Water (First Respondent) Johnson Winter & Slattery (Second Respondent)
File Number(s):	No 229251 of 2016
Publication restriction:	No

EX TEMPORE Judgment

1. HIS HONOUR: In these proceedings, an initial separate question was set down for determination by the Chief Judge as to whether or not the proceedings that had been commenced by Rural Funds Management Ltd had been commenced within time. In the first decision I gave in this matter, I concluded for the reasons there set out that the questions should be answered that the action had not been commenced in time and therefore the proceedings should be dismissed. The question of costs now arises.

2. It is instructive to note, before dealing with how the outcome on costs should fall, that the proceedings were argued in a modestly unusual fashion, in that the contentions advanced by the Applicant in the proceedings as to how the statute should be interpreted and the result that should be derived from that interpretation were supported by the Minister as the First Respondent, leaving the Second Respondent, Rosella SUBTC Pty Ltd in the position of advancing the proposition that was ultimately successful.

3. It is well settled, by now, that on a separate question of law (as was here the case) where that question is dispositive of the total proceedings, the successful party has a realistic expectation - subject to any of its conduct being pointed to as being disentitling - to receive an order for costs in its favour. That position obtains in these proceedings and the only question that arises with respect to Rosella is who should be burdened with either the totality of its costs or, if not, how those costs should be apportioned amongst the other parties.

4. With respect to Rural Funds Management, they were unsuccessful in the argument that they advanced and which the Minister supported, and as a result, have had their substantive proceedings dismissed. However, Rural Funds too seek to have their costs paid. The Minister, who it might be regarded in summary is the primary target of the submissions for costs, resists costs orders being made against the Minister, but says that if costs orders are to be made against the Minister, they should be apportioned and should be in favour of Rosella only.

5. I have had the advantage of reading written submissions on behalf of all three parties as to the engagement of the Land and Environment Court Rules, particularly r 3.7, which applies in Class 1 proceedings such as these. However, that fair and reasonable rule has a number of carvings out, particularly relevant in these proceedings being that contained in r 3.7(3)(a); where it is postulated that:

"Circumstances in which the Court might consider the making of a costs order to be fair and reasonable include where, as a central issue, a question of law has been determinative in the proceedings to extract the relevant words from the provision."

6. That is here the case. It is also the position that, although that is described in the rule as being circumstances where the Court might consider the making of such a costs order, the making of such a costs order in those circumstances has generally been followed.

7. The question arises for determination, in my view, in the first instance is to what extent should the costs order in favour of Rosella be met by either Rural Funds or the Minister or some combination thereof. In considering this, I have been back to a foundational decision of the High Court on costs, that of Latoudis v Casey (1990) 170 CLR 534. The judgment of McHugh J in those proceedings has often been referred to as establishing not only the proposition that costs would ordinarily follow the event, but the corollaries that his Honour adverted to [at 567] that such orders are not made to punish the unsuccessful party and that the function of costs orders is compensatory.

8. However, his Honour continued in a portion that is less frequently had regard to, to say:

“Thus, in civil proceedings, an order may and usually will be made although the unsuccessful party has nearly succeeded or has acted reasonably in commencing the proceedings. It may and usually will be made, even though the action has failed through no fault of the unsuccessful party. Those matters, it seemed to me, provide a significant basis for my consideration in this cross‑application.”

9. I observe that in Latoudis v Casey, McHugh J was in the majority in that the Chief Justice, although delivering the leading reasons, expressly concurred with the matters that are raised by McHugh J in his judgment as well as agreeing with his proposed orders. The third member of the plurality, Toohey J, does not deal with the matters that are relevant here in terms. However, I am satisfied that Latoudis v Casey does provide a sufficient authority for me to consider making an order in favour of an unsuccessful party in these proceedings, as well, if there is some proper basis to do so.

10. Costs orders of course only are, as his Honour observed, compensatory and not punitive. Costs orders must necessarily arise out of or in connection with proceedings (or I am satisfied sufficiently foreshadowed proceedings) and processes attendant thereupon to validly engage the power of the Court to make a costs order.

11. In these proceedings, it is clear that as I dealt with in the primary decision, the decision of the Minister's delegate to grant the application made by Rosella and the failure thereafter to notify the Applicant in the proceedings, Rural Funds, of that in a timely fashion, led to the litigation and the necessity for Rural Funds to mount the case it did to seek to persuade me that it was within time. Although clear from my judgment that Rural Funds failed, it did not fail in a fashion that meant that there was no arguable basis for it running the proceedings.

12. Rural Funds had, as Ms Knox pointed out this morning, expressly put the Minister (through Mr Glasson the assessing officer whose advice led to the Minister's delegate, Ms Chatfield, making the decision that she did) on notice that if the decision was in favour of Rosella, Rural Funds intended to commence proceedings in order to exercise its right to have a merit review of the Minister's delegate's decision. That is expressly clear from the letter of 14 August 2015; that is, Annexure E to the affidavit of Mr Alan McKelvey dated 2 December 2015 where that letter expressly says at the end of it in its penultimate paragraphs:

"Our client notes that it has appeal rights against any decision to grant the application, and in order to ensure it is afforded proper opportunity to take advantage of those rights seeks your assurance that you will notify our client when a decision is made of the full particulars of the decision in order that it may exercise its rights.

We look forward to receiving your confirmation that you will notify our client as to the determination of the application immediately it is made."

13. That letter was signed by Mr Andrew White, partner of Sparke Helmore Lawyers acting on behalf of Rural Funds.

14. A further letter was sent again to Mr Glasson, this time on 3 November 2015, (a date I note after the Minister's delegate's determination had been made and as I found in the primary decision, time had commenced to run against Rural Funds). The letter noted, firstly:

"We have not received a response to our letter of 14 August 2015. Our client is concerned that the application may have been granted, thus commencing the appeal - the period during which an appeal may be made."

A correct statement of fact I interpolate. The letter then continued:

"We note that the Minister’s decision maker has an obligation under s.98 of the Water Management Act 2000 New South Wales to notify our client as a matter who has made an objection to the Minister in connection with the application. We look forward to hearing from you as a matter of urgency."

15. The letter also appended, as is noted in the second paragraph of the letter, a copy of the original letter of 14 August 2015.

16. I dealt with the administrative failures of Mr Glasson in my primary decision and it is unnecessary to repeat them here. However, I am satisfied that the Minister, in the personification of the assessing officer, Mr Glasson - the person who, as it ultimately turned out, had failed in a timely fashion to exercise the responsibility to notify Rural Funds of the decision made in favour of Rosella. The express notification of the intention to commence an appeal, if the approval was given to Rosella, is sufficient in my mind to bring that pre‑commencement behaviour within the scope of what might be regarded as anticipation of proceedings for the purposes of the exercise of the costs discretion in these proceedings.

17. I have therefore concluded that the Minister should bear the costs of both Rosella and Rural Funds in their entirety on an as “agreed or assessed” basis and I so order. As in costs proceedings in this Court, the presumption of a more general nature in Latoudis v Casey that costs will follow the event applies and it therefore follows that the Minister, as having been entirely unsuccessful on costs, should also bear the costs as agreed or assessed of both parties on this costs application.

18. Given that this decision has been made extemporaneously, I will cause formal orders to be issued early next week. Those orders will be in the form: the Minister as the First Respondent is to meet the costs of the original proceedings on the separate question and on the costs application as agreed or assessed; and that the Minister is to meet the costs of the Second Respondent on the original proceedings and on the costs application as agreed or assessed.

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Amendments

02 August 2016 - Changed to include Counsel for the Applicant on coversheet

Decision last updated: 02 August 2016