Sharples v Minister for Local Government
[2008] NSWLEC 67
•8 February 2008
Reported Decision: 159 LGERA 391
Land and Environment Court
of New South Wales
CITATION: Sharples v Minister for Local Government [2008] NSWLEC 67 PARTIES: APPLICANT:
Terry SharplesFIRST RESPONDENT:
Minister for Local GovernmentSECOND RESPONDENT:
THIRD RESPONDENT:
The New South Wales Department of Local Government
Tweed Shire CouncilFILE NUMBER(S): 40959 of 2007 CORAM: Biscoe J KEY ISSUES: Costs :- security for costs - considerations - where applicant in the proceedings applies under open standing statutory provisionsand is impecunious LEGISLATION CITED: Civil Procedure Act 2005 Sch 6 Pt 4
Corporations Act 2001 (Cth) s 1335
Courts Legislation Amendment Act 2007 Sch 2 cll 9 and 14; Sch 6 cl 28
Environmental Planning and Assessment Act 1979 s 123
Land and Environment Court Act 1979 s 69
Land and Environment Court Rules 2007 r 4.2
Land and Environment Court Rules 1996
Local Government Act 1993 ss 508A(3), 674
Uniform Civil Procedure Rules 2005 rr 1.5, 42. 21CASES CITED: Abraham v Thompson [1997] 4 All ER 362
Diamond v Birdon Contracting Pty Limited [2007] NSWLEC 92
Melville v Craig Nowlan and Associates Pty Limited (2002) 54 NSWLR 82DATES OF HEARING: 8 February 2008 EX TEMPORE JUDGMENT DATE: 8 February 2008 LEGAL REPRESENTATIVES: APPLICANT:
In personTHIRD RESPONDENT:
FIRST AND SECOND RESPONDENT:
Mr M A Izzo, barrister
SOLICITORS:
Crown Solicitor's Office
Mr D R Baird, solicitor
SOLICITORS:
Marsdens Law Group
JUDGMENT:
THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES
BISCOE J
8 February 2008
40959 of 2007
EXTEMPORE JUDGMENTTERRY SHARPLES v MINISTER FOR LOCAL GOVERNMENT AND ORS
1 HIS HONOUR: In these judicial review proceedings the applicant claims that a decision of the third respondent, Tweed Shire Council, was effected by “fraud or falsity occasioned by” its officers and was in breach of s 508A(3) of the Local Government Act 1993. The respondents now move for security for costs against the applicant, who is not legally represented, pursuant to s 69 of the Land and Environment Court Act 1979 which relevantly provides:
…69 Costs
(3) The Court may order a party instituting proceedings in the Court to give security for the payment of costs that may be awarded against that party.
(4) The security referred to in subsection (3) shall be of such amount, and given at such time and in such manner and form, as the Court directs.
(5) The Court may reduce or increase the amount of security ordered under subsection (3) to be given and may vary the time at which, or the manner or form in which, the security is to be given.
(6) If security, or further security, is not given in accordance with an order under this section, the Court may order that the proceedings be dismissed.
(7) The provisions of this section relating to security do not affect the operation of any provision made by or under any other Act or by the rules for or in relation to the furnishing of security.
….
2 Section 69 and certain other provisions of the Land and Environment Court Act1979 have been repealed with effect from 28 January 2008 when this Court in its civil jurisdiction (that is, classes 1 to 4 of its jurisdiction) generally came under the regime of the Civil Procedure Act 2005 and the Uniform Civil Procedure Rules 2005 (UCPR): see the Courts Legislation Amendment Act 2007 Sch 6 cl 28 and Sch 2 cl 9; UCPR rule 1.5.
3 The power conferred by s 69(3) is not constrained by pre-conditions such as those in UCPR Pt 42 r 21 viz:
- (a) that a plaintiff is ordinarily resident outside New South Wales, or
(b) that the address of a plaintiff is not stated or is mis-stated in his or her originating process, and there is reason to believe that the failure to state an address or the mis-statement of the address was made with intention to deceive, or
(c) that, after the commencement of the proceedings, a plaintiff has changed his or her address, and there is reason to believe that the change was made by the plaintiff with a view to avoiding the consequences of the proceedings, or
(d) that there is reason to believe that a plaintiff, being a corporation, will be unable to pay the costs of the defendant if ordered to do so, or
(e) that a plaintiff is suing, not for his or her own benefit, but for the benefit of some other person and there is reason to believe that the plaintiff will be unable to pay the costs of the defendant if ordered to do so,
4 Nor is the power in s 69(3) constrained by a precondition such as that in s 1335(1) of the Corporations Act 2001 (Cth) which empowers the Court to order security for costs where there is reason to believe that a corporate applicant will be unable to pay any costs awarded to a respondent.
5 However, in the present case the repeal of s 69 of the Land and Environment Court Act 1979 does not affect the Court’s power to make an order under that section because the notices of motion now before the Court were filed last year before the section was repealed. This is the effect of the savings provisions in Sch 6 Pt 4 of the Civil Procedure Act2005, introduced by Sch 2 cl 14 of the Courts Legislation Amendment Act 2007 which relevantly provides:
13 Definitions
In this Part:
relevant commencement date means the date of the commencement of Schedule 2 [9] to the Courts Legislation Amendment Act 2007 .
relevant proceedings means proceedings in Class 1, 2, 3 or 4 of the jurisdiction of the Land and Environment Court.
unamended L & E legislation means the Land and Environment Court Act 1979 or the rules of court made under that Act, as in force immediately before the relevant commencement date.
…
Subject to the regulations, in any other Act or instrument:16 Construction of references
- (a) a reference to a provision of the unamended L & E legislation for which there is a corresponding provision in this Act extends to the corresponding provision of this Act or the uniform rules, and
(b) a reference to any act, matter or thing referred to in a provision of the unamended L & E legislation for which there is a corresponding provision in this Act or the uniform rules extends to the corresponding act, matter or thing referred to in the corresponding provision of this Act or the uniform rules, as the case requires.
Subject to this Schedule and the regulations:
17 General saving
(a) anything begun before the relevant commencement date under a provision of the unamended L & E legislation for which there is a corresponding provision in this Act or the uniform rules may be continued and completed under the unamended L & E legislation as if this Act had not been enacted, and
(b) subject to paragraph (a), anything done under a provision of the unamended L & E legislation for which there is a corresponding provision in this Act or the uniform rules (including anything arising under paragraph (a)) is taken to have been done under the corresponding provision of this Act or the uniform rules, as the case requires.
The “ relevant commencement date” defined above is 28 January 2008.
6 The Land and Environment Court Rules2007 also commenced on 28 January 2008. They repeal the Land and Environment Court Rules 1996. New rule 4.2 contains the following provisions concerning proceedings brought in the public interest:
- 4.2 Proceedings brought in the public interest
(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.
(2) The Court may decide not to make an order requiring an applicant in any proceedings to give security for the respondent’s costs if it is satisfied that the proceedings have been brought in the public interest.
(3) In any proceedings on an application for an interlocutory injunction or interlocutory order, the Court may decide not to require the applicant to give any undertaking as to damages in relation to:
- (a) the injunction or order sought by the applicant, or
(b) an undertaking offered by the respondent in response to the application,
if it is satisfied that the proceedings have been brought in the public interest.
7 Orders for security for costs are essentially discretionary. Relevant considerations therefore should be identified. The considerations relevant to an application for security for costs under s 69(3) of the Land and Environment Court Act 1979 were reviewed by Lloyd J in Diamond v Birdon Contracting Pty Limited [2007] NSWLEC 92:
- [4] The Court has an unfettered discretion to order a party instituting proceedings in the Court to give security for the payment of costs that may be awarded against that party: s 69(3) of the Land & Environment Court Act 1979 . The principles that have been conventionally applied to applications for security are those set out by Beazley J in KP Cable Investments Pty Limited v Meltglow Pty Ltd (1995) 56 FCR 189 at 197-198. The considerations said to be relevant by her Honour in that case may be summarised as:
- (1) Whether the application for security has been brought promptly;
(2) The strength and bona fides of the case in which security is sought;
(3) Whether the impecuniosity of the applicant results from the respondent’s conduct, the subject of the claim;
(4) Whether the application for security is oppressive in the sense of denying an impecunious citizen or organisation a right to litigate;
(5) Whether there are persons standing behind the plaintiff applicant who are likely to benefit and be willing to provide the security;
(6) Whether persons standing behind the plaintiff applicant have offered any personal undertaking to be liable for the costs, and if so, the form of any such taking;
(7) Whether the applicant for security is in substance the plaintiff or the proceedings are defensive in nature.
[5] Care must be taken in adopting this judgment of the Federal Court because in Melville v Craig Nowlan & Associates Pty Ltd (2002) 54 NSWLR 82, the New South Wales Court of Appeal held that cases on security for costs under s 56 of the Federal Court of Australia Act 1976 should not be applied to applications under s 69(3) of the Land & Environment Court Act 1979 . Nevertheless the principles described by Beazley J are available as a general guide and I am prepared to apply them, but modified by the qualifications to those principles as explained in Melville .
8 The principle of access to justice means that an applicant should not have to provide security for costs as a condition of pursuing the claim unless to allow the claim to proceed without security would be an abuse of process. It is not considered to be an abuse of process for an applicant who is a natural person to pursue a genuine claim without providing security merely because the applicant is poor and could not satisfy an adverse costs order, even though it is unjust to a successful respondent left with unrecovered costs. The principle of access to justice trumps mere poverty. In Abraham v Thompson (1997) 4 All ER 362 (CA) at 377 Millett LJ held:
- It is not an abuse of the process of the court for an impecunious plaintiff to bring proceedings for a proper purpose and in good faith while being unable to pay the defendant's costs if the proceedings fail. If the plaintiff is an individual the court has no jurisdiction to order him to provide security for the defendant's costs and to stay the proceedings if he does not do so. It may be unjust to a successful defendant to be left with unrecovered costs, but the plaintiff's freedom of access to the courts has priority. The risk of an adverse order for costs and consequent bankruptcy has always been regarded as a sufficient deterrent to the bringing of proceedings which are likely to fail. Where there is no risk of personal bankruptcy, as in the case of a plaintiff which is a limited company, the court has a statutory jurisdiction to award security for costs; but even in this case it will frequently not do so if this will have the effect of stifling bona fide proceedings. It is preferable that a successful defendant should suffer the injustice of irrecoverable costs than that a plaintiff with a genuine claim should be prevented from pursuing it.
9 The applicant brings these proceedings under the open standing provisions of s 674 of the Local Government Act 1993 (LG Act). The position of an impecunious applicant in the context of a similar open standing provision in s 123(1) of the Environmental Planning and Assessment Act 1979 was considered in Melville v Craig Nowlan and Associates Pty Limited (2002) 54 NSWLR 82. In the opinion of Heydon JA (with whom Young CJ in Eq agreed) litigation under such a provision is of a different kind from the usual type of litigation in which the courts have worked out the general rule that poverty does not bar access to the courts. His Honour held that an order for security for costs against an impecunious natural person bringing proceedings under such an open standing provision does not deprive the person of any fundamental right where there are many others who might prosecute the case by reason of the open standing provision: at 109 [102], 112 [109]. Nevertheless, Heydon JA considered that a significant factor was whether an impecunious applicant was injured by the challenged conduct or was merely a person who had a desire that the law be enforced, as follows at 118 [131]:
- There is one factor relevant to security orders against plaintiffs making s 123(1) applications to which no attention was directed in argument, but which might be quite significant in other cases. The position of an impecunious plaintiff who lives next door to an illegal development which is injurious to the comfort and safety of that plaintiff is radically different from that of a plaintiff who lives hundreds of kilometres away and has no more than a desire that the law be enforced and that developments of that kind, whatever they are, cease. It might be highly relevant that an order that the first type of plaintiff provide security would frustrate the proceedings, but of very little relevance that such an order against the second type of plaintiff would. It would be relevant for the first type of plaintiff because the circumstances would correspond closely to those in which the general law rule about impecunious natural persons operated justly. Here the claimant is in neither category. She lives more than six kilometres from the proposed development. She told the public meeting held on 26 February 2001 that she had started the proceedings to prevent the urbanisation of the Clarence River from Palmers Island to Yamba . Since neither party advanced any particular submission about the geographical relationship between her residence and the development, it may be taken that it is not a factor pointing decisively in either direction.
10 Young CJ in Eq made some additional comments including the following at [136]:
- …the underlying principle is that security will be ordered in cases where not to do so would allow proceedings which were vexatious or oppressive: McHenry v Lewis (1882) 22 Ch D 397 at 408. The so-called rule about poverty being no bar is merely one of the factors the court takes into account when making its final assessment as to whether the proceedings, without security for costs, would be an abuse of the court's process.
11 The respondents submit that security for costs should be ordered for three cumulative reasons:
- (a) the applicant is impecunious and could not satisfy any adverse costs order;
(b) the proceedings will not be frustrated because they can be brought by others;
(c) the applicant has twice failed to comply with directions to plead his case and still has not done so.
12 As to the first reason, it is common ground that the applicant is impecunious and could not satisfy any adverse costs order. It is not the mere fact of impecuniosity upon which the respondents rely but that factor combined with the other factors to which I have referred.
13 As to the second reason advanced for ordering security, the respondents submit that the proceedings will not be frustrated because they are brought under the open standing provisions of s 674 of the LG Act; the issues raised by the applicant directly affect many others in the third respondent’s local government area; and therefore any of them can bring the proceedings. However the applicant has given evidence or made submissions, which I accept, that he will not be able to meet a security for costs order as sought by the respondents, that any such order would stifle this litigation, and that the nature of the issues and the burden of litigation is such that it is unlikely that anyone else would be prepared to conduct this case if he does not do so.
14 As to the third reason – failure to comply with directions to plead – the following prayer for relief in the Application initiating the proceedings filed last September makes serious allegations against the respondents, including fraud:
- A declaration that the first respondent’s decision to grant a section 508A special variation to general income for a period of five years to the third respondent was effected by fraud or falsity occasioned by officers of the third respondent and is contrary to and in contravention to s 508(3) of Local Govt of NSW 1993.
The applicant indicated to me today that the section of the LG Act to which he intended to refer is s 508A(3).
15 On 2 November 2007, the Court directed that the applicant file and serve points of claim by 23 November 2007. That was not done. The respondents submitted, without contest, that the Court directed on 7 December 2007 that the applicant file and serve points of claim by 21 January 2008 (in fact short minutes of order dated 7 December 2007 on the court file stipulate 21 December 2008, which is obviously an error). Points of claim have still not been filed or served.
16 No explanation was provided by the applicant until he filed and read his own affidavit at the hearing this morning. His explanation, which I accept, is to the effect that he has suffered serious mental and physical illnesses, including a stroke in December 2007, which has left him effectively incapacitated to comply with his obligations under the directions. Unfortunately, none of this was communicated to the respondents until the hearing this morning. Having seen that evidence, they do not contest it.
17 The respondents brought and prosecuted their security motions in good faith without any knowledge that there was any explanation for the default. The lack of communication by the applicant to the respondents of the reasons for his defaults is a matter to be taken into consideration. All litigants, whether represented or not, should be mindful that communication is often necessary and effective in resolving issues before they reach the steps of the Court. However, I accept that the state of the applicant’s health was such that he was thinking unclearly about all this.
18 The applicant’s health now appears to have improved and he has indicated that, if given the opportunity, he should be able to file and serve points of claim within two weeks. I accept that he is genuine. The respondents have expressed concern that as he has failed to comply with directions to file points of claim and still has not done so, if security is not now ordered the present motions will have to be renewed if he again defaults.
19 Notwithstanding that the applicant’s affidavit read today testifies to the substance of his case and that his complaints were communicated to the respondents before he commenced proceedings, the respondents are entitled to have his case pleaded so that they might know precisely what it is that they have to meet, particularly given the serious nature of the allegations.
20 As to the substance of his case, in his affidavit the applicant says that the matter commenced in March 2006 when the third respondent council published a document entitled “Tweed Shire Council’s 7 Year Plan” in which were listed $133.6 million of shire projects for which it wished to obtain community approval in order to obtain Ministerial approval pursuant to s 508A of the Local Government Act 1993 and relevant guidelines. The compounding effect of the rate increase being sought, the applicant says, was such that rates would approximately double for every ratepayer in the shire by the end of the seven year plan. The applicant says that the community were not told this. He says they were told the effect of the proposed increase on 83% of ratepayers would be around $1 per week for every year of the program. He alleges that a false and misleading representation was made in writing in that regard. The applicant says that a doubling of rates will have a massive financial impact on his family’s continued ability to meet future rate demands in the longer term and he believes that he and his family will be forced to sell their property. He recounts expressions of concern by individual members of the community and indicates that he caused to be conducted a survey and provided the results to the third respondent council. He alleges that the council knowingly and/or recklessly provided the first two respondents with false and misleading information twice.
21 In light of this evidence (although it is not all in a form that would make it admissible at trial), the respondents properly concede for the purposes of the present hearing that the applicant’s case is not without substance and concerns a matter of public interest.
CONCLUSION
22 Factors favouring a security for costs order are that the motions for security were brought promptly; the applicant is impecunious so that if the order is not made the respondents, if successful and if they obtain a costs order, are likely to be out of pocket; the applicant has failed to comply with directions to plead and still has not done so; and there is a risk that he will not comply with a further direction to file and serve points of claim within a limited time. Factors weighing against a security order are that the applicant’s case is arguable, regular on its face, genuine, properly instituted, brought by a person within the jurisdiction, brought in the public interest (albeit also in his and his family’s interest); a security order would be likely to stultify the proceedings; an acceptable explanation has been provided for failure to comply with the Court’s directions to plead; and the applicant has said he would be able to plead within a short time if given the opportunity. The new r 4.2 of the Land and Environment Court Rules 2007 expressly empowers the Court not to order security for costs if satisfied that the proceedings have been brought in the public interest.
23 The factors against an unconditional security order outweigh those favouring an unconditional security order. However, the risk that the applicant will continue to default on any obligation to plead justifies a conditional security for costs order which will give him a further opportunity to plead before he is required to provide security. The appropriate amount of that security, on the uncontested evidence provided by the respondents, is as indicated below.
24 The Court orders that the applicant file and serve points of claim within 21 days. In default the proceedings will be stayed unless the applicant provides security within a further 14 days in the sum of $6,000 on account of the first and second respondents’ costs and in the sum of $6,000 on account of the third respondent’s costs. The costs of these notices of motion are reserved.
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