Sharples v Minister for Local Government (No 2)

[2009] NSWLEC 62

Land and Environment Court

of New South Wales

CITATION:

Sharples v Minister for Local Government (No 2) [2009] NSWLEC 62

PARTIES:

APPLICANT:
Terry Sharples

FIRST RESPONDENT:
Minister for Local Government

SECOND RESPONDENT:
New South Wales Department of Local Government

THIRD RESPONDENT:
Tweed Shire Council

FILE NUMBER(S):

40959 of 2007

CORAM:

Biscoe J

KEY ISSUES:

COSTS :- public interest litigation - judicial review proceedings in class 4 of Court's jurisdiction - exercise of Court's power not to award costs against unsuccessful applicant

LEGISLATION CITED:

Land and Environment Court Rules 2007, r 4.2(1)
Local Government Act 1993, s 508A

CASES CITED:

Anderson v NSW Minister for Planning (No 2) [2008] NSWLEC 272, (2008) 163 LGERA 132
Engadine Area Traffic Action Group Inc v Sutherland Shire Council (No 2) [2004] NSWLEC 434, (2006) 136 LGERA 365
Ku-Ring-Gai Council v Minister for Planning (No 2) [2008] NSWLEC 276
Minister for Planning v Walker (No 2) [2008] NSWCA 334
Oshlack v Richmond River Council [1998] HCA 11, (1998) 193 CLR 72
Sharples v Minister for Local Government [2008] NSWLEC 67
Sharples v Minister for Local Government [2008] NSWLEC 328

DATES OF HEARING:

29 April 2009

 
DATE OF JUDGMENT: 

29 April 2009

LEGAL REPRESENTATIVES:

APPLICANT:
Dr A Greinke
SOLICITORS:
N/A

THIRD RESPONDENT:
Mr C J Leggat SC
SOLICITORS:
Marsdens Law Group

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

BISCOE J

29 April 2009

40959 of 2007

SHARPLES v MINISTER FOR LOCAL GOVERNMENT & ORS

JUDGMENT

1 HIS HONOUR: This is an application for costs by a successful respondent against the applicant in judicial review proceedings in class 4 of the Court’s jurisdiction: Sharples v Minister for Local Government [2008] NSWLEC 328. The proceedings were brought against the Minister for Local Government, the Department of Local Government and Tweed Shire Council. Costs were reserved. Only the council seeks an order for costs against the applicant.

2 Costs normally follow the event in class 4 proceedings. However, the applicant resists a costs order on the basis of r 4.2(1) of the Land and Environment Court Rules 2007, which provides:

“ 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.”

3 This new rule came into effect in January 2008. I considered and compared it with the pre-existing general public interest litigation costs rules in Anderson v NSW Minister for Planning (No 2) [2008] NSWLEC 272, (2008) 163 LGERA 132 and Ku-Ring-Gai Council v Minister for Planning (No 2) [2008] NSWLEC 276.

4 In Anderson at [8] – [11] I held (omitting the numerous citations):

“[8] The new r 4.2(1) is not a mere formulation of the pre-existing case law. Previously, in the absence of any costs rule expressly dealing with public interest proceedings, the courts adopted the general principle that the public interest has to be served by the litigation and there has to be an additional factor contributing to a finding of special circumstances which justifies departure from the usual costs order.

[9] The additional factor may be found in the raising of arguable, novel legal issues of general significance…

[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.

[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.”

5 In a case decided before the introduction of the new public interest costs rule, Engadine Area Traffic Action Group Inc v Sutherland Shire Council (No 2) [2004] NSWLEC 434, (2004) 136 LGERA 365 at [15], Lloyd J identified five matters that may be considered in determining whether proceedings can be categorised as having been brought in the public interest:

“The public interest served by the litigation.

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.

Whether the applicant sought to enforce public law obligations.

Whether the prime motivation of the litigation is to uphold the public interest and the rule of law.

Whether the applicant has no pecuniary interest in the outcome of the proceedings.”

6 In Minister for Planning v Walker (No 2) [2008] NSWCA 334 Ms Walker succeeded at first instance but failed on appeal. The Court of Appeal held that the litigation brought by Ms Walker was public interest litigation and there were additional special circumstances, and exercised the costs discretion by ordering each party to pay their own costs both at first instance and on appeal. It appears that the new public interest costs rule in this Court and the cases which had considered them were not brought to the Court of Appeal’s attention. The Court of Appeal decided the case by approving the five public interest considerations identified in Engadine, and by holding that more was required to displace the ordinary rule as to costs.

BACKGROUND

7 The applicant was a ratepayer in the local government area of the third respondent, Tweed Shire Council. He challenged the validity of two determinations made in 2006 and 2007 by the first respondent, the Minister for Local Government under s 508A(1) of the Local Government Act 1993 that the council’s general income may be increased. Section 508A(3) provides that such a “determination may be made only on the application of the council made in accordance with any applicable guidelines issued by the Director-General under the Act”.

8 There were two limbs to the applicant’s case:

(a) both determinations were ultra vires because under the guidelines the council was required to demonstrate to the Minister that there was evidence of community support but, in seeking to obtain such evidence, misleadingly understated to the community the effect of the proposed rate increase in the council newspaper Tweed Link. The applicant called this limb of his case “misleading the public”;

(b) both determinations were invalid because in the council’s applications the council misleadingly overstated the extent of community support or understated the extent of community opposition in paper and telephone surveys. The applicant called this limb of his case “misleading the Minister”.

9 On the first limb, the applicant succeeded at trial in establishing that the council made a materially misleading representation to the public by understating the effect of the proposed rate increases. As the process of community consultation was flawed, the council’s application to the Minister for an income increase was discordant with the guidelines concerning community consultation. However, the applicant failed to establish that the determinations were invalid. That turned on a question of statutory construction, in particular whether a determination by a Minister under s 508A(1) varying general income is invalidated if the council application is discordant with the guidelines.

10 On the second limb, the applicant was unsuccessful in its contentions that the council misled the Minister as to the extent of positive responses from ratepayers and that the determinations were invalid on four legal bases:

(a) simply because the applications contained misleading survey representations;

(b) in breach of the guidelines, the council failed to provide valid evidence of community support;

(c) the Minister failed to give proper consideration to whether there was community support for the proposal. ;

(d) by reason of (a) to (c) above, the Minister’s determinations were manifestly unreasonable.

11 The applicant submits by reference to the five Engadine considerations, that these proceedings were brought in the public interest.

(a) The public interest served by the litigation

12 The applicant submits that the public interest was served by holding up to public scrutiny the misleading conduct of the council towards its ratepayers and the manner in which the council applied to the Minister. The applicant submits that this is consistent with a concept of public benefit as supporting the transparency of government processes.

13 The council at an interlocutory stage of the proceedings, on a security for costs application, conceded that the proceedings concerned a matter of public interest: Sharples v Minister for Local Government [2008] NSWLEC 67 at [20] – [21]. However, on the present application the council submits that the public interest was not served because:

(i) letters written by the applicant prior to the litigation in which he made allegations of corrupt and criminal conduct by the council indicate that he was on a personal vendetta. I held in my earlier judgment that those allegations were wrong on any view of the evidence. However, they were not made in the proceedings. I am not inclined to conclude that the proceedings were a vendetta and not brought in the public interest simply because the applicant made intemperate or worse accusations before the litigation commenced. There is a stark contrast between the proceedings and the allegations made in letters from the applicant prior to the proceedings;

(ii) the transparency of government processes as a public benefit is entitled to little weight because it is a relevant factor in many cases challenging government decisions. I agree that it is a relevant factor in many such cases;

(iii) the proceedings were doomed to failure. I do not think that this can possibly describe the first limb of the applicant’s case. On the second limb, the applicant’s case faced substantial difficulties but again I would not characterise it as doomed to fail.

14 In my opinion the public interest was served by the litigation for the reasons submitted by the applicant.

(b) Whether that interest is confined to a relatively small number of people or whether the interest is wide

15 The council points out that the proceeding was brought by the applicant alone, it was not a class action nor was it brought by a representative association, and there is no evidence of support for the proceeding. In my opinion, this consideration is not governed by proof of popularity of the litigation in the minds of people affected. The outcome of the case directly affected all ratepayers in the Tweed Shire and the legal principles were of general significance to the legality of revenue raising activities of all local governments in New South Wales. In my opinion, the public interest served by the litigation was wide.

(c) whether the applicant sought to enforce public law obligations

16 The council concedes that the application sought to enforce public law obligations, but submits that that is entitled to little weight since that will generally be the case in judicial review proceedings.

(d) whether the prime motivation of the litigation was to uphold the public interest and the rule of law

17 The council submits that the motivation was a vendetta against the council as evidenced by the applicant’s corruption and criminality allegations in his pre-litigation correspondence. I have earlier said that I do not accept the vendetta characterisation of the litigation. In my view this consideration is satisfied. The prime purpose of the litigation was to demonstrate that, in law, the council’s conduct rendered the Ministerial determinations invalid.

(e) whether the applicant had no pecuniary interest in the outcome of the proceedings

18 The council submits that the applicant had a pecuniary interest in the outcome because he sought a refund of rates and was a ratepayer and therefore stood to benefit financially if the proceedings succeeded. The council also says that there is no evidence that anyone else wanted a refund of rates.

19 It is true that the applicant has a pecuniary interest in the outcome, but it is limited to his interest as a ratepayer. His pecuniary interest is so small that I think it is of little significance. Even if he had succeeded in the proceedings and been awarded costs, it seems likely that he would still have been out of pocket in that the usual non-recoverable component of costs would have exceeded any rates refund, or at least it is unlikely that he would have been significantly financially better off. The real pecuniary beneficiaries of the litigation, if it had succeeded, would have been numerous ratepayers who did not have to bear the burden of the litigation.

MEASURE OF SUCCESS

20 In the circumstances of this case, in my view, more is necessary for the exercise of the discretion under r 4.2. This was, I think, recognised by the applicant who submits that the finding that the council misled the public is a special factor justifying the exercise of the discretion under r 4.2, and is also a factor relevant to the Court’s general discretion on costs. I accept that that factor has significant weight in relation to the first limb of the applicant’s case. However, on the second limb, the applicant failed completely. The second limb was fairly weak.

NOVELTY AND IMPORTANCE

21 The applicant submits that a further special factor favouring an order under r 4.2 is novelty (the effect of local government misleading ratepayers) and general significance (the effect of s 508A). The raising of novel legal issues of general importance can be sufficient reason for not ordering costs against an unsuccessful applicant under the general law, even apart from r 4.2: Anderson at [9]; Oshlack v Richmond River Council (1998) 193 CLR 72 at [20].

22 The council submits that there is insufficient novelty and importance in the case given its nature and the absence of evidence that other ratepayers thought it was important, and because the applicant was conducting a vendetta against the council. I have earlier not accepted the vendetta submission.

23 In relation to the first limb, in my view the case did raise questions of novelty and general significance, as submitted by the applicant. In relation to the second limb, I do not think that it did.

CONCLUSION

24 In my opinion, under r 4.2 there should be no order as to costs in relation to the first limb of the applicant’s case. In relation to the second limb, I am not persuaded that I should depart from the usual order that costs should follow the event. It is therefore necessary to make an apportionment in a broad way. The council submits that half the costs should be attributed to the first limb and half to the second. Doing the best I can, my impression is that about two thirds of the hearing time was spent on the first limb. I think that this proportion probably also represented preparation time.

25 The order of the Court is that the applicant is to pay one third of the third respondent’s costs.