Shellharbour City Council v Minister for Local Government

Shellharbour City Council (the appellant) sought to challenge the validity of a proposed amalgamation of local government areas. The primary challenge was dismissed at trial in the Land and Environment Court. Subsequently, the Minister for Local Government (the respondent) abandoned the amalgamation proposal, and the appellant discontinued its appeal to the Court of Appeal. The central issue before the Court of Appeal was whether the respondent should be ordered to pay the costs of both the trial and the appeal, despite the appeal being discontinued.

The Court of Appeal was required to determine whether the respondent’s conduct in pursuing the amalgamation proposal and then abandoning it was unreasonable, thereby justifying an order for costs against the respondent. Specifically, the court considered whether the appellant's success in the appeal was inevitable, a factor relevant to awarding costs when an appeal is discontinued. The court also had to consider the principles governing the award of costs in circumstances where a matter becomes moot due to the actions of one party after the initial decision.

The Court of Appeal reasoned that the appellant's discontinuance of the appeal meant that the court was not in a position to determine the merits of the appeal. While acknowledging that the respondent's abandonment of the proposal might have rendered the appeal academic, the court found no basis to conclude that the appellant's success was inevitable, nor that the respondent's conduct was so unreasonable as to warrant an order for costs in the Court of Appeal. Regarding the trial costs, the court upheld the Land and Environment Court's order that the appellant pay the respondent's costs, finding no error in that decision.

Consequently, the Court of Appeal dismissed the appellant’s application to set aside the order for costs made in the Land and Environment Court and made no order as to the costs of the parties in the Court of Appeal.