Stanley Rural Community Inc v Stanley Pastoral Pty Ltd(ACN 163 142 363)
[2018] VSCA 104
•23 April 2018
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2017 0003
| STANLEY RURAL COMMUNITY INC | Applicant |
| v | |
| STANLEY PASTORAL PTY LTD (ACN 163 142 363) | Respondent |
S APCI 2017 0019
| STANLEY PASTORAL PTY LTD (ACN 163 142 363) | Cross-Applicant |
| v | |
| STANLEY RURAL COMMUNITY INC | Cross-Respondent |
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| JUDGES: | OSBORN, SANTAMARIA and ASHLEY JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 23 April 2018 |
| DATE OF JUDGMENT: | 23 April 2018 |
| MEDIUM NEUTRAL CITATION: | [2018] VSCA 104 |
| JUDGMENT APPEALED FROM: | [2016] VSC 811 (McDonald J) |
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COSTS – Application to Trial Division pursuant to s 148 of the Victorian Civil and Administrative Tribunal Act 1998 – Where primary judge dismissed application – Where successful respondent applied for costs – Where primary judge refused application and ordered that each party bear its own costs and that successful respondent pay applicant’s costs of successful application for security for costs – Whether primary judge erred in refusing to award costs to successful respondent – Cross-appeal allowed – Costs fixed.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicant in S APCI 2017 0003 and the Cross-Respondent in S APCI 2017 0019 | Mr D M Robinson | HWL Ebsworth |
| For the Respondent in S APCI 2017 0003 and the Cross-Applicant in S APCI 2017 0019 | Mr N J Tweedie SC with Ms E Peppler | Best Hooper |
OSBORN JA:
SANTAMARIA JA
ASHLEY JA:
Introduction
In 2013, Indigo Shire Council (‘the Council’) refused the applicant, Stanley Pastoral Pty Ltd (‘SPPL’), a permit for the use and development of its land. SPPL applied to the Victorian Civil and Administrative Tribunal (‘the Tribunal’) for a review of the Council’s decision to refuse to grant the permit. It named Stanley Rural Community Inc (‘SRCI’) as the respondent to its application.
On 23 November 2015, the Tribunal allowed the application for review and granted the permit subject to certain conditions.[1] On 18 December 2015, SRCI applied for leave to appeal from the Tribunal’s orders pursuant to s 148 of the Victorian Civil and Administrative Tribunal Act 1998.
[1]Stanley Pastoral Pty Ltd v Indigo Shire Council [2015] VCAT 1822.
On 24 February 2016, SPPL applied for an order that SRCI give security for the costs of its application for leave to appeal. On 20 April 2016, Ginnane J ordered that SRCI give security in the sum of $20,000.[2] In doing so, he made an order reserving the costs of the application for security. On 18 May 2016, SRCI paid $20,000 into court.
[2]Stanley Rural Community Inc v Stanley Pastoral Pty Ltd [2016] VSC 173.
On 12 December 2016, a judge in the Trial Division dismissed the application for leave to appeal from the Tribunal’s orders.[3] On 23 December 2016, the judge refused to make an order for costs in favour of SPPL and ordered that the amount that SRCI had paid into court by way of security be released to SRCI.[4]
[3]Stanley Rural Community Inc v Stanley Pastoral Pty Ltd [2016] VSC 764.
[4]Stanley Rural Community Inc v Stanley Pastoral Pty Ltd [2016] VSC 811 (‘Costs Reasons’).
On 17 January 2017, SRCI applied to this Court for leave to appeal in respect of the primary judge’s dismissal of its application for leave to appeal from the Tribunal’s orders.[5]
[5]S APCI 2017 0003.
On 17 February 2017, SPPL applied to this Court for leave to cross-appeal in respect of the primary judge’s refusal to make an order for costs in its favour as the successful respondent before the primary judge.[6]
[6]S APCI 2017 0019.
On 26 October 2017, this Court heard the parties’ oral arguments on SRCI’s application for leave to appeal. On that occasion, the Court indicated that it would deal with SPPL’s application for leave to cross-appeal after it had determined SRCI’s application for leave to appeal.
On 20 December 2017, this Court refused SRCI’s application for leave to appeal and published its reasons.[7]
[7]Stanley Rural Community Inc v Stanley Pastoral Pty Ltd [2017] VSCA 385.
On 23 April 2018, this Court heard SPPL’s application for leave to cross-appeal. After hearing oral argument, the Court ordered that the application for leave to cross-appeal be granted and the cross-appeal allowed. It fixed the costs payable by SRCI to SPPL in respect of both the application for leave to appeal to the Trial Division and the application for security for costs at $50,000. It also fixed the costs payable by SRCI to SPPL in respect of the application for leave to appeal to this Court and the application for leave to cross-appeal at $40,000. At the time of making those orders, we indicated that we would provide reasons in due course. These are our reasons.
The reasons of the primary judge
The primary judge refused to make an order for costs in favour of SPPL on the basis that the point upon which it had succeeded (a) was not advanced before the Tribunal; and (b) had not been foreshadowed in its written submissions before the primary judge (although it was raised in oral argument on the second day of the hearing). He said that ‘[t]he conduct of SPPL falls within a well-recognised category of conduct disentitling a successful party to a beneficial exercise of the Court’s discretion.’[8] In reaching his conclusion, the primary judge relied upon JGM Nominees Pty Ltd v Tulip Investments Pty Ltd,[9] Oshlack v Richmond River Council[10] and Armstrong v Boulton.[11]
[8]Costs Reasons [11]. The primary judge also rejected SRCI’s submission that SPPL should be ordered to pay its costs.
[9](2013) 46 VR 709.
[10](1998) 193 CLR 72 (‘Oshlack’).
[11][1990] VR 215 (‘Armstrong’).
In the event, the primary judge ordered that each party bear its own costs of the proceedings. He then considered the order made by Ginnane J on 20 April 2016 in which he had reserved the costs of the application for security. The primary judge said:
[SRCI] is entitled to an order that SPPL pay its costs of and incidental to the security for costs application heard by Ginnane J on 1 April 2016. As no costs order has been made in favour of SPPL in the current proceeding, [SRCI] is entitled to the costs which it incurred resisting the security for costs application. Further, an order will be made pursuant to r 79.02(2) of the Supreme Court (General Civil Procedure) Rules 2015 releasing to [SRCI] the $20,000 which it paid into court pursuant to the orders made by Ginnane J on 18 May 2016.[12]
[12]Costs Reasons [13].
Submissions
SPPL contended that the costs orders made by the primary judge were unreasonable. It argued that (a) the primary judge’s reasons depended, as a matter of practicality, upon his finding that SPPL could only have succeeded on its argument with respect to s 8(6) of the Water Act 1989, whereas it had other bases upon which it could have succeeded; (b) it had contended before the Tribunal and the primary judge that the Water Act (which necessarily included s 8(6)) effectively set out a ‘code’ for the use and control of groundwater; and (c) SPPL was entitled to defend the decision below ‘on any ground reasonably available to it, regardless of whether that ground had been raised by it’ before the Tribunal or the primary judge. SPPL also said that the lack of specific reference to sub-ss 8(4) and (6) in the Tribunal’s reasons did not mean that the provision is to be taken to have been overlooked; the terms of the Tribunal’s decision were such that it necessarily required the primary judge (and the parties) to have regard to the whole of the Water Act, including sub-ss 8(4) and (6).
SPPL also contended that the costs orders were influenced by several erroneous conclusions of fact and law. It drew attention to certain findings that were set out in the substantive reasons of the primary judge and said that it should be inferred that he relied upon those findings to support his conclusion that SPPL had only succeeded on appeal because of the operation of sub-ss 8(4) and (6).
Finally, SPPL contended that the approach of the primary judge in relation to the costs of the application for security for costs was unreasonable. SPPL said that the mere fact that no order had been made that SRCI pay costs did not justify a conclusion that the application should not have been brought in the first place. According to SPPL, the application was well-founded because it was necessary and appropriate that SRCI be ordered to pay a reasonable sum to be held as security, which SRCI unsuccessfully resisted. SPPL submitted that it was entitled to the costs of that application regardless of the position in relation to the appeal costs.
For its part, SRCI contended that the primary judge was under no obligation to determine every issue in dispute before exercising the discretion to order that each party bear its own costs. It said that the issues that the primary judge did not address were irrelevant to the outcome of the proceedings or to the question of costs; the only legally relevant issue was the new issue that SPPL raised during the hearing before the primary judge. SRCI also argued that there was no unreasonableness in distinguishing the basis of SPPL’s success before the primary judge from the basis of its success before the Tribunal.
SRCI also contended that the costs orders were not influenced by the errors of fact and law to which SPPL drew attention.
Finally, SRCI contended that the primary judge’s decision on the costs arising from the application for security for costs did not concern the issue whether the application should not have been brought; it was simply a finding that SRCI should not be required to indemnify SPPL for its costs of obtaining security from SRCI that, in the event, served no purpose. In other words, said SRCI, the costs of the summons for security for costs ‘followed the event’ on costs.
Analysis
Ordinarily, costs follow the event on an appeal.[13] However, it is not necessarily an error to hold that a successful respondent should be denied its costs. The award of costs is in the discretion of the Court.[14] Accordingly, such an award will be reviewed only when it can be shown that the Court acted on a wrong principle, mistook the facts, took into account an irrelevant consideration, failed to take into account a relevant consideration or made a decision in which, although no specific error can be identified, was so unreasonable as to suggest implicit error.[15] While it is not uncommon for a successful appellant to be refused its costs on appeal, especially where success has resulted from a point not taken below, it is relatively uncommon for a successful respondent to be refused its costs: the respondent succeeded below and has been brought into an appeal which has proved unsuccessful. Moreover, a successful respondent is entitled to defend the decision below on any ground which is open to it.[16]
[13]Jamal v Department of Health (1988) 14 NSWLR 252, 271 (Mahoney JA).
[14]Boz One Pty Ltd v McLellan (No 2) [2015] VSCA 145 [41] (Whelan, Santamaria and Kyrou JJA).
[15]House v The King (1936) 55 CLR 499, 505 (Dixon, Evatt and McTiernan JJ). See also Wightman v Johnson [1995] 2 VR 637, 639–40 (Phillips JA, with whom Brooking and Charles JJA agreed).
[16]Bulasa Pty Ltd v Baytown Properties Pty Ltd [2003] VSC 248 [58] (Gillard J).
In particular, we note the authorities upon which the primary judge relied in reaching his conclusion that each party bear its own costs of the proceedings. Those authorities relate to the circumstances in which a successful appellant might be denied its costs. They do not consider the circumstances in which a successful respondent might be denied its costs. In Oshlack,[17] McHugh J, with whom Brennan CJ agreed, said:
[17](1998) 193 CLR 72.
The traditional exceptions to the usual order as to costs focus on the conduct of the successful party which disentitles it to the beneficial exercise of the discretion. In Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd, Devlin J formulated the relevant principle as follows:
No doubt, the ordinary rule is that, where a plaintiff has been successful, he ought not to be deprived of his costs, or, at any rate, made to pay the costs of the other side, unless he has been guilty of some sort of misconduct.
‘Misconduct’ in this context means misconduct relating to the litigation, or the circumstances leading up to the litigation. Thus, the court may properly depart from the usual order as to costs when the successful party by its lax conduct effectively invites the litigation; unnecessarily protracts the proceedings; succeeds on a point not argued before a lower court; prosecutes the matter solely for the purpose of increasing the costs recoverable; or obtains relief which the unsuccessful party had already offered in settlement of the dispute.[18]
[18]Ibid 97–8 [69] (citations omitted). McHugh J was in dissent, but not on this point of principle.
McHugh J referred, with approval, to the following passage from the judgment of the Full Court of this Court in Armstrong:[19]
[19][1990] VR 215.
Under O 64, r 17(1) Supreme Court Rules, the court may make such order for the whole or any part of the costs of an appeal as it thinks fit.
The general rule is that the successful appellant is entitled to costs unless there are special circumstances to deprive him of them.
There have been a number of cases where a successful appellant was deprived of costs where he succeeded on a point not taken in the court below.
In Great Gulf Company v Sutherland (1873) 4 AJR 164, this court held at 164, that ‘where in a County Court appeal the case is decided on point which has, for the first time, been noticed in this Court, the rule generally prevailing will be that no costs will be allowed’.
In Hussey v Home-Payne (1878) 8 Ch D 670, the Court of Appeal (Chancery Division) considered an appeal from a decision on a demurrer to a claim for specific performance of a contract. The point on which the Court of Appeal decided the case was one which had not been argued before the Vice-Chancellor on the demurrer. The court held in favour of the appellant but held that there should be no costs of the appeal. In Goddard v Jeffreys (1882) 46 LT 904 it was held that as a general rule, where an appellant succeeds on a new point, he ought not to get his costs of appeal. The court left the question of who was to pay the respondent's costs to be decided by the judge in the court below. Similarly, in Dye v Dye (1884)13 QBD 147, the Court of Appeal (QB division) held that because the successful plaintiff did not argue in the court below the point on which he succeeded, there would be no costs of the appeal.
In McCracken v Dacomb (1890) 16 VLR 378, at 385–6, this court gave no costs either of the proceedings below or of the appeal, ‘because the ground upon which we decide the case does not appear to have been presented to the learned primary judge’.
We are of the view that this is an appropriate case where the appellant should not have her costs of the appeal. It follows that each party is to bear their own costs of the appeal.[20]
[20]Ibid 223 (citations omitted) (Kaye, King and Gobbo JJ).
In Rhodes v Tower Australia Superannuation Limited,[21] a case to which the parties did not refer the judge, Ms Rhodes lodged a complaint with the Superannuation Complaints Tribunal with respect to a plan into which she had entered with a superannuation fund. Her complaint concerned, among other matters, an exit fee imposed by the fund insurer. The Superannuation Complaints Tribunal held that the exit fee was equitable.
[21][2004] FCA 812 (‘Rhodes’).
Ms Rhodes appealed to the Federal Court. The appeal was dismissed on a threshold point — described as ‘a previously unannounced threshold submission’[22] — taken by the trustee of the superannuation fund that there was no relevant decision made by it which could have been reviewed by the Superannuation Complaints Tribunal.[23] Relevantly, French J said that the trustee ‘raised for the first time at the hearing of the appeal the contention that the [Superannuation Complaints Tribunal’s] decision was beyond its authority’.[24] The substantive basis upon which the appeal was dismissed was that the Superannuation Complaints Tribunal had no authority to vary the terms or set aside the imposition of the exit fee.[25] French J said:
In my opinion the discretion to award costs to a successful respondent may be informed by its failure to take a preliminary objection until the very last minute. I would not go so far as to say that it would be appropriate in any but exceptional cases to award costs against such a respondent. However it may be appropriate to refuse the benefit of an order for costs in such a case.[26]
[22]Ibid [21].
[23]Ibid [2].
[24]Ibid [17].
[25]Ibid [18].
[26]Ibid [19].
In ordering that each party bear its own costs,[27] French J had regard to the following matters:
1.The Tribunal’s authority to hear and determine the application was not challenged before the Tribunal.
2.The question of the Tribunal’s authority was not raised until the hearing of the appeal.
3.The Trustee is involved in the superannuation industry on a day-to-day basis and would be expected to have access at a much earlier stage than the hearing of the appeal to advice in relation to the powers of the Tribunal.
4.Much of the debate in the written and oral submissions at the appeal was wasted in light of the preliminary point taken.
5.There was no prior notice of the intention of the Trustee to take the preliminary issue.[28]
[27]Ibid [21].
[28]Ibid [20].
In the present case, while Rhodes stands for the proposition that, in point of principle, the judge was not precluded from denying the successful respondent its costs, we think that the primary judge, in denying the successful respondent its costs, failed to take into account or give proper consideration to a number of matters.
First, in our opinion, the position of SPPL was not to be equated to that of an appellant who takes a point for the first time on appeal. Had a successful appellant brought the point on which it succeeded at the hearing from which the appeal has been brought, the necessity for the appeal may have been obviated. But that is not the case with a respondent who succeeds below and succeeds on appeal. It has generally been considered that a respondent is entitled to defend its success below on any ground that might be open to it upon the hearing of the appeal. The circumstances that arose in Rhodes, if not unique, were at least far removed from the circumstances of this case.
Secondly, the primary judge had not decided that the only basis upon which SPPL could succeed on appeal was the construction of s 8(6) of the Water Act. There were other issues which did not have to be decided but, were they decided, it is arguable that they would have been decided in favour of the respondent.
Thirdly, while it is true that the effect of s 8(6) did not emerge as a pivotal consideration until the second day of the hearing before the primary judge (as we understand it) the case was decided in the Tribunal on what has been the conventional basis for resolving the relationship between the Water Act and the Planning and Environment Act 1987. The competing submissions below address that basis.
Separately, we also consider that the primary judge failed to address properly the orders for security for costs which had been made in favour of SPPL. SPPL had succeeded before the Tribunal; it was perfectly entitled to seek security from SRCI in the conduct of the appeal. That entitlement was vindicated by the order of Ginnane J that security be granted.
In the event, we consider that the primary judge’s decision not to allow SPPL its costs was affected by error. In those circumstances, the discretion to award costs is re-opened. As with the primary judge, we are also impressed with the fact that SPPL succeeded on a ground which it had not argued before the Tribunal and which it had not foreshadowed relying upon before the primary judge. In our opinion, an order should be made allowing SPPL some, but not all, of its costs.
At the hearing of the application for leave to cross-appeal, we asked counsel for SPPL for an estimate of the costs of SPPL up to and including the hearing before the primary judge. We were told that those costs were estimated at approximately $106,000 on a solicitor–client basis. Counsel for SRCI did not suggest that that estimate was exorbitant or in any other way unreasonable. We think that no further costs should be spent in determining the costs of the application before the primary judge. In all the circumstances, we will fix the costs payable by SRCI to SPPL in respect of both the application for leave to appeal to the Trial Division and the application by SPPL for security for costs at $50,000.
At the conclusion of the hearing of the application for leave to cross-appeal, SPPL made an application for its costs of both the application for leave to appeal to this Court and its application for leave to cross-appeal. SRCI opposed that application. It contended that its participation in these proceedings was prompted by considerations of public interest and the necessity to determine an important question of law. It referred to Oshlack. The Court granted SRCI leave to file an affidavit of Edwin Tyrie affirmed on 20 April 2018 in opposition to SPPL’s application for its costs in this Court.
In our opinion, costs should follow the event. It has not been established to us that the present application was purely one that might be described as ‘in the public interest’. The Tribunal was required to give effect to the public interest as provided for in the Planning and Environment Act[29] and the Indigo Planning Scheme made under that Act. SRCI has not established that the Tribunal failed to do so.SRCI chose to pursue its opposition to SPPL by opposing its application for relevant permits under the Planning and Environment Act rather than by exercising rights of appeal that existed under the Water Act. Further, the determination of the critical question of law had been made in the Trial Division. No further cogent reason in the public interest for pursuing an application for leave to appeal to this Court was provided.
[29]See Planning and Environment Act 1987 s 4.
For the reasons given above, this Court is of the opinion that no further costs should be expended in determining the costs of the present application for leave to appeal and the application for leave to cross-appeal. The Court asked counsel for the cross-applicant for an estimate of SPPL’s costs of the application for leave to appeal to this Court and its application for leave to cross-appeal. Counsel said that its costs, not including today, were approximately $47,000 on a solicitor–client basis. Again, counsel for SRCI responsibly conceded that this estimate was neither exorbitant nor unreasonable. Accordingly, we will fix the costs payable by SRCI to SPPL in respect of the application for leave to appeal to this Court and the application for leave to cross-appeal at $40,000.
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