Stanley Rural Community Inc v Stanley Pastoral Pty Ltd (No 2)

[2016] VSC 811

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE
COMMON LAW DIVISION
JUDICIAL REVIEW AND APPEALS LIST

S CI 2015 06415

STANLEY RURAL COMMUNITY INC	Applicant
v
STANLEY PASTORAL PTY LTD (ACN 163 142 363)	Respondent

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JUDGE:	McDonald J
WHERE HELD:	Melbourne
DATE OF HEARING:	10 and 14 November 2016
DATE OF JUDGMENT:	23 December 2016
CASE MAY BE CITED AS:	Stanley Rural Community Inc v Stanley Pastoral Pty Ltd (No 2)
MEDIUM NEUTRAL CITATION:	[2016] VSC 811

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COSTS – Respondent succeeded on a point of statutory construction not argued at first instance and not foreshadowed in advance of proceedings – Discretion to refrain from awarding costs to successful party – Each party ordered to bear their own costs – Order releasing funds paid into court by applicant – Supreme Court (General Civil Procedure) Rules 2015 r 79.02(2).

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APPEARANCES:	Counsel	Solicitors
For the Applicant	Mr D M Robinson	Lander & Rogers
For the Respondent	Mr N J Tweedie SC with Ms E Peppler	Best Hooper

HIS HONOUR:

1. On 12 December 2016, the Court delivered judgment in Stanley Rural Community Inc v Stanley Pastoral Pty Ltd.[1]  At [44] and [45] of the judgment the Court stated:

44.Sections 8(4) and (6) of the Water Act are fatal to SRC’s application for leave to appeal. The application must be dismissed. Although there is no reference to ss 8(4) and (6) in the decision of the Tribunal, the operation of these provisions supports the Tribunal’s ultimate conclusion that SPPL did not require a planning permit for the bulk extraction of water.

45.I shall provide the parties with an opportunity to make submissions on the question of costs. I have reviewed the written submissions which were filed before the Tribunal. There is no reference in SPPL’s written submissions to ss 8(4) and (6) of the Water Act. No party appears to have addressed the critical issue of the meaning of the phrase ‘expressly (and not merely impliedly)’ in s 8(6). My conclusion that this phrase requires explicit language qualifying the rights conferred on the holder of a water licence is a key component of my reasons. If no submissions were advanced before the Tribunal regarding the operation of ss 8(4) and (6), a question arises as to whether this has any bearing upon the costs of the current proceedings.[2]

[1][2016] VSC 764.

[2]Ibid [44]–[45] (citations omitted).

1. Both the applicant (‘SRC’), and the respondent (‘SPPL’), filed written submissions on the question of costs.  SPPL submits that SRC should pay its costs, or alternatively, pay its costs fixed in the sum of $23,000.[3]  The amount of $23,000 is made up of two components.  First, $20,000 paid into court pursuant to a security for costs order made by Ginnane J on 20 April 2016.[4]  Second, an amount of $3,000 paid into trust by consent. 

   [3]‘Outline of Submissions on Costs on behalf of Stanley Pastoral Pty Ltd’ dated 16 December 2016, [2].

   [4]As subsequently amended by order of Ginnane J dated 18 May 2016.

1. SRC seeks orders that SPPL pay its costs of the proceeding.[5]  In the alternative, it seeks an order that SPPL be ordered to pay its costs of the application for security for costs determined by Ginnane J on 20 April 2016, and that otherwise each party bear their own costs.[6]  In the further alternative, it seeks an order that each party bear their own costs of the proceeding.[7] 

   [5]‘Submissions on Costs on behalf of the Applicant’ dated 20 December 2016, [2].

   [6]Ibid.

   [7]Ibid.

1. For the reasons which follow, I have concluded that, save for the costs of the security for costs application before Ginnane J, each party should bear their own costs of the current proceeding.  SPPL will be ordered to pay SRC’s costs of and incidental to the security for costs application on a standard basis.

1. Both SPPL and SRC accept that no submissions were advanced by either party in the proceeding before the Victorian Civil and Administrative Tribunal (‘Tribunal’) regarding the operation of s 8 of the Water Act 1989.[8]  In the current proceeding, SPPL has succeeded on a point which was not argued at first instance.  The point was not foreshadowed in SPPL’s lengthy written submissions filed in advance of the hearing.  It was raised for the first time on the second day of hearing.

   [8]Ibid [3]–[4]; ‘Outline of Submissions on Costs on behalf of Stanley Pastoral Pty Ltd’ dated 16 December 2016, [6], [19].

1. SPPL submits that ‘despite s 8 of the Water Act not being explicitly referred to in the Tribunal’s decision, the findings of the Court and the Tribunal are ad idem’.[9] It is correct that both the Court and the Tribunal concluded that SPPL did not require a permit for the extraction of 19 megalitres of water the subject of the ‘take and use’ licence which was granted under s 51 of the Water Act 1989. However, it is ss 8(4) and (6) of the Water Act which underpin the Court’s conclusion that no permit was required.  Those provisions are not mentioned in the Tribunal’s reasons for decision,[10] reflecting the absence of any submission before the Tribunal regarding the operation of these provisions.

   [9]‘Outline of Submissions on Costs on behalf of Stanley Pastoral Pty Ltd’ dated 16 December 2016, [11].

   [10]See Stanley Pastoral Pty Ltd v Indigo Shire Council [2015] VCAT 1822.

1. The Court has a discretion to refrain from awarding costs to a successful party.  The circumstances which may, in the exercise of this discretion, justify the making of an order depriving a successful party of costs, include the fact that the successful party has succeeded on a point which was not argued at first instance.

1. In JGM Nominees Pty Ltd v Tulip Investments Pty Ltd,[11] Neave JA considered (with Kyrou AJA agreeing) the circumstances which may, in the exercise of a court’s discretion, justify the making of an order that a successful party to litigation bear the costs of the unsuccessful party. Neave JA stated:

Although costs normally follow the event, it is not necessarily an error for a judge to order that a successful party to litigation bear the costs of the unsuccessful party. The circumstances which may, in the exercise of a judge’s discretion, justify the making of such an order, include misconduct prior to or in the conduct of litigation, the fact that the successful party has succeeded on a point which was not argued at trial and/or the fact that the successful party obtains relief which had already been offered by the unsuccessful party. None of those circumstances applied in this case.[12]

[11](2013) 46 VR 709 (‘JGM Nominees’).

[12]Ibid [59] (citations omitted).

1. Neave JA in JGM Nominees cited with approval the judgment of McHugh J in Oshlack v Richmond River Council.[13]  McHugh J stated:

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.[14]

[13](1998) 193 CLR 72.

[14]Ibid [69] (McHugh J in dissent, but not on this point) (citations omitted).

1. In support of the proposition set out above, McHugh J cited with approval the following passage from the judgment of the Appeal Division of the Supreme Court of Victoria in Armstrong v Boulton:[15]

   [15][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: Solomon v Miller (1865) 2 WW & AB (Eq) 135; Learmonth v Bailey (1875)1 VLR (Eq) 34; Memo of Judges (1875) 1 Ch D 41 and Olivant v Wright (1875) 45 LJ Ch 1.

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 p 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 pp 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.[16]

[16]Ibid 223.

1. The judgment in Armstrong v Boulton has frequently been cited with approval.[17] An order that each party bear their own costs is appropriate in the current proceedings. The operation of ss 8(4) and (6) of the Water Act 1989 in respect of the licence granted to SPPL was critical to my finding in favour of SPPL in the current proceeding.  SPPL has succeeded on a point not argued at first instance and which was not foreshadowed in advance of the proceedings.  The conduct of SPPL falls within a well-recognised category of conduct disentitling a successful party to a beneficial exercise of the Court’s discretion.

   [17]Adrenaline Pty Ltd v Bathurst Regional Council (2015) 322 ALR 180, [89]; Deas v Issa (No 2) [2013] FCA 1145, [2]; Pamamull v Albrizii (Sales) Pty Ltd (No 3) [2011] VSCA 320, [12].

1. SRC submitted that SPPL should be ordered to pay its costs.[18] I do not accept this submission. Although not raised in the proceedings before the Tribunal, the construction of ss 8(4) and (6) of the Water Act 1989 is a matter which could have been identified by SRC’s legal advisors as an impediment to a successful challenge to the Tribunal’s decision.  An order that each party bears its own costs strikes an appropriate balance on the question of costs.

   [18]‘Submissions on Costs on behalf of the Applicant’ dated 20 December 2016, [2].

1. I shall order that each party bear their own costs in the current proceeding.  SRC 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.[19] As no costs order has been made in favour of SPPL in the current proceeding, SRC 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 SRC the $20,000 which it paid into court pursuant to the orders made by Ginnane J on 18 May 2016.

   [19]Costs of the security for costs application were reserved by Ginnane J by order dated 20 April 2016.

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