Woollahra Municipal Council v Minister for Local Government & Ors

[2017] HCATrans 244

[2017] HCATrans 244

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S141 of 2017

B e t w e e n -

WOOLLAHRA MUNICIPAL COUNCIL

Appellant

and

MINISTER FOR LOCAL GOVERNMENT

First Respondent

DR ROBERT LANG, DELEGATE OF THE CHIEF EXECUTIVE OF THE OFFICE OF LOCAL GOVERNMENT

Second Respondent

CHIEF EXECUTIVE, OFFICE OF LOCAL GOVERNMENT

Third Respondent

LOCAL GOVERNMENT BOUNDARIES COMMISSION

Fourth Respondent

GAGELER J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON WEDNESDAY, 29 NOVEMBER 2017, AT 9.01 AM

Copyright in the High Court of Australia

____________________

MR C.J. BIRCH, SC:   If your Honour please, I appear with my learned friend, MS T.L. PHILLIPS, for the appellant.  (instructed by Speed and Stracey Lawyers)

MR N.C. HUTLEY, SC:   If your Honour please, I appear with my learned friend, MR S.J. FREE, for the first respondent.  (instructed by Crown Solicitor’s Office (NSW))

HIS HONOUR:   Thank you, Mr Hutley.  I note that there are submitting appearances for the second, third and fourth respondents.  Technically, this is your motion, Mr Hutley.  You move on your summons?

MR HUTLEY:   Yes, your Honour.

HIS HONOUR:   You read your affidavit?

MR HUTLEY:   Yes, your Honour.  There is a little bit of correspondence to be tendered beyond the affidavit material, just to bring up to date the various offers and counter‑offers with respect to resolving the matter.

HIS HONOUR:   Since the last outing in this Court?

MR HUTLEY:   No, not since the last one, since 25 October.  They did not go in in the first instance, your Honour.  I think it is by consent.

HIS HONOUR:   Very well.  Thank you.

MR HUTLEY:   It is four letters, your Honour.

HIS HONOUR:   Thank you.  I will mark the four letters together exhibit A.

EXHIBIT A:          Four letters

HIS HONOUR:   Mr Birch.

MR BIRCH:   Your Honour, I read the affidavit of Mr Malcolm Robert Gordon Stewart, filed on 23 October and sworn on 23 October, to which there were four objections of which we were notified on a schedule and I do not read the portions objected to.  I could perhaps just hand up that schedule for your Honour.

HIS HONOUR:   Yes.  Very well, I read the affidavit, I admit the exhibits and, in reading the affidavit, I omit those parts noted on the schedule which I will put with the affidavit itself so there is no doubt when somebody inspects the file.  All right ‑ ‑ ‑

MR BIRCH:   Your Honour, I think we are, in a sense ‑ ‑ ‑

HIS HONOUR:   ‑ ‑ ‑ it is your show, I think.

MR BIRCH:   ‑ ‑ ‑ the substantive moving party and we had understood we would be opening.

HIS HONOUR:   Yes.

MR BIRCH:   Could I take your Honour to ‑ ‑ ‑

HIS HONOUR:   Well, that is a grand word, given that it is a summons to be heard in the next 45 to 50 minutes.

MR BIRCH:   Yes, I am not going to separately open, your Honour, and I am mindful of the clock here in front of me, and I am assuming that I should wind up in about 20 to 25 minutes so there is time for Mr Hutley and a reply.

Your Honour, can I go to the affidavit of Mr Stewart and just take you quickly to three or four important facts.  If one goes to tab 4, that is a letter – no, it is not – I will go to the body of the affidavit, your Honour, and to paragraph 22 in the affidavit.  That deposes to an offer that was made to accept undertakings so as to avoid having to bring the action.  That offer was made on 24 March.  The letter, in fact, appears under tab 16.

HIS HONOUR:   That is during the pendency of the Land Environment Court proceeding, is it?

MR BIRCH:   It is, and that was shortly prior to the proceedings which were commenced on 1 April 2016.  Then there was a further revised form of offer to accept undertakings; that is referred to in paragraph 23.  That was made on 30 March, just the day before, in effect.  That appears under tab 17.  Sorry, your Honour, the offer to which I just referred was under tab 18 – no, my notes have let me down, your Honour.  In any event, the substance of it is referred to in the – yes, so I have taken your Honour to the offer that was made on 22 – that was rejected by the Crown Solicitors on behalf of the Minister.  And then I should take your Honour to the offer that was made during the course of the litigation.  Your Honour will find that under tab 18.

HIS HONOUR:   Tab 18.  Thank you.

MR BIRCH:   Yes, tab 18.  That is dated 21 June.  That is after the Land and Environment Court litigation had travelled some distance, and it refers in the first paragraph to the fact that:

there is likely to be an appeal to the Court of Appeal . . . a serious likelihood of an application for special leave –

Then in the fourth paragraph:

Accordingly our client proposes that this matter be settled on the basis that the amalgamation not proceed under the current proposal.  The costs of the proceedings to date would be borne by the respective parties.

So that was the formal offer that was made.  Now, what happened then, your Honour, was this – the matter proceeded to judgment, the matter was appealed to the Court of Appeal and there was then an application for and a grant of special leave.  And then after the grant of special leave had been made and all of the submissions of the parties in readiness for the appeal in this Court had been filed, there was the public announcement, which your Honour finds under tab 21.  Now, the responsible Minister is the Minister for Local Government but the public announcement came from the Office of Premier and Cabinet.  I just wish to highlight two or three matters at this stage.  In the first paragraph:

Due to the protracted nature of current legal challenges and the uncertainty this is causing ratepayers, those council amalgamations currently before the courts will not proceed.

It refers to the fact that there had been “lengthy and costly legal proceedings” to which certain councils were happy to contribute, according to the Premier, in the third paragraph, and the proposals that were not to proceed included the Randwick, Waverley, Woollahra one over the page.

Then that media announcement is added to in this regard.  If one goes to tab 22, this is a letter from the Minister for Local Government to the mayor of Woollahra, writing to say that:

I . . . advise . . . I have decided not to recommend to the Governor of New South Wales that the proposal to merge the Randwick, Waverley and Woollahra local government areas be implemented.

This means that your council will continue to stand alone.

If your Honour then turns back to tab 6, this is the process that commenced the matter in the Land and Environment Court, and prayer 6 for relief was:

An injunction restraining the Minister from recommending implementation of the Proposal until such time as the Proposal has been examined, an inquiry in relation to the Proposal has been held, and a report furnished in accordance with ss 218F and 263 of the LGA.

So the proposal had to be inquired into by a delegate, it had to be the subject of a review by the Boundaries Commission and then the Minister had to determine whether or not to recommend to the Governor to proclaim the amalgamation.  We sought an injunction that would restrain her from making that proposal to the Governor.  We got the determination that I have just taken your Honour to at tab 22 where the Minister said, I will not be recommending to the Governor that the proposal be implemented.

Now, if I go back to the affidavit of Mr Stewart and to page 8 in that affidavit, it sets out part of the transcript of an interview given by the Premier of New South Wales shortly after the announcement had been made ‑ in a radio interview in which she was asked various things.  Now, your Honour will see there that the Premier expands upon the reasons why the public announcement was made and the Minister made the decision not to recommend – this is at page 2:

unfortunately, the advice we received previously was that it was unlikely the High Court would choose to hear the case and given the protracted timing –

et cetera.  I do not need to read it all to your Honour, but it is clearly referring to the grant of special leave and pending High Court appeal.  At just point 6:

We had not assumed the court action would take so long, there’d be so many councils to take court action and as a result, our goal as a government is to provide certainty –

et cetera.  Then the last question:

Is it true that apart from the council elections that the advice you received that you were going to get done in the High Court?

Premier:   No.  The advice was . . . the advice was that simply we didn’t know and what concerned me more than not knowing what the outcome might be is the timing.  So you have various bits of advice –

et cetera.  I will not read it all.  But what it comes down to is this – we say, your Honour, that it makes clear, reading that and the public media release, that it was the pending appeal in this Court which was the cause of the decision to what we have described as capitulate to the request of Woollahra not to recommend to the Governor.

I will go back to that again, your Honour, when I come to the exercise of the discretion.  There are, in effect, two issues.  Firstly, does your Honour have power to make the sort of orders that we have sought, and then, secondly, ought your Honour to make them.  The power issue, of course, concerns the question of the costs orders below.  We are inviting your Honour to set aside the costs orders that were made in the Land and Environment Court and the Court of Appeal.

We say the steps in our argument are these: we say, firstly, that section 26 of the Judiciary Act, construed without having in mind a potential constitutional limitation, confers sufficient power upon this Court to deal with all the issues of costs.  There is no necessary limitation within that section that the Court must have proceeded to have dealt with and determined the appeal and that it confers upon this Court the power to make an order in circumstances where we say there has been a capitulation to set aside all the costs orders below and award costs to my client down the line or, alternatively, set them aside on the basis that there would then be no order as to costs down the line.  I will come to the costs in this Court as a separate issue.

So the first step in the argument is does section 26 by its terms have that breadth we say it does. We did not detect in our opponent’s submissions any strong dispute that it did not have that breadth, leaving aside the question of a constitutional implication. We have referred in our written submissions to the judgment of Justice Hayne in particular in Edwards v Santos as authority to the fact that section 26 where it speaks of the costs of the matter is referring to the costs in the courts below as well as in this Court and his Honour was there contrasting this Court’s appellate jurisdiction with the judicial review application in its original jurisdiction where the costs of the matter that is the subject of the review are not part of the matter in this Court.

HIS HONOUR:   What particular passage in Justice Hayne’s judgment in Edwards v Santos are you referring to?

MR BIRCH:   Yes, your Honour; if I could take your Honour to page 426 in the report of Edwards v Santos. Your Honour will see at the very bottom of page 426 his Honour commences to refer in paragraph 11 to section 26. And what happened in this case was that there had been judicial review of matters ‑ ‑ ‑

HIS HONOUR:   I was in it, I recall.

MR BIRCH:   Sorry, I should have read the names of counsel.  Your Honour will then see the passages in paragraph 12, and particularly paragraph 13, are the ones which we principally rely upon.  Your Honour will see there in paragraph 13:

The justiciable controversy in the Federal Court . . . In this Court, the justiciable controversy was whether the Federal Court’s orders disposing . . . were infirm . . . Unlike the case of committal for trial followed by trial, in which a single matter proceeds through . . . and unlike the case in which this Court’s appellate jurisdiction is engaged, the “matter brought before the Court” here is distinct from the matter that was brought before the Federal Court.

So what we say is “matter” here means the whole of the controversy as it has been from its first instance hearing through the intermediate appeal to this Court.

Your Honour, there are the comments that we refer to in our written submissions from DL as to the necessity of reading section 26 broadly. We say that – and I will come in a moment to the – when I touch upon discretionary reasons as to why the Court should find that it has the broadest possible power to deal with costs in order to ensure that the appellate jurisdiction cannot work an injustice to parties and its limit there is the potential and I will point out why that is the case shortly.

Your Honour, can I concentrate my focus on this argument which we apprehend is the key point against us.  There is what they say ‑ what Justice McHugh called in Eastman a “negative implication” from section 73. Given what has been said in Mickelberg and Eastman about the nature of the appeal under section 73 that it is although an appeal in which the Court has ample power to decide the matter, it is one in which it is decided on the evidence that was led at trial, there is no power to lead fresh evidence, and there are broad statements in the authorities that one does not take into account circumstances that have occurred since the date of the trial.

Therefore, so it is said, we cannot obtain costs orders because if that is the nature of the appellate jurisdiction under section 73, so it is said, there is a negative implication which restrains the legislature even in exercising its incidental power that it cannot alter the fundamental nature of that appellate jurisdiction, and we say that argument ought be rejected, that section 26 does not get read down and there was ample legislative power to pass section 26 in the broad form which I have contended for.

We say that is so for two reasons.  We say, firstly, Mickelberg and Eastman are not authority for that negative implication argument.  They did not have before them – sorry, I should make this clear, your Honour.  When I talk about the negative implication argument I am referring to this argument that there is an implied restraint on the extent of legislative power to make incidental laws in regard to the exercise of this Court’s appellate jurisdiction.

So we say Eastman and Mickelberg did not determine that this Court’s – Parliament’s legislative power was constrained by such a negative implication, and we say even if it were held that it did, the nature of costs as an ancillary matter to what is being otherwise determined within the appeal leaves the Parliament in a position where it can legislate broadly on the topic of costs without having infringed upon any negative implication that it cannot transform or alter the fundamental nature of the appellate jurisdiction conferred under section 73.

Your Honour, can I just refer briefly to – or summarise the judgments in Mickelberg and Eastman.  I am just going to touch upon what the findings were and the judicial opinions that were expressed.  In the Mickelberg decision at page 271 the Chief Justice left open – he expressed it as possible that the Parliament could have legislated to confer the power to receive – it is all discussed, of course, in regard to fresh evidence so it is not directly concerned with the point that I am on but it is related.

Chief Justice Mason left open the power “at least” in regard to “the exercise of federal jurisdiction”. Justice Brennan did not refer expressly to the question of expansion by legislation of the appellate jurisdiction but did express views about the nature of it in a criminal context which would not be applicable. Justice Deane entirely rejected the view that section 73 was so limited anyway. Justices Toohey and Gaudron suggested that power could be conferred in regard to a State matter if it would otherwise fall within the terms of section 75 and 76 so that it was a permissible conferral of original jurisdiction. It could perhaps be said that Justices Toohey and Gaudron might challenge the wide scope of section 26, although I am going to suggest they do not even do that. But, in any event, those are not opinions of the sort that stand for a strong negative implication restraining the legislature.

In Eastman, Chief Justice Gleeson, said that the power – a statute could confer power at least in regard to federal jurisdiction.  Sorry, your Honour, I have omitted the page reference to that in my notes.

HIS HONOUR:   It sounds like it might be the most important passage.

MR BIRCH:   It is, and I will provide it to your Honour in a moment.  Justice Gaudron dealt with it at page 24 and concluded that power could be conferred under section 75 or 76.  Justice McHugh concluded that such power could be conferred as original jurisdiction pursuant to 75 and 76.  Justice Gummow concluded that there was a question as to whether the power could be conferred by virtue of 51(xxxix).

HIS HONOUR:   This is all about fresh evidence, I think.

MR BIRCH:   It is all, your Honour, about fresh evidence.  The page reference for Chief Justice Gleeson was page 11, paragraph 14.  For Justice Gaudron it was page 24, and for Justice Gummow it was page 64.

Your Honour, I will not take more time on this analysis. Can I just summarise it and say this. There is no overwhelming support for a proposition as strong as that put forward by our opponents from the judgments in those cases. There is support for at least the proposition that the Parliament could have legislated at least in regard to federal jurisdiction. But even those Judges who have expressed a doubt about whether it could extend to State jurisdiction have expressed their opinions in cautious terms – expressed their views in cautious terms. It was not before them. It was not teased out as to what the implications would be. One ought not to conclude, therefore, that there is anything which suggests section 26 ought to be read down.

Can I turn then to the second limb of the argument, your Honour, and it is this. We say that whatever the implication might be that flows from section 73 of the Constitution, it could only be to the extent it constrains the legislative power, one aimed at ensuring that the legislature does not alter or transform the core appellate jurisdiction conferred by section 73 and that costs are of their nature something ancillary. Costs in this age are creatures of statute. There is an ancient equitable jurisdiction to deal with costs but in courts of common law costs were always creatures of statute. Costs in this Court are dealt with and covered by the powers that have been conferred under section 26 and under the Rules and they are the prime example of the exercise of an ancillary jurisdiction.

If this Court is given power to deal completely with all the costs of an appeal before it, that does not alter the nature of the appellate jurisdiction otherwise exercised under section 73. I appreciate that it will be said against me that I am seeking to have orders set aside that were made below, they were the costs orders made in the ancillary jurisdiction below to deal with costs, but that it is still the case that there was an appeal of a sort that properly invokes section 73 before the Court at all times. It is not like Eastman and Mickelberg where what was sought to be done was to bring into Court an appeal which of its very nature was not one that properly invoked the appellate jurisdiction.  For those reasons, your Honour, we say there is no constitutional block to a finding that 26 be given the broad reading for which I have contended.

Now, your Honour, if that is the case, as we say it is, then the Court has ample power to deal with the whole of the application that we bring before it and we have said that in exercising its discretion there are three possible principles that could apply.  The first we have referred to as the capitulation principle.  We have taken the substance of that from the reasons of Justice Burchett in the One.Tel Case and I note that your Honour was in that as well.

HIS HONOUR:   I think it might be one of my greatest victories, being led, of course.

MR BIRCH:   Yes.  His Honour distinguishes between cases where a matter terminates because the point has become moot in two ways.  One is where it may be that the substance is simply taken away, it is rather like a contract frustrated, and one can imagine in a circumstance where neither party has taken a step but that nevertheless the dispute no longer needs to be conducted, even if the outcome might be more welcome by one side than the other and that is the sort of case in which we say the Lai Qin principle would be applicable and, of course, his Honour refers to the others where there has been a capitulation.

Now, what we say is that there is very clearly a capitulation here and it is even worthwhile noting what had happened in the One.Tel Case just to remind your Honour because the case was about the validity of notices that had been issued.  His Honour deals with this in paragraph 3.  He sets out the advice of the solicitor acting for the relevant authority and they had maintained that their notices were valid but they could not establish their validity and, in the circumstances, they preferred a “consent to an order setting aside the notices” – that is at point 6, the very last line in the passage quoted in paragraph 3.  That was, his Honour said, at the beginning of paragraph 7, a matter which involved there being a “clear winner” and he applied what we have called the capitulation principle.

Now, your Honour, it does not matter the precise verbal formula that was adopted by the Minister in announcing the decision and it does not matter whether one says, well, it was driven by political considerations rather than legal considerations or anything of the sort.  The fact was that what the Minister did was to produce an outcome by her own volition which was equivalent to the form of injunction that had been sought, and it cannot be the case that the capitulation principle turns on the verbal formula with which one decides to back down.

So, we say, keeping in mind the passages to which I have taken your Honour, very clearly there was a capitulation.  It is clear that the decision not to recommend to the Governor was caused by the pendency of our appeal.  It is not as if the Minister had said, well, having read the delegate’s report and the Boundaries Commission report, despite the fact that you have been harassing me in litigation, I have decided anyway that on the balance and on the merits I ought not to proceed with this proposal, the Minister has been caused to make the decision that she has because of the pendency of the litigation and therefore has capitulated, we say, in the face of it.

Now, your Honour, in those circumstances there ought be, we say, a costs order down the line and, indeed, we say if there was not – and if the Court did not have power to order costs in those circumstances then the appellate jurisdiction could easily become an engine of injustice.  One can imagine a circumstance in which a piece of litigation has been hard fought, the costs below have become very significant, possibly even overshadowed the amount that was originally – or the issue that was originally in dispute – there is a party who then obtains special leave and the other party with the benefit of costs orders below are they then in a position to capitulate and yet, nevertheless, say having done so in this Court, well, you ought not to disturb the costs orders that we have got below, the matter is now moot, the Court ought not to take the time to decide a hypothetical just to determine costs.

It would have the consequence that the system would be gained by a litigant in that position who was not facing the consequence that they could be ordered to pay the costs down the line.  The existence of this Court’s appellate jurisdiction ought not to expose parties to that potential by declining to make an order that puts the costs where they, we say, appropriately belong in light of the conduct that was made.

Now, your Honour, that is the capitulation principle upon which we rely for our primary claim which is that there should be costs in our favour at each of the two levels below as well as in this Court.  It is ultimately a matter for this Court’s judicial discretion as to what is just and fair.  If I do not dissuade your Honour that the full‑blooded capitulation principle that I have outlined ought apply then we say there is still good reason why your Honour should set aside the costs orders below and leave each party to bear their own costs of the two hearings below simply because we say, firstly, it would be unjust and unfair for the sorts of reasons I have just canvassed to leave them there and leave us to pay them, but also for the additional reason – what we have referred to as the protraction principle in our submissions, that is we made the pre‑litigation offer to take undertakings.  We made the settlement offer in June of 2016 to take undertakings and the decision of the Minister not to recommend the amalgamation proposal is every bit as favourable to us as the terms upon which we offered the settlement in June of 2016.

So it has all been unnecessary if only the Minister had accepted the offer that we made.  In those circumstances we say that again it is unjust that having now the teeth of the grant of special leave, the Minister having capitulated in the way that she has, we ought be left bearing them.  So from the protraction principle, your Honour, we would seek to argue that there ought be – the strongest view of it would be that we should still have our costs, that our argument about capitulation is strengthened by the offers that we made.  But even if your Honour was against me on that, the offers place us in a position where at least there ought to be no order.

Now, your Honour, finally we have referred to what we call the Lai Qin principle.  Of course, that was a decision of Justice McHugh in this Court’s original jurisdiction.  It was litigation that had only travelled a short distance before it was resolved.  But it is a case that has been often referred to and represents the principle that where the Court is not able to determine who would have been the winner, then the usual order would be that the costs ought to be left to lie where they fall.

Your Honour, in that regard we say two things. We say that because of the arguments we put about section 26 and its breadth, if one applies that one should apply to the costs down the line, not simply the costs in this Court. Therefore, if one was to apply the Lai Qin principle one could set aside the costs orders that were made in the Land and Environment Court and in the Court of Appeal.  The Lai Qin principle might lead to – and each party pay their own across the board – we accept that, but on the other hand it certainly would lead to, we say, setting aside the orders in the Land and Environment Court and the Court of Appeal.

Your Honour, those are the three principles that we have called in aid in our argument regarding the exercise of discretion so far as the costs are concerned as they affected courts below.  The costs in this Court are in a

separate and special category because we do not apprehend there is any argument – that there is any limit on the Court’s discretionary power to deal with them and it can deal with them as it would have if it were an ordinary trial court.

In dealing with the costs in this Court, absent any potential limitation through constitutional limits, again we say we would proceed through each of those steps.  We would say the capitulation principle speaks in favour of a costs order in our favour in this Court, that the capitulation in the teeth of the grant of special leave gave us the result that we were seeking in this Court. 

Secondly, and another reason why we say we should have the costs in this Court, I took your Honour earlier to the letter that we wrote in June 2016.  We said in that letter to our opponents, this is a case in which it is foreseeable there will be an appeal to the Court of Appeal, that there will be an application for special leave.  There was nothing shocking or surprising about the fact that this litigation ended up in this Court and yet the Minister did not decide to adopt the course of action ultimately chosen until all the submissions had been filed and the matter was looking for its hearing date.

There is no reason in those circumstances for the Minister to say well, each party should simply pay their own costs in circumstances where the Minister has capitulated and, furthermore, additionally, no reason why the Minister should be entitled to an “each party pay their own” order in circumstances where we had offered a compromise as favourable back in June that would have obviated the need for both the Court of Appeal proceeding, this proceeding and the conclusion of the Land and Environment Court proceedings.

Now, your Honour, there is no argument that we should pay costs in this Court.  The position of our opponents is that in this Court – but we say the appropriate order in this Court is that the respondent should pay the appellant’s costs. 

HIS HONOUR:   Thank you, Mr Birch.  Mr Hutley, I am conscious that you need to be somewhere.

MR HUTLEY:   Your Honour, I do not need to be in court now, I actually need to be on a plane.  But, anyway, that is neither here nor there.  Your Honour has been taken to the announcement of the Minister on 27 July 2017 and the correspondence recommending - that they would not recommend the government to amalgamate – to the Governor that there be amalgamation.  As your Honour would appreciate the legislation required such a recommendation.  The Minister could at any time have decided for whatever reason not to proceed.  It is apparent from the statements that what drove it was the effects of delay and the consequent impacts upon members of the community.

Now, correspondence then ensued. On the 25th the Minister offered to end the appeal on the basis that each party pay its own costs in this Court but it was advised on her behalf that it was not accepted that the Minister would seek costs after that date, and we do. On the central question can we start with section 26 and the first point to observe about section 26 is that it is:

The High Court and every Justice thereof sitting in Chambers shall have jurisdiction –

and we note “to award”.  It does not say to set aside orders in other courts, either in the Court of Appeal or at first instance:

to award costs in all matters brought before the Court, including matters dismissed for want of jurisdiction.

Now, in our respectful submission, this is not a power conferred upon the Court to set aside or interfere with orders of other courts being the subject of the appeal. That power inheres in the nature of the appeal under section 73, but more particularly is the subject of the power of the Court to make appropriate orders in an appeal under section 37 of the Judiciary Act, that is:

The High Court in the exercise of its appellate jurisdiction may affirm reverse or modify the judgment appealed from, and may give such judgment as ought to have been given in the first instance –

et cetera, and that is the form of order which takes place in this Court when an appeal is successful concerning orders for costs in the courts below.

Thus, we say, on the true construction of section 26, simpliciter there is no warrant for the making of the orders sought. There is no power – there is no power to interfere with orders of other courts and that is accepting everything that was said by this Court in re De L v Director‑General of Community Services (NSW) 190 CLR 270 at 221 about section 26 not being narrowed and, similarly, the statement of Justice Hayne in Edwards v Santos, particularly at paragraph 11, make clear, in our respectful submission, that his Honour was not purporting to say that section 26 was a basis upon which one dealt with orders for costs elsewhere. We say the word “award” makes that clear to demonstration.

Therefore we say this is determined on a simple question of construction.  Then if that be correct can I then turn to what we say how your Honour would exercise the discretion.  This is a classic case, we say, in this Court where the proceedings have become moot because of the exercise of a discretion of the Minister to decide not to recommend an amalgamation to the Governor.  It is in no way what my learned friends would call a capitulation insofar as it can be described that there is such a principle as the capitulation principle.

In all those cases which were referred to it was apparent – is that the party said to have capitulated acknowledged their case was bad. We have not acknowledged that and nothing said by the Minister is to that effect. Thus, normally, we would submit, the costs would lie where they fell except to this extent, as I took your Honour to our letter of 25 October. The Minister said that if the Council, in effect, proceeded with their application of the variety which we are now – and which is the only reason why we are taking this Court’s time, in our respectful submission, otherwise it would have clearly been dealt with on the papers, in our respectful submission, the argument that section 26 warrants the exorbitant orders that my learned friend seeks brings us here and our learned friends should bear the costs of this application by reason of the approach they have taken.

Now, if, contrary to our submissions the costs in the matter for the purposes of section 26 extend to the costs the subject of the orders both on the appeal and at first instance, one then has to deal with a number of issues, firstly, what would the form of the order be which itself leads to peculiarities. It would appear that our learned friends would ask your Honour to make an order which would discharge both the order in the Court of Appeal as to costs and in the Land and Environment Court.

Your Honour will see the order in the Land and Environment Court behind tab 8 and your Honour will see in the judgment of the Court of Appeal at paragraph 209 the form of orders that the Court of Appeal made, namely that the proceedings were dismissed and costs of the appeal were awarded against the Council.

Our learned friends would say that on the true construction of section 26 that empowers your Honour apparently to set aside the order for costs in the Court of Appeal and further, by a device which is wholly obscure, to go on and set aside the order at first instance of a court, a court from which there is no appeal to this Court, it being an appeal from the Court of Appeal. In other words, the matter becomes extraordinarily extraordinary.

Now, as we understand it, at a constitutional level they say this power, if your Honour construes section 26, is supportable by reference to

section 51(xxxix) of the Constitution in relation to section 73. It proceeds, we say, on the assumption that an order regularly made for costs in two courts, one of which is not the subject of direct appeal to this Court, is not in any way shown to have been attended by any error, can be set aside as part of the incidental power in relation to the costs of appeal.

We say it lies in assertion rather than analysis.  No assistance, we say, can be drawn from cases awarding costs where there has been the so‑called capitulations.  All were cases in the original and not appellate jurisdiction.  To deal with my learned friend’s Armageddon suggestion that this could frustrate the appeals to this Court, if on an appeal the respondent conceded error, the Court could clearly deal with the issue as to costs and may well do so if it thought it was an appropriate way to do it in the circumstances.  So in other words it is not going to become an issue – an engine of oppression.

Now, in any event, we say the point is really dealt with in Mickelberg and your Honour was taken to the statement of Sir Anthony Mason at 267 and Sir Gerard Brennan at 274 and the joint judgment of Justices Toohey and Gaudron at 297 to 298. Central to appeals under section 73 is the concept of correction of error. Error is not sought to be established here with respect to the orders sought to be challenged. Without it no attack can be made on the orders of the courts below.

The central concern of the appellate power is those orders, as section 73 makes manifest, and the incidental power cannot be used to avoid the requirement of error. Thus, we say, to construe section 26 in the fashion advanced by our learned friends would have the result that section 26 exceeded the constitutional power of Parliament to deal with matters in relation to appeals. Your Honour, otherwise we rely on our written submissions. If the Court pleases.

HIS HONOUR:   Yes, thank you.  Mr Birch.

MR BIRCH: The first point, your Honour, is it is said that section 26 simply cannot have the breadth for which we contend and that the use of the word “award” is a clue and that one infers from that that it does not extend to interfering with costs that have been made below. We say that that argument is one of those ones which proves too much if it is true that the interference with any orders that have been made below has to be found in the other general provisions which provide for the orders that might be made at the conclusion of the appeal, then in effect section 26 is concerned only with the costs in this Court is the practical consequence of the construction of it that is advocated by Mr Hutley.

So we say, firstly, of course, there is nothing in section 26 which suggests that it is limited to the costs in the High Court, it is to deal with the costs in the matter, and if the matter includes the whole of the controversy then section 26 necessarily must be giving the Court the power to deal with the costs that have been incurred below. I will not repeat the arguments I put based on what Justice Hayne had said, but what we say though is that the reference to the matter brought before the Court is necessarily something which must expand its power beyond really the costs in the High Court.

When my learned friend says, well, it is not clear by what device it is possible to interfere with the costs orders in the Land and Environment Court, the response is, well, it is the device in section 26 which confers upon this Court the power in regard to the costs in the matter once one recognises that the matter includes the whole of the controversy that carries with it that power.

The second central point that was made by my learned friend was that our arguments involve a departure from and conflict with the notion that this appellate jurisdiction conferred under section 73 is the correction of error and what we are seeking is not the correction of error. The core appellate jurisdiction is indeed concerned with the correction of error. We do not seek to challenge Mickelberg or Eastman in this case. But what one has in matters brought before this Court is the attack upon the central relief that was granted in the court below which brings about the – enlivens the jurisdiction of this Court under section 73 and that was our concern to obtain injunctive orders to restrain the Minister from recommending to the Governor the amalgamation proposal.

The capitulation, as we have called it – and we say that is a very apt phrase because it does not depend on the words the Minister chooses to put in a press release, it depends upon what in substance happened – dealt with the claim for relief, in effect giving us what we sought by our claim for relief, and then the question arises, we say, that leaves incidental and ancillary matters, namely, the costs orders, to be considered, the court no longer needing to deal with the central core of the appeal.

So, the fact that the Court does not need to proceed to correct an error is because of the simple fact and device that the Minister has given in, that does not mean for the reasons I have already given that this Court though does not possess the ancillary and incidental power to deal with the other issues that are left.  In fact, one only has to reflect upon what has happened.  The Minister has given in to what we have sought and yet seeks to keep the benefit of the costs orders it obtained as we hard fought the Minister through the courts up to this point, enjoyed what was in a sense a

substantial victory, and yet the Minister says you still have to pay my costs.  Well, we say this Court has ample power to deal with that.

HIS HONOUR:   Thank you.

In this matter I have reached a clear view, and I do not think it would benefit from me reserving.  I therefore propose to proceed directly to judgment.

Pursuant to special leave to appeal granted on 12 May 2017, Woollahra Municipal Council commenced an appeal in this Court from the judgment of the Court of Appeal of the Supreme Court of New South Wales in Woollahra Municipal Council v Minister for Local Government [2016] NSWCA 380. The appeal was commenced by Woollahra Municipal Council filing a notice of appeal on 19 May 2017.

At issue before the Court of Appeal, and at issue in the appeal to this Court, was the validity of processes purportedly undertaken pursuant to the Local Government Act 1993 (NSW) which led to the Minister for Local Government receiving a report which recommended implementation of a proposal that the Minister recommend to the Governor of New South Wales the making of a proclamation which would have had the effect of amalgamating the Woollahra local government area with the local government areas of Randwick and Waverley. The validity of those processes has become moot by reason of circumstances which occurred during the pendency of the appeal to this Court.

On 27 July 2017, the Premier of New South Wales issued a media release in which she stated that “Due to the protracted nature of current legal challenges and the uncertainty [that was] causing to ratepayers, those council amalgamations [that were] currently before the courts [would] not proceed.”

Amongst the previously proposed amalgamations which the Premier indicated would not proceed was that of the Woollahra, Randwick and Waverley local government areas.  On the same day, the Minister for Local Government wrote to Woollahra Municipal Council informing the Council that she had decided not to recommend to the Governor that the proposal to amalgamate those local government areas be implemented.

Before me today is an application made by summons filed by the Minister on 20 October 2017 for an order that special leave to appeal be revoked.  The Minister and the Council are the only active parties to the appeal.  There is no issue between them that the Premier’s announcement and the Minister’s decision mean that the appeal now lacks utility and should not proceed.  The only issue is as to costs.  Neither the Minister nor the Council submits that determination of that issue of costs necessitates determination of the substantive issue in the appeal and neither party submits that sitting alone I do not have power to determine that issue of costs or that it is inappropriate for me to do so.

Mr Hutley SC, who appears with Mr Free for the Minister, submits that the appropriate order for costs is limited to an order having the effect that each party bear its own costs of the appeal to this Court, save for costs incurred after 26 October when the Council refused an offer by the Minister to consent to the discontinuance of the appeal on the basis that each party bore its own costs in this Court.  He submits that the existing orders for costs made in the Minister’s favour in the Court of Appeal and in the Land and Environment Court from which the appeal to the Court of Appeal was brought cannot now be disturbed.

Mr Birch SC, who appears with Ms Phillips for the Council, submits that the power, not only to order costs of the appeal to this Court but also to vary the orders for costs in the Court of Appeal and the Land and Environment Court, can be found in section 26 of the Judiciary Act 1903 (Cth). That section provides:

The High Court and every Justice thereof sitting in Chambers shall have jurisdiction to award costs in all matters brought before the Court, including matters dismissed for want of jurisdiction.

Mr Birch submits that the discretion conferred by section 26 should be exercised to produce the result that the Council gets the costs of the appeal to this Court as well as the costs of the proceedings in those other courts, or at the very least that each party should bear its own costs of the proceedings in those other courts. The Council, he submits, has at all times acted reasonably and expeditiously. The Minister, in contrast, he submits, has protracted the litigation between the parties by failing to accept offers of compromise made last year shortly before and during the course of the proceeding in the Land and Environment Court.

Mr Birch submits that the Minister’s change of position in July this year should be characterised as a total capitulation.  The Minister has vacated the litigious arena, he submits, leaving the Council victorious.  The Council, says Mr Birch, is “the clear winner”.  The Council is left in the same position as if it had obtained the declaratory and injunctive relief which it had originally sought from the Land and Environment Court.

Section 26 of the Judiciary Act, the terms of which I have already quoted, is cast in the language of jurisdiction but it is really concerned to confer a power that is to be exercised if and to the extent that the Court has jurisdiction.  That observation is not contradicted by its express application to matters dismissed for want of jurisdiction.  The Court has jurisdiction to determine its own jurisdiction.

The matter that is brought before the Court within the meaning of section 26 can be accepted to encompass so much of the justiciable controversy between the parties before the Court over which the Court has jurisdiction. The power to order costs conferred by the section, broad as it is, can only be exercised within the confines of that jurisdiction. That is the burden of the reasoning of Justice Hayne in Edwards v Santos Limited (2011) 242 CLR 421 at paragraphs 11 to 13, to which Mr Birch has drawn attention.

An appeal to this Court where special leave is granted is an appeal in its appellate jurisdiction conferred on this Court by section 73 of the Constitution. As the consistent course of authority surveyed and applied by this Court, for example, in Eastman v The Queen (2000) 203 CLR 1 well establishes the jurisdiction conferred by section 73 is jurisdiction to determine an appeal in the strict sense. This Court has no power in the exercise of that appellate jurisdiction to disturb an order for costs made by the court from which the appeal is brought unless this Court concludes in the appeal that the court erred on the merits or otherwise in the exercise of its discretion. In circumstances such as the present, where the appeal to this Court is not to proceed, no such conclusion is capable of being drawn.

I therefore reject Mr Birch’s submission as to the ability of this Court in the circumstances of this appeal to disturb the costs orders that have been made in the Court of Appeal and in the Land and Environment Court. They cannot be disturbed in the exercise of the power conferred by section 26 of the Judiciary Act.  Such an outcome does not, in my opinion, raise the prospect of the appellate processes of this Court being gained by a respondent, to use the terminology adopted by Mr Birch.  He was referring in that reference to a respondent to an appeal who might choose to change position rather than to contest a losing case in this Court.

The Court retains control over its own appellate processes through the control that it has over the grant and revocation of special leave and its ability in an appropriate and no doubt exceptional case to determine an appeal purely on the question of costs.

The costs of the appeal to this Court are different. They are within the discretion conferred by section 26 of the Judiciary Act.  The guiding principle to be applied, in my view, other than in exceptional circumstances, is that stated by Justice McHugh in Re Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin (1997) 186 CLR 622. The principle is that if it appears that both parties have acted reasonably until the litigation was settled, or its further prosecution became futile, the proper exercise of discretion as to costs will ordinarily mean that the Court will make no order as to the costs of the proceedings.

I am unable to accept Mr Birch’s submission that this is a case where that principle ought not to be applied.  The Minister’s change of position, following the Premier’s announcement, cannot be characterised as a capitulation, or to use the language of Justice Burchett in One.Tel Limited v Deputy Commissioner of Taxation (2000) 101 FCR 548 at paragraph 6 as a surrender.

The pendency of the appeal to this Court no doubt played some part in the considerations which informed the decision of the New South Wales Government which the Premier announced.  The change of position, however, cannot be attributed to an acceptance on the part of the government, or more particularly of the Minister, that the processes in issue in the appeal were invalid or that the Council was entitled to the relief that it sought.  The change of position, in other words, cannot be characterised as a concession.  The change of position was rather the result of a change of political heart which removed the subject matter of the controversy.

In the exercise of my discretion I do not accede to Mr Hutley’s invitation to shave with a fine cut and to differentiate between the costs in this Court before and after 26 October.

The orders that I make are as follows:

1.Special leave to appeal is revoked.

2.There is no order as to the costs of the proceedings in this Court.

The Court will now adjourn.

AT 10.06 AM THE MATTER WAS CONCLUDED