Costs in the Land and Environment Court - the final word?

The question of costs in the Land and Environment Court has long been a vexed one, particularly in relation to its dominant, semi-administrative, function of deciding merit appeals from decisions of, or orders issued by, consent authorities. Under the Act by which the Court is established, it is given extremely wide discretion as to what orders, if any, it makes as to costs, and successive attempts, mostly unsuccessful, have been made to fill out that discretion.

Current Situation

The current provision of the Court rules provides that in all proceedings in classes 1 and 2 of its jurisdiction (basically merit reviews) no order as to costs is to be made unless the Court considers that a costs order is "in the circumstances of the particular case fair and reasonable".

The Court has attempted, in a number of decisions, to flesh out what this means in practice:

1. In general, parties ought not to be discouraged from seeking to have a decision of the consent of authority reviewed by the prospect of having to pay costs if unsuccessful;

2. But where there was little or no merits review, as in the case of a legal challenge to the authority's power or capacity to take the action in dispute, this did not apply and the order as to costs in favour of the successful party could be made;

3. Similarly, in cases where there was a preliminary question of law, the Court would be more likely to follow the "usual" practice in other Courts of awarding costs to the successful party.

Recent Decisions

Now, these attempts to regulate the Court's discretion have been struck down as an impermissible fetter on the discretion by the Court of Appeal in Port Stephens Council v Samson [2007] NSW CA 299. Although the Court was at pains to stress the desirability of a "high level of consistency in approach" it regarded the principles set out above as going too far.

The Court said that principles or guidelines were permissible, but that they could not be given presumptive, let alone determinative, weight in cases to which they applied. In other words, a "guideline" that costs on preliminary questions of law will follow the event seems to be acceptable, but not a "presumption" that that course will follow.

Having stressed the importance of consistency, one might have hoped that the Court would lay down some "guidelines" which would assist the L & E Court. Unfortunately, this was not to be, although it did approve the principles 2 and 3 above as long as they were described as "guidelines" and not "presumptions".

Additionally, however, the Court appeared to lay down an additional "guideline" that, since clarification of the law was desirable in the normal exercise of the consent authority's functions, it might be expected that an unsuccessful consent authority would be more likely to suffer a costs order than an unsuccessful applicant. Just what the L & E Court makes of this remains to be seen.

Another apparent "guideline" adverse to Councils and consent authorities generally emerges from the further decision of the Court of Appeal in Thaina Town v Sydney City Council [2007] NSW CA 300, a judgement which was delivered at the same time as Port Stephens Council v Samson. This case concerned a prevention notice issued under the Protection of the Environment Operations Act by Council, an appeal from a decision made before pt 16 r 4 of the rules was enacted in its present form. In this case, the L & E Court refused to make an order for costs despite the fact that it found that the prevention notice had been wrongly issued to the applicant.

The appeal was successful, principally on the ground that the Court below had overlooked a relevant factor, namely that the applicant was seeking to resist the imposition of a liability by the Council, and was not merely seeking review of a decision on an application for consent or a licence. In other words, it would seem that different principles may well apply in Class 1 or 2 proceedings where the application is an appeal against an order or notice imposing a liability, as distinct from appeals against refusal of a consent, or the conditions of consent. This would, it seems, apply equally to orders under the Environmental Planning and Assessment Act as to notices under the POEO Act and doubtless those acting for applicants in these types of proceedings will come armed with a copy of the decision.

Conclusion

In both decisions, the Court of Appeal has adhered to orthodoxy in its strict approach to the impermissible fettering of the Court's general costs discretion. But the new "guidelines" which it has formulated are both unfavourable to Councils and other public authorities in making it more likely that:

1. Costs of successful private parties in preliminary questions of law will be awarded against unsuccessful councils than the other way round: and

2. Costs of a successful appeal against a council order will be awarded against the council than in "ordinary" appeals against consents.

Author: Mary-Lynne Taylor