Land and Environment Court New South Wales

• Medium Neutral Citation: Fullerton Cove Residents Action Group Incorporated v Dart Energy Ltd (No 3) [2013] NSWLEC 152
• Hearing dates: 10 September 2013
• Decision date: 12 September 2013
• Jurisdiction: Class 4
• Before: Pepper J

Decision

Each party to bear its costs of the proceedings. New South Wales Department of Trade and Investment, Regional Infrastructure and Services to pay Fullerton Cove Residents Action Group Incorporated's costs of the application.

• Catchwords: COSTS: unsuccessful judicial review proceedings - whether departure from usual costs rule justified - whether proceedings brought in the public interest - applicable legal principles - whether litigation properly characterised as in the "public interest" - whether there was "something more" - whether any countervailing considerations - no order as to costs.
• Legislation Cited: Civil Procedure Act 2005, ss 11, 98; Environmental Planning and Assessment Act 1979, Pt 4, ss 111, 112; Land and Environment Court Rules 2007, r 4.2(1); Uniform Civil Procedure Rules 2005, rr 1.7, r 42.1, Sch 2
• Cases Cited: Calderbank v Calderbank [1975] 3 All ER 333; Caroona Coal Action Group Inc v Coal Mines Australia Pty Ltd (No 3) [2010] NSWLEC 59; (2010) 173 LGERA 280; Delta Electricity v Blue Mountains Conservation Society Inc [2010] NSWCA 263; (2010) 176 LGERA 424; Dobrohotoff v Bennic (No 2) [2013] NSWLEC 139; Friends of Turramurra Inc v Minister for Planning (No 2) [2011] NSWLEC 170; Fullerton Cove Residents Action Group Incorporated v Dart Energy Ltd [2012] NSWLEC 207; Fullerton Cove Residents Action Group Incorporated v Dart Energy Ltd (No 2) [2013] NSWLEC 38; Hastings Point Progress Association Inc v Tweed Shire Council (No 3) [2010] NSWCA 39; (2010) 172 LGERA 157; Hume Coal Pty Ltd v Alexander (No 4) [2013] NSWLEC 106; Kennedy v Stockland Developments Pty Ltd (No 3) [2011] NSWLEC 249; Lester v Ashton Coal Pty Ltd (No 2) [2012] NSWLEC 254; (2012) 193 LGERA 293; McCallum v Sandercock (No 2) [2011] NSWLEC 203; McGinn v Ashfield Council [2011] NSWLEC 105; (2011) 185 LGERA 230; Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72; Oshlack v Rous Water [2013] NSWCA 169; (2013) 194 LGERA 39; Oshlack v Rous Water (No 3) [2012] NSWLEC 132; Shellharbour City Council v Minister for Planning (No 2) [2012] NSWLEC 96; Snowy River Alliance Inc v Water Administration Ministerial Corporation (No 2) [2011] NSWSC 1132
• Category: Costs
• Parties: Fullerton Cove Residents Action Group Incorporated (Applicant); New South Wales Department of Trade and Investment, Regional Infrastructure and Services (Second Respondent)
• Representation: Mr I Hemmings and Ms V McWilliams (Applicant); Mr A Shearer (Second Respondent); EDO NSW (Applicant); New South Wales Department of Trade and Investment, Regional Infrastructure and Services (Second Respondent)
• File Number(s): 40866 of 2012

EX TEMPORE Judgment

Fullerton Cove Residents Action Group Incorporated Contends that the Unsuccessful Proceedings Were Brought in the Public Interest

1 The applicant in these proceedings, Fullerton Cove Residents Action Group Incorporated ("Fullerton"), unsuccessfully brought judicial review proceedings against Dart Energy Ltd ("Dart"), the first respondent, and the New South Wales Department of Trade and Investment, Regional Infrastructure and Services ("the Department"), the second respondent (Fullerton Cove Residents Action Group Incorporated v Dart Energy Ltd (No 2) [2013] NSWLEC 38).

2 Fullerton sought review of a decision by the Department to approve a pilot exploration program comprising the drilling of two pilot wells on a single site over a period of 50 days ("the pilot program"). The pilot program site was located in the Fullerton Cove locality, north of Newcastle.

3 Fullerton Cove is bounded by a number of national parks and state conservation areas, including the Hunter Estuary National Park, the Tilligerry State Conservation Area, the Worimi State Conservation Area and the Worimi National Park.

4 It was not in dispute that the pilot program site:

(a) contained endangered ecological communities ("EECs"), including Relic Saltmarsh Flat;

(b) was adjacent to the Hunter Estuary National Park and the Hunter Estuary Wetlands ("the wetlands"), listed under the RAMSAR List of Wetlands of International Importance; and

(c) was generally located above the Stockton and Tomago aquifers.

5 The proceedings were commenced by summons on 24 August 2012.

6 Fullerton sought a declaration that the approval of Dart's pilot program granted by the Department under Pt 5 of the Environmental Planning and Assessment Act 1979 ("the EPAA") was invalid and of no effect by reason of a failure to comply with ss 111 and 112 of that Act. During the hearing the claim that the pilot program was "designated development" and ought to have been assessed under Pt 4 of the EPAA, thereby necessitating the preparation of an environmental impact statement ("EIS"), was abandoned by Fullerton.

7 On 5 September 2012 Sheahan J (Fullerton Cove Residents Action Group Incorporated v Dart Energy Ltd [2012] NSWLEC 207) made an order expediting the proceedings and granting interlocutory relief to Fullerton restraining Dart from, in effect, proceeding any further with the pilot program. The matter was listed for hearing commencing 15 October 2012.

8 On 7 September 2012 Fullerton served the Department with a notice to produce requesting "all documents that the New South Wales Department of Trade and Investment, Division of Resources and Energy says record matters relevant to the decision to approve the First Respondent's Pilot Appraisal Exploration Program on 1 June 2012".

9 On 14 September 2012 the Department purported to comply with the notice. Significantly, not included in the documents produced was a document entitled Report on Interim Background Water Assessment ("the Interim Water Report").

10 On 19 September 2012, Dr Gavin Mudd, an expert in the proceedings, affirmed an affidavit in the proceedings on behalf of Fullerton. Unaware of the existence of the Interim Water Report, naturally enough no reference was made by him to it in his affidavit.

11 It was not until 4 October 2012 when Dart circulated an amended draft tender bundle index, which included a reference to the Interim Water Report, that Fullerton became aware of it.

12 On 5 October 2012 Fullerton finally received a copy of the Interim Water Report from Dart. The Department in fact never furnished Fullerton with a copy of the Interim Water Report.

13 In the intervening period, that is to say, between the receipt of the Interim Water Report on 5 October 2012 and the commencement of the hearing on 15 October 2012, the Report was shown to Dr Mudd who considered it, but due to time limitations, neither produced a supplementary expert report nor sought to amend the views expressed by him in his report. The significance of these events will become apparent below.

Should the Court Make No Order for Costs?

14 Because the summons commencing the proceedings was filed in Class 4 of the Court's jurisdiction, costs would normally follow the event. However, at the hearing the parties requested that the issue of costs be reserved. This is what occurred and the parties were ordered to list the matter before the Court for a hearing on costs in the absence of any agreement on this question.

15 Fullerton has sought an order that, notwithstanding the 'event' of its loss, there be no order as to costs on the basis that the litigation was brought in the public interest. Only the Department opposes the making of such an order. Dart, the principal contradictor in the proceedings and who was no less successful than the Department in the proceedings, is not a party to Fullerton's costs application.

16 In my opinion, the litigation brought by Fullerton to protect Fullerton Cove epitomises the very concept of litigation properly brought in the public interest. As a consequence, the order sought by Fullerton should be made. And because the Department has been unsuccessful in resisting the order, it should pay Fullerton's costs of the application.

Costs in Proceedings Brought in the Public Interest in Class 4 of the Court's Jurisdiction

17 Section 98 of the Civil Procedure Act 2005 ("CPA") affords the Court a broad discretion to award costs, subject to the rules of the Court. Pursuant to r 42.1 of the Uniform Civil Procedure Rules 2005 ("UCPR"), costs generally follow the event. However, the Land and Environment Court Rules 2007 ("LEC Rules") prevail over r 42.1 of the UCPR to the extent of any inconsistency (s 11 of the CPA and r 1.7 and Sch 2 of the UCPR).

18 Rule 4.2(1) of the LEC Rules provides as follows:

4.2 Proceedings brought in the public interest

(1) The Court may decide not to make an order for the payment of costs against an unsuccessful applicant in any proceedings if it is satisfied that the proceedings have been brought in the public interest.

19 It should be noted that r 4.2 of the LEC Rules only applies in Class 4 of the Court's jurisdiction (Caroona Coal Action Group Inc v Coal Mines Australia Pty Ltd (No 3) [2010] NSWLEC 59; (2010) 173 LGERA 280 at [7]).

20 In order to engage the discretion contained in r 4.2 of the LEC Rules, the Court must first be satisfied that "the proceedings have been brought in the public interest".

21 The onus is on the party seeking to take the benefit of r 4.2(1). Thus, in this instance, it is for Fullerton as the "unsuccessful applicant" in the proceedings to persuade the Court that the proceedings have been brought in the public interest, and moreover, that the Court should exercise its discretion and decline to make an order for the payment of costs against it.

22 The Department relied on dicta in Hastings Point Progress Association Inc v Tweed Shire Council (No 3) [2010] NSWCA 39; (2010) 172 LGERA 157 to emphasise to the Court that merely because legislation such as the EPAA allows for challenges to planning decisions to be made by a wide class of people, this is not, of itself, a reason for people, including special interest groups, to be excused from paying the costs of any unsuccessful challenge made by them (at [45]). It should be noted, of course, that Hastings was not a case concerning r 4.2 of the LEC Rules (at [19]-[21]), and was decided before much of the Court's recent jurisprudence in this area was established.

23 The Department went on to quote the following passage (at [48]-[50]):

48 I agree with the submissions of the second respondent that the courts must be very careful to see that the concept of public interest litigation does not become an umbrella for the exercise of discretion as to costs on an unprincipled and haphazard and unjudicial manner to adopt the words of the Western Australia Full Court in Buddhist Society of Western Australia (Inc) v Shire of Serpentine-Jarrahdale [1999] WASCA 55. These words were approved by Weinberg J in Mees v Kemp (No 2) [2004] FCA 549 at [19] and by the Full Federal Court in Save the Ridge Inc v Commonwealth [2006] FCAFC 51 at [6].

49 Indeed, in Oshlack, as part of his principle (6) at [134] p 123, Kirby J pointed out that the authorities made it clear "that litigants espousing the public interest are not thereby granted an indemnity for costs or a 'free kick' in litigation."

50 It must be remembered that once costs are incurred, they do not just vanish into the ether if a court declines to make an order that a party pay them. If a successful party does not obtain an order for costs, that party has to pay those costs itself. If a developer, that really means that the extra costs are passed on to purchasers of lots in the development, in some cases meaning that the lots are beyond the means of possible local purchasers.

24 I accept that these observations, and many made thereafter, to similar effect, sound a salutary note for caution and restraint to be exercised in characterising proceedings as being brought in the public interest so as to justify a departure from the ordinary costs position. However, caution must not give way to prohibition (the logical corollary of many of the Department's submissions, in my view) and be permitted to render nugatory, through the stultifying spectre of an adverse costs order, the open standing provisions enshrined by the legislature in the EPAA. It is for this reason that jurisprudence has been developed in this Court, as the repository of much of the exclusive jurisdiction to hear and determine environmental disputes in New South Wales, to provide for a principled framework within which proceedings may be characterised as having been properly brought in the public interest.

25 The legal principles to be applied when exercising the costs discretion in litigation characterised as having been brought in the public interest were stated by Preston J in Caroona. These principles have been applied and endorsed by this and other courts (see, for example, Delta Electricity v Blue Mountains Conservation Society Inc [2010] NSWCA 263; (2010) 176 LGERA 424 at [202]; McGinn v Ashfield Council [2011] NSWLEC 105; (2011) 185 LGERA 230 at [17]; Friends of Turramurra Inc v Minister for Planning (No 2) [2011] NSWLEC 170 at [31]; Snowy River Alliance Inc v Water Administration Ministerial Corporation (No 2) [2011] NSWSC 1132 at [6]; McCallum v Sandercock (No 2) [2011] NSWLEC 203 at [24]-[30]; Kennedy v Stockland Developments Pty Ltd (No 3) [2011] NSWLEC 249 at [89]-[95]; Shellharbour City Council v Minister for Planning (No 2) [2012] NSWLEC 96 at [20]; Lester v Ashton Coal Pty Ltd (No 2) [2012] NSWLEC 254; (2012) 193 LGERA 293 at [6]; Oshlack v Rous Water (No 3) [2012] NSWLEC 132 at [3]-[14] and Hume Coal Pty Ltd v Alexander (No 4) [2013] NSWLEC 106 at [23]-[47]).

26 To the extent that Fullerton submitted that the principles espoused in Caroona and applied in subsequent decisions of this Court need not be followed in the present application because Caroona was a decision within Class 8 of the Court's jurisdiction, in my view, the analysis articulated in Caroona, or at least something akin to it, is nevertheless necessary for the Court to engage in, for it to be satisfied that the proceedings have been "brought in the public interest". There can be no doubt that this is the approach that has been adopted in decisions since Caroona determined in Class 4 of the Court's jurisdiction (see, for example, Lester at [4]-[6] per Preston J and Shellharbour (No 2) at [19] per Craig J). It is the course that I intend to follow, bearing in mind that each case will ultimately turn upon its own facts.

27 In Caroona, Preston J formulated a three-step approach for determining when litigation may be properly said to have been brought in the public interest (at [13]). In Oshlack (No 3) I summarised the three steps (at [6]-[14], undisturbed on appeal in Oshlack v Rous Water [2013] NSWCA 169; (2013) 194 LGERA 39 at [199] and [239]) and I repeat that summary for present purposes.

28 Step one is the characterisation of the proceedings as "public interest" litigation. The following considerations are relevant in determining whether litigation can be properly characterised as having been brought in the public interest:

(a) whether the public interest is served by the litigation;

(b) whether the interest litigated is confined to a relatively small number of members from the applicant group in the immediate vicinity of the development, concerned with their own private amenity, or whether the interest is wider, involving a significant number of members of the public and concerned with a wider geographic area;

(c) whether the applicant is seeking to enforce public law obligations;

(d) whether the prime motivation of the litigation is to uphold the public interest and the rule of law; or

(e) whether the applicant has no pecuniary interest in the outcome of the proceedings.

29 These considerations are not exhaustive and it is not necessary to answer them in any particular way in order for litigation to be classified as having been brought in the public interest. The answers given may also be relevant to the second and third steps (Caroona at [43]).

30 Step two is to determine whether there are any additional circumstances that may render the proceedings public interest litigation. Merely because a litigant makes claim to some notion of public interest does not entitle him or her to be granted an indemnity from costs or a "free kick" in the litigation (Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [134] per Kirby J). Thus the "something more" requirement (Caroona at [13] and [17]).

31 In the second step, once litigation has been characterised as having been brought in the public interest it is necessary to examine closely the nature, extent and other features of the public interest involved in the particular litigation to ascertain whether or not they provide justification in the circumstances of the case for departure from the usual rule that costs follow the event (Caroona at [15]-[16]).

32 This second step is often the most contentious. This application was no exception. It is therefore worth revisiting the observations made in Caroona concerning the rationale behind why "something more" is required (at [47]-[49]):

47 It is perhaps because of the nebulous and broad nature of the concept of public interest that courts have suggested that "something more" may be required than the mere characterisation of the litigation as being in the public interest: Oshlack v Richmond River Shire Council (1994) 82 LGERA 236 at 244 (Stein J) and noted in Oshlack v Richmond River Council (HCA) at [20], [49]; Anderson v NSW Minister for Planning (No 2) at [8]; Minister for Planning v Walker (No 2) at [9]; Hastings Point Progress Association Inc v Tweed Shire Council (No 3) at [27], [35], [47] and [54]. However, the statement that "something more" is required has been interpreted in different ways. One interpretation has been that the "something more", the additional circumstance or factor, must be unrelated to the nature, extent or other features of the public interest involved in the litigation. This interpretation is incorrect. The circumstance or factor can relate to the public interest in the litigation. A brief summary of the background to Stein J's statement that "something more" is required in Oshlack v Richmond River Shire Council may help explain why this is so.

48 The search for "something more" may have originated from a concern of the court that a plaintiff may merely lay claim to representing the public interest but without proving the claim. Hence, in Campbell (on behalf of Lord Howe Island Preservation Movement) v Minister for Environment and Planning, (NSWLEC, Cripps CJ, 24 June 1988, unreported), Cripps CJ said at 3-4:

I accept that in an appropriate case the ordinary rule as to costs might not apply by reason of the fact that one of the parties can legitimately claim to represent the public interest ... But to be accorded public interest status, it is not sufficient merely to lay claim to representing the public interest for the proposition to be accepted.

49 In other words, something more than merely laying claim that the proceedings are in the public interest is required; the claim must be established. In the facts of that case, the Court found the claim had not been established and therefore special circumstances justifying departure from this usual costs rule had not been established (at p 4).

33 The "something more" may, for example, be found in the magnitude of the public interest itself (Caroona at [59]). There are at least five categories of circumstances that have been identified as constituting "something more" for the purpose of step two (Caroona at [60]):

(a) the litigation raises one or more novel issues of general importance;

(b) the litigation has contributed in a material way to the proper understanding, development or administration of the law;

(c) the litigation was brought to protect the environment, or some component of it, and the environment, or particular component of it, is of significant value and importance;

(d) the litigation affects a significant section of the public; or

(e) there was no financial gain to the applicant in bringing the proceedings.

34 Again, these considerations are neither determinative, exhaustive nor mutually exclusive.

35 Step three is to determine whether there are any countervailing circumstances that would prevent the proceedings being characterised as having been brought in the public interest (Caroona at [18]-[19]). These may include, for example, whether the applicant, or those standing behind the applicant, has sought to vindicate rights of a commercial character and stood to benefit from the litigation, has unreasonably pursued or persisted with points that had no merit or with issues that were not eminently arguable, or has engaged in disentitling conduct, such as impropriety or unreasonableness, in the conduct of the litigation (Caroona at [61]).

The Litigation Was in the Public Interest

36 As noted by Gaudron and Gummow JJ in Oshlack v Richmond River Council (at [30]) the category of interest comprising public interest litigation is a "nebulous concept". Nevertheless it is necessary to give this amorphous concept content and effect. Furthermore, although this first step requires categorisation of the purpose for which these proceedings were brought, it is worth heeding the caution sounded by Basten JA in Hastings (at [7]):

7 Attempts to categorise such purposes too precisely may not assist in providing legally normative content to the concept. For example, protection of the environment may be a purpose which means different things to different people. It may involve protection of the natural environment, it may extend to an urban environment and it may include any factor which affects the amenity of persons within a location or area. On one view, in conformity with the purpose of s 123 of the EP&A Act, any attempt to ensure that the Act is not breached with impunity will constitute a public interest of a sufficient kind.

37 A great deal of evidence was tendered by Fullerton to demonstrate that the proceedings could properly be characterised as litigation in the public interest.

38 Three affidavits, together with accompanying documents, were affirmed by Mr Justin Hamilton (3 September 2012, 17 May 2013 and 28 June 2013). Mr Hamilton is an architect and the public officer of Fullerton. He has been a member of Fullerton since early 2011. He is also a resident of Fullerton Cove and has lived there since approximately October 2005.

39 Relevantly, he deposed that Fullerton had been in existence for approximately 20 years as a non-profit community group. In or around August 2011, Fullerton commenced a campaign to stop coal seam gas mining in Fullerton Cove, which was specifically directed towards Dart's pilot program.

40 During 2012 Mr Hamilton wrote various letters on behalf of Fullerton setting out its concerns in respect of the pilot program and its potential impact on flora, fauna and water resources in the Fullerton Cove area. Correspondence included letters to media personalities and the local federal Parliamentary member.

41 In February 2012 Fullerton published its first newsletter directed towards preventing coal seam gas exploration in Fullerton Cove and setting out Fullerton's primary concerns with respect to coal seam gas exploration and production at Fullerton Cove, particularly in relation to the potential adverse impacts of the exploration on groundwater and the local flora and fauna.

42 On 13 December 2011 and 5 June 2012, Mr Hamilton attended, together with other members of Fullerton, public meetings at Port Stephens Council and Newcastle Council, during which it was unanimously resolved to write to the New South Wales Premier, the Minister for Resources and Energy and the Minister for the Environment, on behalf of the residents of Port Stephens, the Hunter and Newcastle, to express concern over the proposal to carry out test drilling for coal seam gas in Fullerton Cove.

43 On 20 June 2012 he attended a public meeting at the Fern Bay community hall, convened by Fullerton, to discuss coal seam gas development at Fullerton Cove. During the meeting he observed that it was attended by approximately 140 people. After the meeting, 141 people had written down their names and contact details on Fullerton's contact list for the purpose of being kept informed about Fullerton's ongoing activities.

44 On 17 September 2012 Mr Hamilton attended, on behalf of Fullerton, a meeting with the Hon Craig Baumann MP, the State member for Port Stephens, to discuss Fullerton's concerns regarding coal seam gas exploration at Fullerton Cove.

45 On 8 October 2012 Fullerton provided a petition to New South Wales Parliament to halt exploration and production of coal seam gas at Fullerton Cove. The petition received 1,611 signatures.

46 Indeed, the documents annexed to Mr Hamilton's affidavits generally demonstrated that Fullerton's campaign against the pilot program at Fullerton Cove had fostered a significant amount of community interest and support.

47 Mr Hamilton further deposed in his affidavits that:

(a) Fullerton had been active in respect of a number of different environmental issues in Fullerton Cove, including the impacts of sand mining on the beach and a proposed sewerage treatment plant;

(b) he had no financial interest in the outcome of the proceedings and it was his belief that Fullerton had no financial interest in the outcome of the proceedings;

(c) as a member of Fullerton, he was concerned about the potential impacts of the pilot program on water quality and the aquifers in the area, and on the ecological communities that are dependant on the RAMSAR wetlands. It was these concerns that motivated Fullerton to agitate for a comprehensive EIS to be completed in respect of the pilot program and the vehicle through which this was to be achieved, was the litigation; and

(d) he, and other members of Fullerton, were of the view that the pilot program had not been properly assessed. Concerned about the risk of irreversible harm to the environment, including to aquifers and wildlife in the area, if the pilot program proceeded, Fullerton instituted the proceedings in the Court.

48 Mr Hamilton was extensively cross-examined by the Department. The cross-examination only served to reinforce the genuineness of Fullerton's contention that it had commenced the litigation in the public interest in order to protect Fullerton Cove from what it perceived to be an inadequate assessment of the potential adverse consequences of coal seam gas exploration in that environmentally sensitive area.

49 Although, with the exception of the Green and Golden Bell Frog, none of the material published and disseminated by Fullerton before the commencement of the proceedings referred in any specificity to the species of flora and fauna relied upon by Fullerton at the hearing to argue that there had been a breach of ss 111 and 112 of the EPAA, in my view, this did not matter.

50 As Mr Hamilton made plain during his oral evidence, neither he nor the members of Fullerton could be considered to be ecological experts with the necessary qualifications or skill to write authoritatively on the various species about which they were concerned. It was sufficient that in the published material Fullerton had clearly expressed concern about the impact of the coal seam gas exploration and drilling in Fullerton on the RAMSAR wetlands, on the flora and fauna found at Fullerton Cove and on the groundwater. This flora and fauna included native and migratory birds and their habitat and endangered ecological communities. In addition, the published material demonstrated that Fullerton was particularly concerned with flora and fauna species listed as threatened under the Environment Protection and Biodiversity Conservation Act 1999 (Cth) ("the EPBC Act") and the Threatened Species Conservation Act 1995. Many of the species the specific subject of the litigation were in fact listed as threatened under one or more of these enactments.

51 To the extent that it is necessary to do so, I find that the literature published by Fullerton is entirely consistent with the concern expressed by it about the impact of the pilot program on Fullerton Cove, as articulated by Mr Hamilton and other members of Fullerton, both prior to the litigation commencing and as at the date the proceedings were instituted by it.

52 The cross-examination of Mr Hamilton revealed that:

(a) although the litigation was commenced primarily on behalf of Fullerton's members, it had support from local communities other than that of Fullerton Cove;

(b) although some members of Fullerton had expressed a concern about the impact of the coal seam gas exploration at Fullerton Cove on their immediate amenity and property values, he was not aware of any evidence that the pilot program would, with the exception of one individual, have any adverse effect in this regard. Overwhelmingly the principal motivation in bringing the proceedings was to protect the Fullerton Cove environment; and

(c) although Fullerton had incorporated as late as 17 August 2012, that is to say, shortly prior to the commencement of the litigation on 24 August 2012, the need for incorporation had been discussed as early as 2010 and 2011 by the Fullerton Committee. Mr Hamilton confessed that the onus of incorporation had been left to him but that he had delayed in executing the task because of the terminal illness of his business partner. Mr Hamilton conceded that a factor in the incorporation of Fullerton prior to the commencement of the litigation was to protect Fullerton's members from any potential adverse costs order.

53 The Department sought to argue that because the form to incorporate Fullerton, completed and signed by Mr Hamilton, did not list the principal activity of the association as "Environment/horticulture/animal protection", but rather as "Social services/community association", this demonstrated that Fullerton was not an organisation principally concerned with the protection of the environment, and more specifically, the protection of Fullerton Cove.

54 This suggestion must be rejected. First, in the same form Mr Hamilton described the objects of the association as "the safety and wellbeing of the residents and community of Fullerton Cove and its environment" (emphasis added). And second, as Mr Hamilton stated in cross-examination, he did not tick the first box comprising the term "Environment" because of its association with "horticulture" and "animal protection". These latter descriptions did not, in his opinion at the time when he completed the form, best describe the activities of Fullerton. In his view, the work of the association, including its environmental activities, were better described by the term "community association". Having said this, he agreed that Fullerton was engaged in other campaigns which were not environmentally focused.

55 In my opinion, it is tolerably clear that the principal activity of Fullerton at the relevant time was that of environmental protection. What is important in the characterisation of the litigation is the motivation of Fullerton in commencing the proceedings. There can be no doubt that in commencing the litigation Fullerton was motivated by its desire to protect the Fullerton Cove environment from what it perceived, rightly or wrongly, to be the detrimental impacts of coal seam gas exploration in that area. I place little weight on the fact that Fullerton has engaged in other community activities that are not environmentally related. And, in any event, I do not understand why a public interest group must be exclusively engaged in environmental matters for any proceedings it brings to be classified as in the public interest.

56 The Department also sought to argue that because Fullerton had initially expressed the view in public that approval for the pilot program was to be challenged under Pt 4 of the EPAA, and not Pt 5, on the basis that the program ought to have been classified as "designated development", that this demonstrated that the intention of Fullerton was to stop the pilot program in its entirety "come what may".

57 First, it is true that "the litigation was subject to metamorphosis at numerous times from its commencement to its conclusion at the hearing" (Lester at [8]). But I do not understand how this has a bearing on whether or not the litigation is to be characterised as being in the public interest. As Mr Hamilton stated, the consistent position of Fullerton was that the effect of the pilot program on the ecologically sensitive Fullerton Cove environment had been inadequately assessed. Whether the challenge to the approval for the pilot program was brought pursuant to Pt 4 or Pt 5 of the EPAA, could not make any difference to the proper characterisation of the litigation. Either way, Fullerton was seeking assessment by means of an EIS of the pilot program.

58 Second, in my opinion, the proceedings were brought to uphold and enforce important obligations in a statute, one of the principal objects of which is to protect the environment (see s 5 of the EPAA). This plainly constitutes a public interest of a sufficient kind. It does not lose this character because the grounds of challenge to the approval changed over time. In this regard it must be remembered that the proceedings were expedited by reason of the grant of injunctive relief. More leisurely refinement of the grounds of challenge was therefore not possible. Here, just as in Lester, the change to the formulation of Fullerton's challenge was no bar to the litigation being characterised as being in the public interest.

59 Third, to the extent that it was suggested that Fullerton in reality desired to halt all coal seam gas exploration in the Fullerton Cove area by instituting the proceedings, again, this does not militate against a finding that the litigation was in the public interest. At the heart of much environmental litigation such an aim may be found. It renders the proceedings no less in the public interest.

60 Fullerton also relied upon an affidavit of Ms Elaine Johnson affirmed 17 May 2013. Ms Johnson is a solicitor with EDO NSW ("the EDO"), and has had carriage of the litigation for Fullerton.

61 Much of the material annexed to Ms Johnson's affidavit was either not read or was rejected by the Court. This was because this material comprised of literature written after the proceedings had concluded and judgment was reserved.

62 The time for assessing whether or not litigation may be characterised as in the public interest is at the time the litigation is commenced. Accordingly, while material prior to the commencement of the proceedings, as at the date of the commencement of the proceedings and during the hearing of the proceedings is likely to be relevant, material post-dating the conclusion of the proceedings is not. This is particularly so when the material is written by third parties with little or no connection to the litigation.

63 For completeness, it should be noted that a number of documents annexed to Mr Hamilton's affidavits were rejected on a similar basis.

64 Also ruled inadmissible were various media articles attached both to Mr Hamilton's affidavits and Ms Johnson's affidavit that did more than report upon the activities of Fullerton Cove prior to the litigation but purported to express an opinion on the merits or otherwise of the coal seam gas industry and the litigation in general (Hume Coal (No 4) at [41]).

65 The Department forcefully argued that because the interest was confined to a relatively small number of members from Fullerton residing in the immediate vicinity of the pilot program, this weighed against any finding that the litigation was in the public interest. I disagree. First, I do not accept the Department's description of Fullerton as "small". Documents produced pursuant to a notice to produce issued by the Department demonstrated that Fullerton comprised approximately 28 members. In my view that is more than sufficient. Second, and more importantly, the size of the application group is not, of itself, a barrier to the proceedings being characterised as in the public interest. A single individual can bring proceedings to protect the environment that can constitute public interest litigation (Oshlack v Richmond River Council at [111]-[114], [134] and [140] per Kirby J). Third, and in any event, as the evidence discloses, although it was Fullerton who initiated the proceedings, there was not insignificant interest in the litigation outside Fullerton and the Fullerton Cove area.

66 The Department also argued that the proceedings could not be characterised as public interest litigation because of the small geographical area over which the pilot program was to be carried out and its limited duration. Again, this must be rejected. As noted above, Fullerton Cove contained endangered ecological communities, was adjacent to RAMSAR listed wetlands, was home to a number of threatened species of flora and fauna under the EPBC Act and the Threatened Species Conservation Act and was located above the Stockton and Tomago aquifers, the latter of which had a geographical reach far beyond the area of the pilot program. When regard is had to the perceived and actual ecological importance of Fullerton Cove and the very real concern that Fullerton had in respect of the potential adverse impacts of the program on these environmental features, the small size of the geographical area ceases to matter.

67 Finally, the suggestion by the Department that Fullerton, or any of its members, had a pecuniary or private interest in the outcome of the proceedings must be eschewed. Although some of Fullerton's members were concerned about a loss of property value occasioned by the pilot program, vague and unspecified statements of this nature are not sufficient to demonstrate an interest that would preclude a characterisation of the litigation as in the public interest. Moreover, although such opinions were expressed by some of the individual members of Fullerton, there was no evidence that this was the view of Fullerton as an incorporated body.

68 In summary, I have no hesitation in finding, for the reasons given above, that the litigation was brought in the public interest.

The Proceedings Raised Novel Issues of General Importance

69 A fair reading of Fullerton Cove (No 2) reveals that not only did the litigation raise one or more novel issues of general importance, but that the litigation has contributed in a material way to the proper understanding, development and administration of the law. These issues were three-fold, namely:

(a) first, whether the Court had jurisdiction to entertain the claim (see [60]-[76]);

(b) second, whether expert evidence was admissible in determining a breach of s 111 of the EPAA and what was the proper construction of that provision ([116]-[146]). As the Court noted in relation to this issue ([120]):

120 A survey of the potentially applicable case law reveals the following propositions. First, to date, it appears that no decision has directly and unequivocally decided the issue of whether expert evidence is admissible to determine whether or not a decision-maker has examined and taken into account to the fullest extent reasonably possible all matters affecting or likely to affect the environment as required by s 111 of the EPAA. While the authorities are replete with illustrations where such evidence has been admitted (for example, Jugiong), no party was able to furnish the Court with decisive and binding authority in this respect.

(c) and third, whether the assessment required by s 112 of the EPAA is a jurisdictional fact, again a question which had not been authoritatively determined as at the date of the litigation ([230]-[300]).

70 As may be seen from the judgment, it was the determination of these issues, and not merely the resolution of questions of fact, that occupied a sizable proportion of the hearing. In this regard Fullerton Cove (No 2) can be distinguished from Oshlack v Rous Water (No 3) where the Court held that no novel issues of general importance were raised by the applicant in that case (at [25]-[29]). The Department's submission that the only novel issue of general importance was that concerning the proper construction of s 112 of the EPAA, which did not occupy much of the hearing, must therefore be rejected.

71 The Department specifically argued that the general importance of the s 112 issue ought to be accorded little weight because:

(a) the issue only emerged late in the proceedings;

(b) having regard to the overall context of the entire proceedings "it was ultimately an issue of statutory interpretation";

(c) it was not Fullerton who provided the Court with significant assistance on the topic. It was left to the Department to collate the relevant case law on this point; and

(d) the ground ultimately failed on the facts.

72 First, in relation to the timing of the emergence of the jurisdictional fact question, I neither wholly understand the relevance of, nor agree with, the description by the Department that the issue was one that arose "late" in the litigation. As the Court observed in respect of the pleadings concerning s 112 of the EPAA (at [47]-[50]):

47 However, when paragraphs 21-28 of the points of claim are read as a whole, and likewise paragraphs 29-40 (excluding paragraph 35 dealing with designated development that was not pressed by Fullerton Cove at the hearing), and when regard is had to the points of defence, it is clear that what is alleged is a breach by the Department of ss 111 and 112 of the EPAA, unconfined in scope, and that was understood as such by both Dart and the Department.

48 The respondents, and in particular Dart, strenuously contended that if Fullerton was to depart from the "long line of authority in this Court that the determination of whether an activity 'is likely to significantly affect the environment' for the purpose of s 112 so as to require an EIS is a matter for the determining authority and not for the court", it was required to do so expressly in its pleading by alleging that s 112 involves the determination of a jurisdictional fact. Dart relied in support on an affidavit of Ms Louise Camenzuli, a solicitor engaged by Dart, affirmed 5 October 2012, which demonstrated that Dart had sought particulars of the error of law alleged in paragraphs 36-40 of the points of claim. But in my opinion, neither the request nor the answer by the solicitor for Fullerton advanced the matter very far.

49 It is plain that the pleadings in respect of s 112 do not explicitly raise an assertion as to the existence of a jurisdictional fact. To this observation there are two responses. First, since 2010, there has been authority in this Court that has held that s 112 does give rise to a jurisdictional fact (Parks and Playgrounds Movement Inc v Newcastle City Council [2010] NSWLEC 231; (2010) 179 LGERA 346 at [132] per Biscoe J and Oshlack v Rous Water [2011] NSWLEC 73; (2011) 184 LGERA 365 at [5]-[6] per Biscoe J, although cf Timbarra Protection Coalition Inc v Ross Mining NL [1999] NSWCA 8; (1999) 46 NSWLR 55 at [84] per Spigelman CJ which suggests it does not). Therefore, unless these decisions are plainly wrong (see a discussion of this test below in the context of determining whether there has been a breach of s 112), the position in this Court has been that, however pleaded, in order for the Court to determine whether or not s 112 of the EPAA has been breached, the Court must determine the existence of a jurisdictional fact. That is to say, in order to ascertain whether or not the Department unlawfully granted approval to the pilot program in the absence of having obtained an EIS, the Court must, on present authority, determine for itself if the activity the subject of the approval is "likely to significantly affect the environment".

50 Second, while not all errors of law are jurisdictional errors, the determination of a jurisdictional fact is the determination of a "form of jurisdictional error" (Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd [2010] NSWCA 190; (2010) 78 NSWLR 393 at [34] and Plaintiff M70/2011 v Minister for Immigration and Citizenship [2011] HCA 32; (2011) 244 CLR 144 at [59]) and thus the determination of an error of law.

73 The Department had therefore been put on notice by reason of the allegation of breach of s 112 of the EPAA that the possible existence of a jurisdictional fact would require ventilation. The question needed to be resolved in order to determine if s 112 had been contravened.

74 Second, it is not clear whether the Department, by characterising the proper construction of s 112 of the EPAA as "ultimately an issue of statutory interpretation", was seeking to diminish the difficulty attendant upon the resolution of that question. Issues of statutory construction often have profound consequences as many of the challenges to decisions made under the Migration Act 1958 (Cth) attest to.

75 Third, all of the parties provided assistance to the Court on the interpretation of s 112. The submission put by the Department exaggerates the Department's involvement in this regard.

76 Fourth, that the ground ultimately failed on the facts cannot have any bearing on the importance of the question raised by the ground, namely, to authoritatively determine, in this Court at least, whether s 112 of the EPAA gave rise to a jurisdictional fact.

77 Finally, and revisiting the factors discussed in Caroona in respect of step two, if it be necessary to make such a finding in light of the reasons expressed above, in my opinion, given that the component of the environment sought to be protected in Fullerton Cove by the litigation consisted of a RAMSAR wetland, several endangered ecological communities, and various threatened species under the EPBC Act and the Threatened Species Conservation Act, there was, on this basis alone, "something more" sufficient to constitute public interest litigation.

There are No Countervailing Circumstances that Preclude the Litigation From Being Characterised as Having Been Brought in the Public Interest

78 The Department submitted that because at the hearing Fullerton persisted with a weak factual case, particularly with respect to the claim regarding the absence of any groundwater assessment, the proceedings were sufficiently unmeritorious that Fullerton should be ordered to pay its costs.

79 But upon closer scrutiny, the Department's submission amounts to saying that, because Fullerton lost, costs should follow the event. This is not the correct approach. This is because on any fair assessment of the proceedings Fullerton's conduct of the litigation cannot be described by epithets such as 'hopeless', 'unarguable' or 'unmeritorious'. Rather, put simply, Fullerton lost on the facts. In addition, there can be no legitimate complaint in respect of Fullerton's conduct of the litigation. Grounds that could not legitimately be pursued were abandoned (for example the designated development ground) and factual concessions were appropriately made. That Fullerton's experts did not, ultimately, measure up, is insufficient to amount to a countervailing consideration disentitling Fullerton from any reliance on r 4.2(1) of the LEC Rules. Indeed, it should be remembered that while Fullerton was unsuccessful principally for factual reasons, it was largely successful in relation to the legal obstacles raised by both Dart and the Department. To describe the running and result of the litigation as, in effect, an abject failure on the part of Fullerton simply cannot be maintained.

80 In a variation of its contentions, the Department complained that Fullerton's experts did not support the case that it advanced. In particular, the Department focused on Dr Mudd's eventual concession that the assessment before the decision maker of the pilot program adequately addressed shallow groundwater resources. But this concession came about only as a result of Dart's, not the Department's, cross-examination of Dr Mudd and was, in part, occasioned by the failure of the Department to provide, as it should have, Fullerton with a copy of the Interim Water Report. And although Dr Mudd ultimately conceded that the Interim Water Report satisfied his concerns regarding the shallow groundwater impacts of the pilot program, he nevertheless maintained his position that the Report did not address his concerns about the impact of the pilot program on deep groundwater, and moreover, that there had never been a proper groundwater assessment conducted by Dart, as opposed to the groundwater monitoring methodology proposed by it.

81 Likewise, the criticisms made by the Department of Mr Paull's evidence and the concessions that he made during the course of the hearing do not amount to countervailing considerations. As with Dr Mudd, the deficiencies in Mr Paull's evidence were only exposed during his cross-examination by Dart, and not the Department.

82 Leaving aside the obvious fact that Fullerton lost, it also could not be said on the evidence that (Caroona at [61]):

(a) Fullerton was seeking to vindicate rights of a commercial nature and stood to benefit from the litigation;

(b) as an incorporated association, the private interests of the members, or of Fullerton, would be affected, legally or financially, by the outcome of the proceedings, or that Fullerton was a vehicle for persons seeking to protect their own commercial interests;

(c) Fullerton was supported financially by third persons or entities who would benefit from the outcome of the litigation;

(d) the litigation raised only questions of public interest that were narrow and devoid of any wider significance; or

(e) Fullerton had engaged in disentitling conduct, such as impropriety or unreasonableness, in the conduct of the litigation.

Summary of Findings on Public Interest

83 To conclude, I find that the litigation was conducted in the public interest for the purposes of r 4.2(1) of the LEC Rules. I also find that as an exercise of my discretion under that rule it is appropriate that there be no order as to costs in the proceedings between the parties.

Costs of This Application

84 Fullerton has been successful in arguing that r 4.2(1) of the LEC Rules applies and that the Court should exercise its discretion and make no order as to costs. Consequent upon its success, Fullerton now seeks its costs of its application.

85 In support, Fullerton relied on correspondence sent on its behalf from Ms Johnson of the EDO inviting the Department not to oppose any application that there be no order as to costs under r 4.2(1). In particular, Fullerton relied on a letter dated 24 June 2013 sent by Ms Johnson to the Department wherein she outlined the reasons for Fullerton pursuing an application under r 4.2(1) of the LEC Rules and offered the Department a "final opportunity" to agree to an order that each party bear its own costs. The offer was said to be made in accordance with the principles set out in Calderbank v Calderbank [1975] 3 All ER 333. While Fullerton does not rely upon the terms of that letter as the basis for any claim for indemnity costs, it nevertheless argues that this correspondence, together with the earlier correspondence referred to, demonstrates the unreasonableness of the Department's position in rejecting its offer in order to avoid the necessity of having a hearing to determine the issue.

86 The Department submitted that it would be a "gross injustice" if it were ordered to pay the costs of Fullerton's application in circumstances where it had been wholly successful in the proceedings. It also contended that the purported Calderbank letter dated 24 June 2013 contained no element of compromise and was not an offer that could engage the principles in that case. Finally, it argued that if the proceedings were to be characterised as having been brought in the public interest, then it too should obtain the benefit of any application of r 4.2(1) of the LEC Rules.

87 I disagree. First, the words of r 4.2(1) of the LEC Rules are equivocal in respect of their present application to the Department. Arguably, the provision only applies to an unsuccessful applicant in the substantive proceedings and not in a subsequent costs application once the substantive proceedings have concluded. The Department was not the "unsuccessful applicant" but was the successful respondent. The Department cannot, therefore, claim the benefit of the rule. But even if it did apply, for the reasons expressed below, I would not exercise the discretion contained in that rule in the Department's favour.

88 Second, while I agree that the purported Calderbank letter dated 24 June 2013 contained no element of compromise (see the applicable legal principles recently reviewed by the Court in Dobrohotoff v Bennic (No 2) [2013] NSWLEC 139 at [13]-[18]), it was difficult to see what compromise could have been offered in light of the order sought by Fullerton. What the letter did contain, however, was an entirely reasonable, in my view, suggestion by Fullerton to avoid the attendant expense and inconvenience of a hearing on the application of r 4.2(1) of the LEC Rules to the proceedings. In that letter, and its earlier iterations, Fullerton urged upon the Department an acceptance that the litigation had been brought in the public interest. The Department's rejection of this position on 23 April 2013 in an email to Ms Johnson was, for a model litigant, less than fulsome and unhelpful in the circumstances. It stated:

The Second Respondent does not accept that the proceedings were brought in the public interest or in the alternative the Second Respondent does not accept that the entirety of the proceedings were brought in the public interest.

89 Third, although Fullerton's application under r 4.2(1) of the LEC Rules was not an application made pursuant to a formal notice of motion, and could arguably be conceived of as a continuation of the substantive hearing, the reality is that the application was conducted, heard and determined as a wholly separate application. Separate submissions were filed; separate evidence was prepared and read; the application was listed for a separate hearing; and a separate judgment has been produced. In circumstances where Fullerton was put to the cost of a discrete costs hearing, in which it enjoyed complete success, I see no reason why it should not recover its legal costs. If necessary, the result can be seen, in the alternative, as an exercise in apportionment.

90 Fourth, contrary to its submission, the Department has not enjoyed complete success insofar as it lost many of the legal issues raised by it during the substantive proceedings.

91 In short, as an exercise of my general costs discretion pursuant to s 98 of the CPA I find that it is appropriate in all the circumstances that the Department pay Fullerton's costs of its successful application. The Department could, and should, as it transpired given the strength of Fullerton's costs application, have acceded to Fullerton's entreaties that it agree to an order that each party bear its own costs of the proceedings.

92 Finally, it should be noted that to the extent that Fullerton sought to rely on the fact that Dart did not oppose the Court exercising its discretion under r 4.2(1) of the LEC Rules as a basis for a costs order in its favour, this must be rejected. Although the absence of Dart, or conversely the presence of the Department, is a curiosity upon which the Court remarked in an earlier directions hearing, it is not for this Court to speculate as to why Dart has elected to take the course that it has. Dart's lack of opposition to Fullerton's application can have no bearing whatsoever on the outcome of the application under r 4.2(1) of the LEC Rules, or the outcome of Fullerton's claim for costs consequent upon its successful costs application.

Orders

93 In conformity with the reasons given above, the Court orders that:

(1) with the exception noted in order (2) below, each party is to bear its own costs of the proceedings;

(2) the New South Wales Department of Trade and Investment, Regional Infrastructure and Services is to pay Fullerton Cove Residents Action Group Incorporated's costs of, and incidental to, the costs hearing before the Court on 10 September 2013; and

(3) upon publication of these reasons on CaseLaw the exhibits are to be returned.

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Amendments

19 September 2013 - Last sentence amended
Amended paragraphs: 22

Decision last updated: 19 September 2013