On 24 April 2017 judgment was delivered in Prefabricated Buildings Pty Ltd v Bathurst Regional Council  NSWLEC 44 dismissing a Class 3 application brought by Prefabricated Buildings Pty Ltd (‘Prefabricated Buildings’) appealing against a rates notice issued by Bathurst Regional Council (‘Council’). The appeal was brought pursuant to s 574(1) of the Local Government Act 1993 (NSW) (‘Act’) and related to an annual rates notice issued for water and sewerage services.
A summary of that case by our Local Government specialists can be found here.
Council’s Notice of Motion for costs
On 10 May 2017, Council filed a Notice of Motion seeking an order that Prefabricated pay its costs in the proceedings, including the costs of the Motion. The case of Prefabricated Buildings Pty Ltd v Bathurst Regional Council (No.2)  NSWLEC 111 deals with this Motion.
At the Motion, Robson J considered at whether a departure from the presumptive rule that each party bears its own costs is warranted and whether it is fair and reasonable in the circumstances to award costs. He looked at whether the applicant acted unreasonably and whether proceedings were solely centred on a question of law.
Presumptive Rule for Costs
His Honour noted that the starting point in costs matters is the presumptive rule that there be no order for costs in Class 3 proceedings as stated in Arden Anglican School v Hornsby Shire Council  NSWLEC 103. This presumptive rule, is now encapsulated in r3.7(2) of the Land and Environment Court Rules 2007 (NSW) (‘Court Rules’). Rule 3.7(3) sets out certain circumstances in which the Court may find that it is ‘fair and reasonable’ to award costs in a Class 3 proceedings. Council raises two grounds upon which it contended that costs should be awarded – that being Prefabricated Buildings acted unreasonable and that the proceedings involved a pure question of law.
In relation to the notion of unreasonableness, his Honour took into account the fact that Mr Carter (a director of Prefabricated Buildings) was unrepresented when he commenced proceedings, and found that by him commencing proceedings in his own right rather than in the name of Prefabricated Buildings was reflective of a “mistake”, rather than unreasonableness. It was also noted that while the claim may have evolved over the course of the proceedings, his Honour did not consider that this amounted to unreasonable conduct. Rather, his Honour considered this to be part of the refinement of the central issue in the proceedings.
Pure question of law
His Honour confirmed that it was clear that the hearing on 27 February 2017 involved a pure question of law which was confined to statutory construction of the Act and was determinative of the proceedings, therefore falling plainly within the circumstances identified in r 3.7(3)(a) of the Court Rules. Prefabricated Buildings submitted that not all Class 3 proceedings involving a question of law give rise to a costs order and that there was a line of jurisprudence stating that the reason for the awarding of costs where a preliminary question of law had arisen was because the proceedings then ceased to have the character of merits review and had taken the character of adversary litigation, where costs normally follow the event.
After considering the submissions from the parties, his Honour concluded that it was fair and reasonable in the circumstances to displace the presumptive rule and award costs in the proceedings but noted not in respect of the entire proceedings. His Honour awarded Council its costs from 18 November 2016, that being the date on which the Further Amended Application and Amended Statement of Facts and Contentions were filed and where at that time it became abundantly clear that the sole issue in the proceedings was a legal question regarding the interpretation of the Act. This brought the proceedings squarely within the circumstances of r 3.7(3)(a), and his Honour was satisfied from this point onwards, particularly given that the costs application was foreshadowed, that Prefabricated Buildings assumed the risk of costs and it was fair and reasonable in the circumstances for an order to be made.
Implications for Council
This is a good example when the presumptive rule of costs could be displaced when the proceedings evolve into a pure question of law during the course of the proceedings which did not involve an evaluation of the merits of any application the subject of the proceedings.