Public interest litigants - Order made to provide security for costs

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18 December 2012 | By Louise Camenzuli (Partner)

In the recent decision of Illawarra Residents for Responsible Mining Inc v Gujarat NRE Coking Coal Limited [2012] NSWLEC 259, the Land and Environment Court ordered a public interest litigant to provide security for costs of the respondent in the sum of $40,000.

BACKGROUND

In October 2011, Gujarat NRE Coking Coal Limited (Gujarat) obtained Part 3A project approval to:

  1. Carry out mining operations within an area covered by a consolidated coal lease 745 (CCL 745);
  2. Extract coal from the Bulli and Wongawilli coal seams; and
  3. Commence the first working and other preliminary works at Longwall 4, Wonga East.
    (Project Approval).

Under its mining lease, Gujarat was required to obtain approval of a subsidence management plan prior to the carrying out of longwall mining in the area covered by CCL 745.  In March 2012, Gujarat received such approval (SMP Approval).

In April 2012, Gujarat commenced mining operations at Longwall 4 outside the area covered by the Project Approval.  Subsequently, in May 2012, Gujarat lodged a modification application (Modification) under section 75W of the Environmental Planning and Assessment Act 1979 (NSW) (EPA Act).

In June 2012, Illawarra Residents for Responsible Mining Incorporated (Applicant), commenced proceedings against Gujarat seeking declarations and an order restraining the Gujarat from carrying out development for the purpose of extraction of coal at Longwall 4 until such time as the Modification was approved.  In particular, the Applicant contends that, in commencing and continuing to carry out the extraction of coal from Longwall 4 without project approval under Part 3A or development consent under Part 4, Gujarat is in breach of the EPA Act.

Gujarat argued during the security for costs motion that, as a result of clause 8K of the Environmental Planning and Assessment Regulation 2000 (NSW) (EPA Regulation), section 74 of the Mining Act 1992 (NSW) (repealed in 2005) continues to operate in respect of Longwall 4 and, therefore, such operations are exempt from any requirement for any approval under the EPA Act until the earlier of:

(a) The end of the relevant transition period (being 30 September 2012); or
(b) An approval being given to carry out the mining operations.

Alternatively, Gujarat submits that the Court could permit the development to continue on discretionary grounds or that, upon the expiration of clause 8K of the EPA Regulation (30 September 2012), the continued extraction of coal from Longwall 4 became an existing use right.

On 19 July 2012, Gujarat filed a notice of motion seeking an order that the Applicant provide security for costs in the sum of $75,000 or as determined by the Court.

Security for costs motion

The affidavit evidence prepared by Gujarat’s solicitors estimated that the costs of defending the proceedings would be approximately $107,184 of which $75,000 would be expected to be recovered on a party/party basis if Gujarat was successful in the proceedings. 

As at July 2012, the Applicant had a net asset position of $115, with limited income and assets.  The affidavit evidence of the Applicant deposed that none of the members stand to receive any financial or non-financial benefit from the proceedings.  Further, the affidavit indicated that if an order for security was made, the proceedings would not be able to continue.  In cross-examination, the deponent admitted that, if required, she would be able to provide some money ($5,000) for security.  However, due to financial risk, the deponent was unwilling to provide security or bring the proceedings in her own name.

Decision

Despite the fact that the Court (Sheahan J) accepted that the proceedings relate to the proper administration of public law and environmental law, which is an element of public interest, the Court held that:

  1. The Applicant did not provide the Court with sufficient evidence to support its submission that the proceedings would be stultified if an order for security was made.  The Court indicated that the Applicant needed to adduce evidence from other members of the association going to their willingness or ability to personally provide security for the proceedings to continue; and
  2. Gujarat’s application for security had not been brought to frustrate the Applicant’s ability to litigate and, therefore, rejected the Applicant’s submission that the application was oppressive.

Further, although the Applicant commenced the proceedings in good faith, has reasonable prospects of success and there is an element of public interest involved, there is a high risk that the Applicant would be unable to pay Gujarat’s costs.  In particular, the Applicant’s members are protected from its debts and liabilities as a result of its incorporation and none of its members have offered any personal undertaking to be liable for the costs of the proceedings.

Having regard to these factors, the Court held that an order for security was appropriate in the amount of $40,000.  The reason for this decrease from the amount of security sought by Gujarat was that the Court accepted the Applicant’s submissions that some procedural measures could be implemented by Gujarat to reduce the potential costs of the proceedings and a bulk of the costs were expected to concern the discretionary defence.

Implications

This decision is important for all industries that may be affected by challenges to development consents, project approvals or breaches of environmental and planning legislation brought by public interest litigants.  In exercising the Court’s discretion to order security for costs, consideration is given to the factors set out in John Williams Neighbourhood Group Inc v Minister for Planning (2011) 183 LGERA 327 including but not limited to: 

  1. Whether the application for security was brought promptly;
  2. The strength and bona fides of the applicant’s case;
  3. Whether the respondent caused the applicant’s impecuniosity;
  4. Whether the respondent’s application is oppressive; and
  5. Whether persons standing behind the applicant are likely to benefit from the litigation and, if so, whether such persons have offered an undertaking as to damages.

Following this judgment, the Court may also consider whether the members of the relevant association would be able to provide security for the proceedings to continue.  As a result of this decision, evidence that the proceedings have been brought in the public interest and that the association does not have the means to provide security may not be enough to defend a security for costs motion. 

Note:  This judgment does not have implications for public interest litigants who have received a grant of legal aid under Part 3 of the Legal Aid Commission Act 1979 (NSW) (LAC Act) to commence an appeal.  In the circumstance, the Legal Aid Commission will pay the costs of the public interest litigant (called a “legally assisted person”) capped at a certain amount.  In our experience, a respondent will receive a maximum award of costs in the order of $15,000.


The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.


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Louise Camenzuli

Partner. Sydney
+61 2 9210 6621

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