> Reported Decision : 128 LGERA 287 Land and Environment Court of New South Wales CITATION : Environment Protection Authority v McConnell Dowell Constructors (Aust) Pty Ltd [2003] NSWLEC 156 PROSECUTOR Environment Protection Authority PARTIES : DEFENDANT McConnell Dowell Constructors (Aust) Pty Ltd FILE NUMBER(S) : 50009 of 1999 CORAM: Pearlman J KEY ISSUES: Costs :- class 5 - no disentitling conduct - no reduction in costs LEGISLATION CITED: Clean Waters Act 1970 s 16(1) Land and Environment Court Act 1979 s 52 Australian Conservation Foundation and Ors v Forestry Commission of Tasmania and Ors (1988) 76 LGRA 381; Caltex Refining Co Pty Ltd v Maritime Services Board of NSW (1995) 36 NSWLR 552; Cretazzo v Lombardi (1975) 13 SASR 4; Donald Campbell & Co v Pollak (1927) AC 732; CASES CITED: Environment Protection Authority v McConnell Dowell Constructors (Aust) Pty Ltd [2003] NSWLEC 70; Environment Protection Authority v Shell Co of Australia (2001) 113 LGERA 463; Latoudis v Casey (1990) 170 CLR 534; McConnell Dowell Constructors (Aust) Pty Ltd v Environment Protection Authority (2000) 50 NSWLR 127; Owen v Willtara Construction Pty Ltd (Bignold J, NSWLEC, 11 December 1998, unreported) DATES OF HEARING: 20/06/2003 DATE OF JUDGMENT: 06/30/2003 PROSECUTOR Mr D A Buchanan SC SOLICITORS Environment Protection Authority LEGAL REPRESENTATIVES: DEFENDANT Mr J L Glissan QC and Mr G B Newport (Barrister) SOLICITORS Doyles JUDGMENT: IN THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES 50009 of 1999 Pearlman J 30 June 2003 ENVIRONMENT PROTECTION AUTHORITY Prosecutor v McCONNELL DOWELL CONSTRUCTORS (AUST) PTY LTD Defendant Judgment Introduction 1 The defendant successfully defended a charge that it had polluted water contrary to s 16(1) of the Clean Waters Act 1970. In a judgment delivered on 31 March 2003 (Environment Protection Authority v McConnell Dowell Constructors (Aust) Pty Ltd [2003] NSWLEC 70) ("the primary judgment"), I held that the prosecutor had not established the guilt of the defendant to the criminal standard of proof. 2 As the prosecutor had requested, the proceedings were stood over to allow the prosecutor to consider its position before formal orders acquitting the defendant were made. 3 The parties have now appeared to argue the question of costs. The defendant seeks an order dismissing the proceedings and makes a formal claim for its costs on the basis that, as the successful party in the proceedings, it could expect an award of costs in its favour. The prosecutor claims that the defendant should receive part only of its costs. The prosecutor's case 4 Mr Buchanan SC, appearing for the prosecutor, submitted that it would not be fair (nor just and reasonable) to order the prosecutor to pay all of the defendant's costs. He contended that the proceedings were unreasonably prolonged by the way in which the defence was conducted. He said that this is demonstrated by identification of the issues which were put in dispute by the defendant and upon which the defendant failed. Relying upon a detailed affidavit by Mr C S F McElwain, the solicitor in the employment of the prosecutor who had the primary conduct of the proceedings, Mr Buchanan identified a number of particular matters which the prosecutor claims to justify a reduction in the costs to be awarded to the defendant. 5 Those matters may be summarised as follows: (1) A notice to produce dated 9 April 1999, in which the defendant sought the production of all documents of the Director-General relating to the decision to consent to the institution of proceedings; (2) A notice of motion returnable on 16 April 1999 ("the first notice of motion") (seeking the striking out of the summons as an abuse of process, an order for further and better particulars, and the striking out of a notice to produce given by the prosecutor) and a further notice of motion ("the second notice of motion") seeking a case to be stated to the Court of Criminal Appeal arising out of the Court's decision on the first notice of motion. The prosecutor claims the defendant should not be entitled to six-sevenths of the costs of these notices of motion; (3) Another notice of motion ("the third notice of motion") filed on 15 January 2001 seeking to strike out the summons or alternatively to stay it on the basis that the defect found in the summons by the Court of Criminal Appeal could not be cured by the application of s 43 of the Land and Environment Court Act 1979; (4) Another notice of motion ("the fourth notice of motion") filed on 8 August 2001 seeking a case to be stated to the Court of Criminal Appeal arising out of this Court's decision that s 43 applied to cure the defect; (5) Subpoenas issued by the defendant to the Council of the City of Sydney, Gardner Perrott Pty Ltd and Beralon Pty Ltd; (6) A letter sent by the defendant's solicitors to the prosecutor dated 30 October 2002, inviting the prosecutor to discontinue the proceedings, and contending, amongst other things, that tort law concepts of vicarious liability and non-delegable duty of care had no place in the criminal law, and no concession to the contrary would be made; (7) A bundle of documents sought to be tendered for the defendant in the proceedings, many of which were objected to on the grounds of relevance or that they had already been tendered, and which objection was substantially sustained. The prosecutor claims that the defendant should not be entitled to two-thirds of the costs of this bundle of documents; (8) The submissions made on behalf of the defendant in the trial as to various matters of law in respect of which the defendant either failed in its contentions or was guilty of approbation and reprobation; (9) Work done by solicitors acting for the defendant which duplicated work done by other solicitors acting for the defendant. The proper approach 6 The Court's power to make an order for the payment of costs is to be found in s 52 of the Land and Environment Court Act 1979 ("the Court Act") as follows: 52(1) Where a Judge – (a) convicts any person of an offence punishable in the summary jurisdiction of the Court; (b) makes an order dismissing the charge for any such offence; or (c) makes an order under section 10 of the Crimes (Sentencing Procedure) Act 1999 in respect of any such offence, the Judge may, in and by the conviction or order, order the defendant, in the case of a conviction or order referred to in paragraph (a) or (c), to pay to the prosecutor, or, in the case of an order referred to in paragraph (b), order the prosecutor to pay to the defendant, costs of such amount as are specified in the conviction or order, or, if the conviction or order so directs, as may be determined under subsection (2). (2) The costs payable by a prosecutor or defendant in accordance with a direction under this section are to be determined: (a) by agreement between the prosecutor and defendant; or (b) if no such agreement can be reached, in accordance with the regulations. (3) Regulations made for the purposes of this section may without limitation, adopt all or any specified provisions of Division 6 of Part 11 of the Legal Profession Act 1987, with or without specified modifications. (4) Any such regulation may: (a) confer or impose, or have the effect of conferring or imposing, jurisdiction or functions on any court or judicial officer; or (b) confer or impose, or have the effect of conferring or imposing, functions on any officer or costs assessor. 7 Section 52 was amended by the Courts Legislation Amendment Act 1997. The amendment deleted from s 52(1) the words "… such costs as to the judge seem just and reasonable …" and inserted instead the words "… costs of such amount as are specified in the conviction or order or, if the conviction or order so directs, as may be determined under subsection (2)". The purpose of the amendment was to permit costs to be determined by costs assessors under the Legal Profession Act 1987 instead of requiring the judge, and only the judge, to make a quantified costs order under s 52 (see Caltex Refining Co Pty Ltd v Maritime Services Board of NSW (1995) 36 NSWLR 552). 8 Despite the excision of the words "just and reasonable" from the amended s 52, the Court should, in exercising the power to award costs, make an order which is just, reasonable and fair in all the circumstances of the case. The governing principles for the exercise of the type of discretion which a provision such as s 52 confers upon a court is to be found in the leading authority of Latoudis v Casey (1990) 170 CLR 534. Those principles are as follows: (1) The discretion is broad and unfettered (at 541); (2) The purpose of a costs order is not to punish the unsuccessful party, but to compensate the successful party (at 567); (3) The discretion must be exercised judicially, that is, for reasons directly connected with the charge or the conduct of the proceedings; (at 557, 566, 568); 9 The general rule is that a successful defendant has a reasonable expectation that costs will be awarded in his or her favour: Latoudis v Casey at 557; Donald Campbell & Co v Pollak (1927) AC 732 at 811. But there may be conduct on the part of the defendant, sometimes called "disentitling conduct", which would justify not making an award in his or her favour, or would justify making a reduced award of costs. Thus, in Latoudis v Casey at 544, Mason CJ said: However, there will be cases in which, when regard is had to the particular circumstances, it would not be just and reasonable to order costs against the prosecutor or to order payment of all the defendant's costs. If, for example, the defendant, by his or her conduct after the events constituting the commission of the alleged offence, brought the prosecution upon himself or herself, then it would not be just and reasonable to award costs against the prosecutor. I agree with Toohey J. that, if a defendant has been given an opportunity of explaining his or her version of events before a charge is laid and declines to take up that opportunity, it may be just and reasonable to refuse costs. Likewise, if a defendant conducts his or her defence in such a way as to prolong the proceedings unreasonably, it would be just and reasonable to make an award for a proportion of the defendant's costs. 10 The illustrations noted in the above passage are not the only illustration of "disentitling conduct". Toohey J in Latoudis v Casey at 565, after giving the illustrations referred to in the passage quoted above, went on to say: These illustrations are in no way exhaustive but what they point up is that a refusal of costs to a successful defendant will ordinarily be based upon the conduct of the defendant in relation to the proceedings brought against him or her. 11 In this Court, in Environment Protection Authority v Shell Co of Australia (2001) 113 LGERA 463 at 470, Bignold J was prepared to reduce the costs payable in favour of the defendant by reference to issues in respect of which, although reasonably raised, the defendant wholly failed. Similarly, in Owen v Willtara Construction Pty Ltd (Bignold J, NSWLEC, 11 December 1998, unreported) his Honour declined to award costs in favour of a successful defendant upon the grounds, firstly, that the defendant brought the proceedings upon himself and, secondly, that the defendant failed in some of the issues raised in his defence. 12 There is no complete analogy between the discretion to award costs in summary criminal proceedings and the power to award costs in civil proceedings (Latoudis v Casey at 543) but nevertheless "… there is no difficulty in applying in such proceedings principles akin to those applicable to the making or refusing of orders for costs in civil cases" (per McHugh J in Latoudis v Casey at 568). Hence, it is not improper to observe the note of caution sounded by Jacobs J in Cretazzo v Lombardi (1975) 13 SASR 4 at 16 (a personal injury case) against apportioning costs only on the success or failure of one party or the other on various issues of fact and law. It seems to me, with respect, that a useful statement of the proper approach was set out by Burchett J in Australian Conservation Foundation and Ors v Forestry Commission of Tasmania and Ors (1988) 76 LGRA 381 at 384, (a case involving judicial review of an administrative action) where he said: A party against whom an unsustainable claim is prosecuted is not to be forced, at his peril in respect of costs, to abandon every defence he is not sure of maintaining, and oppose to his adversary only the barrier of one hopeful argument; he is entitled to rise his earthworks at every reasonable point along the path of assault. At the same time, if he multiplies issues unreasonably, he may suffer in costs. Ultimately, the question is one of discretion and judgment. Should all or only part of the defendant's costs be awarded? 13 Applying the general principles I have set out, I have concluded that the defendant is entitled to an award of the whole of its costs. I have reached that conclusion for the following reasons: (1) The prosecutor's case has, in my opinion, descended to an impermissible level of detail in dissecting the conduct of the defendant's defence. There were really only two issues in the whole of these proceedings, and it cannot be said that the defendant raised a multiplicity of issues or that there were a number of significant but discrete issues. The first issue in the proceedings was an interlocutory one – should the summons be struck out as an abuse of process? The second issue, raised of course at the trial, was the issue of proof of the defendant's guilt beyond reasonable doubt. All of the matters alleged by the prosecutor to demonstrate disentitling conduct on the part of the defendant fall within the ambit of both these issues. The question of whether the defendant is entitled to the whole or only part of its costs should not descend to a question of the success or failure of various assertions made by the defendant in endeavouring to establish its case in relation to each of these issues. Thus, as to the interlocutory issue, the defendant alleged a number of defects in the summons and in the process by which the defendant was charged. Those alleged defects did not amount to separate, discrete or multiple issues in the case – they were all part and parcel of the interlocutory issue. The defendant did not succeed in establishing all of the defects, but it did succeed in establishing that the summons as drafted was defective in that it omitted an essential ingredient of the offence. In the absence of the proper application of s 43 of the Court Act, that defect would have had the effect of bringing about an order dismissing the proceedings. It was necessary, as an integral part of the interlocutory issue, to deal with the application of s 43. Indeed, in dealing with the alleged defects, the Court of Criminal Appeal noted that the applicability of s 43 was "… a matter for further consideration …" of this Court ( McConnell Dowell Constructors (Aust) Pty Ltd v Environment Protection Authority (2000) 50 NSWLR 127 at par 54). In the light of this analysis, there is no justification, in my opinion, for reducing the costs of the defendant in relation to the any of the notices of motion or the notice to produce. I take a similar view in relation to the trial. The issue of guilt turned upon the critical question as to whether the defendant was vicariously liable for the act of its independent contractor. The defendant resisted that issue in a number of alternative ways – on the basis of whether vicarious liability was legally available as a theory of liability in a criminal proceedings, and on the basis as to whether vicarious liability had been established beyond reasonable doubt. The matters identified by the prosecutor as disentitling conduct – as to the defendant's contentions about the assimilation of tort law and criminal law and as to the submissions of law made on behalf of the defence – were not separate, discrete or multiple issues, nor do they constitute disentitling conduct. They were simply contentions, some of them in the alternative, as to the applicable law. There were alternative defences raised by the defendant at the trial, namely, an issue was to whether vicarious liability can be a "three-tier" liability, and a defence of honest and reasonable mistake of fact. Ultimately, the Court declined to deal with either of these issues as a consequence of its finding that vicarious liability had not been established (the primary judgment at pars 16 and 122) and neither of them could be reasonably said, in my opinion, to have unduly prolonged the proceedings. (2) The prosecutor claimed that the defendant, in a letter dated 30 October 2002 (before the trial commenced) asserted that the concept of non-delegable duty of care, also a tort law concept, had no place in the criminal law. Yet, in its final submissions on law, so the prosecutor claims, the defendant asserted that non-delegable duty of care was legally available as a head of liability. The prosecutor claims that this is an instance of approbation and reprobation, amounting to disentitling conduct on the part of the defendant, which should not be condoned, and should therefore justify a reduction in an award of costs. This claim, in my opinion, misstates the defendant's position. It claimed in its letter that non-delegable duty of care was not available to the prosecutor as a theory of liability because it was a tort concept unknown to the criminal law. In its submissions of law, the defence made the same claim, and similarly claimed that vicarious liability was not available to establish liability in the criminal law. However, Mr Glissan QC, appearing for the defendant, made the further submission in relation to vicarious liability in general, namely, that the rule is that a principal is not liable for the act of its independent contractor, except where there has been a breach of a non-delegable duty of care or except where the act has been directly authorised (see the primary judgment at par 15). This does not appear to me to be approbation and reprobation. But even if it were to be so regarded, I would not treat it as disentitling conduct on the part of the defendant. It was part and parcel of the defence claim that it was not guilty of the offence as charged, and it was entitled to make submissions in the alternative as to the law to be applied. (3) The remaining matters identified by the prosecutor are, in my opinion, not to be regarded as disentitling conduct. I refer to the filing and serving of three subpoenas claimed to be irrelevant to the issues in the case, the disallowance of some of the components of the defendant's bundle of documents, and the duplication of work by the solicitors for the defendant. These are more likely to be matters to be taken into account in the assessment of the defendant's costs on a party and party basis. They do not constitute reasons for reducing the award of costs in final orders in the proceedings. Orders 14 For the foregoing reasons, I have concluded that the defendant is entitled to an order in its favour for the whole of its costs. 15 The Court having found in the primary judgment that the prosecutor had failed to establish that the defendant was guilty of the offence as charged, it is necessary and appropriate now for the Court to make final orders disposing of the proceedings. 16 They are as follows: (1) The charge against the defendant is dismissed. (2) The prosecutor must pay the costs of the defendant determined in accordance with the Land and Environment Court Act 1979. (3) The exhibits may be returned. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. 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