Usk and District Residents Association Limited v Environmental Protection Agency

Factual and Procedural Background

Company A is a residents’ association incorporated on 23 April 2001 to advance local interests in The City, The State. Company B proposed to develop a non-hazardous waste-disposal facility in the area and, on 8 June 2004, obtained Waste Licence No. 168-1 from Agency A.

On 5 August 2004 Company A commenced judicial-review proceedings seeking (i) certiorari quashing the licence and (ii) declaratory relief against certain conditions. Fourteen grounds were pleaded. Affidavits were exchanged by all parties during the leave stage.

On 17 November 2004 Company B applied, under s. 390 of the Companies Act 1963, for security for costs. Judge Kelly granted the application on 26 November 2004, limiting security to anticipated costs of the leave hearing and fixing the amount at the lower estimate supplied by Company A’s cost accountant. Company A appealed that decision to the Supreme Court.

Legal Issues Presented

1. Whether Company B had demonstrated a prima facie defence sufficient to justify an order for security for costs under s. 390 of the Companies Act 1963.
2. Whether the court should assess a prima facie defence to (a) the leave application only, or (b) the proceedings as a whole.
3. Which evidential materials the court may examine when deciding if a prima facie defence exists—only the affidavit grounding the security motion or all affidavits filed in the substantive proceedings.
4. Whether, in the circumstances, the order for security and the ancillary costs order made by Judge Kelly should be upheld or varied.

Arguments of the Parties

Appellant (Company A)

• Asserted that Company B had failed to establish a prima facie defence to Grounds 7, 9 and 14 of the judicial-review statement, and therefore no security should be ordered.
• Contended that the correct focus was the leave stage; Company B had to show a defence to the leave application, not to the substantive proceedings.
• Maintained that Company B was confined to the evidence set out in the affidavit grounding its security motion and could not rely on other affidavits.

Notice Party/Respondent (Company B)

• Argued that s. 390 requires demonstration of a defence to the proceedings as a whole.
• Submitted that, because judicial-review proceedings are tried on affidavit, all affidavits filed could be considered when assessing a prima facie defence.
• Maintained that it had an arguable defence to each impugned ground:
• Ground 7 (allegedly outdated Environmental Impact Statement): the Inspector’s report showed the Environmental Impact Assessment (EIA) took ongoing quarry operations into account.
• Ground 9 (BATNEEC/buffer zones): determining best available technology not entailing excessive cost is primarily for Agency A; unless its conclusion was irrational, the court should not intervene.
• Ground 14 (material change in licensed activity): any difference between the applied-for and licensed activities required a detailed, fact-sensitive analysis; the issue was at least arguable.
• No “special circumstances” were advanced by Company A to justify refusing security.

Table of Precedents Cited

Court's Reasoning and Analysis

1. Applicable legal test. Drawing on Company C v Company D, the Court stated that the moving party must show (a) a prima facie defence and (b) the impecuniosity of the plaintiff; absent special circumstances, security follows.

2. Plaintiff’s ability to pay. Judge Kelly’s finding that Company A could not meet costs was undisputed on appeal.

3. Scope of the required defence. Interpreting s. 390, Judge Clarke (now “Judge Clarke”) held that the defendant must show a defence to the proceedings as a whole, not merely to the leave application, because costs of leave may ultimately hinge on the overall outcome.

4. Admissible evidential materials. In judicial-review proceedings tried on affidavit, it would be “unreal” to ignore affidavits already filed; therefore Company B could rely on all such materials, not just the affidavit grounding its motion.

5. Evaluation of Grounds 7, 9 and 14.

• Ground 7: The Inspector’s report acknowledged ongoing quarrying and distinguished between the Environmental Impact Statement (EIS) and the EIA process; this provided an arguable defence.
• Ground 9: Determination of BATNEEC is primarily for Agency A; unless irrational, its buffer-zone decision is defensible.
• Ground 14: Whether the licensed activity materially differed from the application involves questions of degree requiring substantive analysis; an arguable defence exists.

6. Absence of special circumstances. Company A offered none that would justify refusing security.

7. Costs in the High Court. While upholding the entitlement to security, the Supreme Court held that Judge Kelly’s order awarding costs of the security motion to Company B should be varied. Because Company A succeeded in limiting both the scope (leave costs only) and amount of security, fairness required that those costs be reserved to the judge who will hear the leave application.

Holding and Implications

Holding: The appeal is DISMISSED insofar as it sought to overturn the order for security for costs; the High Court’s order requiring Company A to provide security is affirmed. The decision on the costs of the security motion in the High Court is VARIED; those costs are reserved to the judge who will hear the leave application.

Implications: Company A must lodge security limited to the anticipated costs of the leave hearing. The substantive judicial-review proceedings cannot proceed until that security is in place. The judgment clarifies that, in environmental judicial reviews brought by limited-liability residents’ groups, the defendant may rely on all affidavits on record to demonstrate a prima facie defence and that security is assessed against the proceedings as a whole.