IN THE SUPREME COURT OF VICTORIA	Not Restricted	
AT MELBOURNE
Common Law Division
Valuation, Compensation and Planning List
S ECI 2020 02658

KINGLAKE FRIENDS OF THE FOREST INC. (ABN 35 186 838 481)	Plaintiff	
		
v  		
		
VICFORESTS	Defendant	

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JUDGE:	Richards J	
WHERE HELD:	Melbourne	
DATE OF HEARING:	10 November 2021; written submissions received 19 November 2021 and 26 November 2021	
DATE OF JUDGMENT:	16 December 2021	
CASE MAY BE CITED AS:	Kinglake Friends of the Forest Inc. v VicForests (No 5)	
MEDIUM NEUTRAL CITATION:	[2021] VSC 830	

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PRACTICE AND PROCEDURE – Subject matter of proceeding overtaken by a change in the governing law – Parties not agreed about disposition of the proceeding – Whether plaintiff should have leave to discontinue the proceeding – Whether one party should be ordered to pay the other party’s costs – Plaintiff given leave to discontinue the proceeding – Defendant given liberty to apply to reinstate proceeding in order to apply for an inquiry as to damages – No order as to costs – Supreme Court (General Civil Procedure) Rules 2015 (Vic), r 25.02(2)(b).

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APPEARANCES:
	Counsel	Solicitors	
For the Plaintiff	Mr J Korman	Oakwood Legal	
			
For the Defendant	Mr E Nekvapil and
Ms M Narayan	Johnson Winter & Slattery	

HER HONOUR:
1	VicForests is a Victorian Government owned business that conducts timber harvesting operations in State forests in Victoria.  In doing so, it must comply with the provisions of the Sustainable Forests (Timber) Act 2004 (Vic) and any relevant Code of Practice made under Pt 5 of the Conservation, Forests and Lands Act 1987 (Vic).  Until recently, the Code of Practice for Timber Production 2014 (Code) incorporated the Management Standards and Procedures for timber harvesting operations in Victoria’s State forests 2014 (2014 Standards).
2	This proceeding involved a claim by Kinglake Friends of the Forest Inc. (Kinglake FF) for a declaration as to the effect of cl 5.3.1.5 of the 2014 Standards.  Kinglake FF also sought a permanent injunction restraining VicForests from carrying out timber harvesting operations in contravention of cl 5.3.1.5 of the 2014 Standards.  It was Kinglake FF’s contention that the effect of cl 5.3.1.5 was to oblige VicForests to screen timber harvesting operations from view from any road or track, by a minimum 20 metre buffer.  VicForests’ position was that cl 5.3.1.5 had a more limited operation — applying only to the view from, and extending to the area within 500 metres of, scenic drives and designated lookouts listed in table 9 in Appendix 5 of the 2014 Standards.
3	Clause 5.3.1 of the 2014 Standards provided specific landscape standards for the Central Highlands forestry management areas, in the following terms:
5.3.1 	Central Highlands FMAs
5.3.1.1 	Retain all mature trees within 20 m of the Monda Track.
5.3.1.2 	Apply a 50 m buffer either side of La La Falls walking track.
5.3.1.3 	Apply a 50 m buffer either side of Island Creek walking track and a 100 m buffer around the Ada Tree.
Foreground (0 – 500 m)
5.3.1.4 	Within 500 m of the scenic drives and designated lookouts listed in table 9 in Appendix 5 the Planning Standards, manage timber harvesting operations to ensure landscape alterations are temporary, subtle and not evident to the casual observer.
5.3.1.5 	Screen timber harvesting operations (except selective harvesting operations) and new road alignments from view. Use a minimum 20 m vegetation buffer with particular emphasis on the sensitive landscape features listed in table 9 in Appendix 5 the Planning Standards.
Middleground (500 m – 6.5 km)
5.3.1.6 	In the middle ground, between 500 m and 6.5 km, seen from the features listed in table 9 in Appendix 5 the Planning Standards:
(a)	manage timber harvesting operations to ensure landscape alterations are only subtly apparent within 5 years of the operation; and
(b)	shape, position and time timber harvesting operations and new roads to minimise their visual impact.
4	On 3 November 2021, one week before the proceeding was listed for trial, the Minister for Energy, Environment and Climate Change published notice in the Victoria Government Gazette of extensive variations to the Code.  One of the variations was the incorporation into the Code of a new set of standards called the Management Standards and Procedures for timber harvesting operations in Victoria’s State forests 2021 (2021 Standards).  These variations, including the incorporation of the 2021 Standards, took effect on 17 November 2021.
5	The 2021 Standards substituted, for cl 5.3.1 of the 2014 Standards, the following prescription in relation to landscape sensitivity areas in the Central Highlands forestry management areas:
5.2.1 	Central Highlands FMAs
5.2.1.1 	Retain all mature trees within 20m of the Monda Track.
5.2.1.2 	Apply a 50m buffer either side of La La Falls walking track.
5.2.1.3 	Apply a 50 m buffer either side of Island Creek walking track and a 100m buffer around the Ada Tree.
5.2.1.4 	Apply an 80m buffer upslope and 20m buffer downslope of aqueducts in the Historic and Cultural Features Reserves in Rubicon State Forest.
Foreground Seen Area Management (0 – 500 m)
5.2.1.5	In the foreground, within 500m seen from the ‘Places’ listed as ‘Landscape Features’, ‘Scenic Drives’ and ‘Designated Lookouts’ in Table 17 Landscape management prescriptions, manage timber harvesting operations to ensure landscape alterations are temporary, subtle and not evident to the casual observer.
5.2.1.6 	In the foreground, within 500m seen from the ‘Places’ listed as ‘Scenic Drives’ and ‘Designated Lookouts' in Table 17 Landscape management prescriptions, use a minimum 20m vegetation buffer to screen timber harvesting operations (except selective harvesting operations) and new road alignments from view.
Middleground seen area management (500m – 6.5km)
5.2.1.7 	In the middleground, between 500m and 6.5km, seen from the ‘Places’ listed as ‘Landscape Features’ in Table 17 Landscape management prescriptions:
(a)	manage timber harvesting operations to ensure landscape alterations are only subtly apparent within 5 years of the operation; and
(b) 	shape, position and time timber harvesting operations and new roads to minimise their visual impact.
6	As a result, cl 5.3.1.5 of the 2014 Standards ceased to have effect on 17 November 2021.
7	At the trial on 10 November 2021, Kinglake FF initially sought to maintain its claim for a declaration and a permanent injunction, on the basis that it had an accrued right that was not affected by the replacement of the 2014 Standards.  On reflection, it accepted that there would be no utility in maintaining its claims for relief, and sought an order that the proceeding be dismissed with no order as to costs.  VicForests wished to consider its position.  I therefore vacated the trial, discharged the interlocutory injunction from 17 November 2021, and directed the parties to exchange written submissions as to the disposition of the proceeding.
8	Kinglake FF submitted that the proceeding should be dismissed, or alternatively it should have leave to discontinue the proceeding.  In either case, it argued that costs should be ordered in its favour, or alternatively that there should be no order as to costs.
9	VicForests’ position was that the Court should determine the merits of Kinglake FF’s claim, because there remain issues outstanding between the parties regarding enforcement of the undertaking as to damages given by Kinglake FF on the grant of interlocutory injunctions in the proceeding, and as to costs.  VicForests submitted that the proceeding should be dismissed on the merits and that costs should follow the event.
10	I do not consider that the proceeding should be dismissed without adjudication of the merits.  VicForests did not consent to that course, and the proceeding is not one in which summary judgment could be ordered against either party.
11	For the reasons that follow, I have concluded that Kinglake FF should have leave to discontinue the proceeding, and that there should be no order as to costs.  VicForests will have liberty to apply for an inquiry as to damages, notwithstanding the discontinuance of the proceeding.
Leave to discontinue
12	Rule 25.02(2)(b) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) provides that a plaintiff may discontinue a proceeding, at any time, by leave of the Court.  The Court has a broad discretion whether to grant leave to discontinue a proceeding, and generally will not compel a plaintiff to litigate against its will.  Leave will ordinarily be granted unless doing so would cause injustice to the defendant, which cannot be avoided by conditions on the grant of leave.
13	The general disinclination to compel a party to litigate when it no longer wishes to do so is reinforced in Victoria by the Civil Procedure Act 2010 (Vic).  The overarching purpose of the Civil Procedure Act is ‘to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute’.  The Court is obliged to seek to give effect to the overarching purpose in the exercise of its powers.  In making any order or giving any direction in a civil proceeding, the Court is to further the overarching purpose by having regard to the objects set out in s 9(1).  These include the efficient conduct of the business of the Court, the efficient use of judicial and administrative resources, and dealing with a civil proceeding in a manner proportionate to the matters in dispute.
14	Kinglake FF correctly accepts that there would be no utility in continuing to litigate its claims for a declaration as to the effect of cl 5.3.1.5 of the 2014 Standards and a permanent injunction to enforce it.  The clause ceased to have effect on 17 November 2021, and was replaced by a differently worded prescription in the 2021 Standards.  The subject matter of the proceeding has been overtaken by events.
15	I consider it would be disproportionate, and an inefficient use of the parties’ and the Court’s time and resources, to hear and determine a claim for relief that is now moot.  In those circumstances, Kinglake FF should have leave to discontinue the proceeding, unless that would occasion some substantial injustice to VicForests that cannot be avoided by conditions on the grant of leave.
16	VicForests submitted that it would suffer injustice if the discontinuance of the proceeding deprived it of the ability to enforce Kinglake FF’s undertaking as to damages, given to the Court in June 2020 when interlocutory injunctions were first sought and granted.  It argued that there is real doubt as to whether it could enforce the undertaking if the proceeding were to be brought to an end other than by a determination on the merits.
17	This submission appears to have been based on a misapprehension that VicForests has an existing ‘right’ to enforce the undertaking as to damages.  The undertaking was given to the Court, not to VicForests, and does not give rise to any right or cause of action.  Rather, VicForests has a right to apply to the Court to order an inquiry as to damages.  Should such an application be made, the Court would have a discretion whether to order an inquiry, and VicForests would have no right to damages until after any inquiry had been conducted.
18	Two interlocutory injunctions were ordered in this proceeding on 14 July 2020, both of which were discharged due to supervening regulatory changes.
19	The first injunction restrained VicForests, within any coupe in the Central Highlands Region, from conducting timber harvesting operations within a net harvestable area in excess of the net area identified for that coupe in VicForests’ timber release plan dated 19 December 2019.  On 28 May 2021, Kinglake FF sought and was given leave to amend its statement of claim to omit its claim for a permanent injunction in those terms, and the interlocutory injunction was discharged.  This occurred because, in December 2020, VicForests gazetted a timber release plan that did not specify the net harvestable areas of the coupes listed in the plan.
20	The second interlocutory injunction was based on cl 5.3.1.5 of the 2014 Standards, and was discharged from 17 November 2021 in the circumstances already described.
21	To date, VicForests has not applied for an inquiry as to damages based on the undertaking given by Kinglake FF on 24 June 2020, in relation to either of the interlocutory injunctions.  The authorities suggest that VicForests may apply for an inquiry even after the proceeding has come to an end.  To put that beyond doubt, I will make it a condition of the grant of leave that VicForests has liberty to apply to reinstate the proceeding in order to apply for an inquiry as to damages.
22	Should VicForests make such an application, one factor relevant to the discretion to order an inquiry will be the circumstances in which Kinglake FF sought and obtained leave to discontinue the proceeding, without adjudication of the merits of its claims for relief.  Any application for an inquiry will be determined on its merits, having regard to this and any other discretionary considerations that may be raised by the parties.
Costs
23	Kinglake FF submitted that costs should be ordered in its favour, because it was almost certain to have succeeded in the proceeding — at least from 10 May 2021, when the Full Court of the Federal Court handed down its decision in VicForests v Friends of Leadbeater’s Possum Inc.  Its alternative submission was that there should be no order as to costs, because it made out a strong prima facie case for relief, and acted reasonably throughout the proceeding.  It relied on the approach of McHugh J in Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin:
In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action.  The court cannot try a hypothetical action between the parties.  To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided.  In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action.  …
Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried.  … But such cases are likely to be rare.
If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings.  This approach has been adopted in a large number of cases.
24	Having given Kinglake FF leave to discontinue the proceeding, I consider that the Lai Qin approach should be adopted in this case.  Both parties acted reasonably in commencing and defending the proceeding.  Although there were a number of interlocutory disputes, these were all about matters of substance.  Significantly, the parties were able to reduce the scope of their dispute to the two issues set out in the statement of issues annexed to my orders of 25 June 2021.
25	This is not one of the rare cases in which the merits of the claim were so clear that one party should be ordered to pay the other party’s costs.  At the outset I formed the view that Kinglake FF had established a strongly arguable case in relation to cl 5.3.1.5 of the 2014 Standards.  My initial view was reinforced by the later conclusion of the Full Court of the Federal Court in Friends of Leadbeater’s Possum, that cl 5.3.1.5 required all timber harvesting operations and new road alignments to be screened from view.  On the other hand, VicForests’ written opening submissions for trial made a cogent argument for a different interpretation of cl 5.3.1.5.  As I called the matter on for the trial on 10 November 2021, it was not obvious to me that either party was certain to succeed.
26	In the circumstances in which this proceeding has come to an end, there should be no order as to costs.
Disposition
27	I make the following orders:
(a)	Pursuant to r 25.02(2)(b) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic), the plaintiff has leave to discontinue the proceeding.
(b)	The defendant has liberty to apply to reinstate the proceeding in order to apply for an inquiry as to whether the defendant has suffered any loss by reason of the injunctions ordered by the Court on 24 June 2020, 3 July 2020 and 14 July 2020 which the plaintiff ought to pay.
(c)	There is no order as to the costs of the proceeding.