Ballina Shire Council v Stubberfield (No 2)

[2006] NSWLEC 538

Land and Environment Court

of New South Wales

CITATION:	Ballina Shire Council v Stubberfield & Anor (No 2) [2006] NSWLEC 538
PARTIES:	APPLICANT Ballina Shire Council RESPONDENTS John Richard Stubberfield and Dorothy May Stubberfield
FILE NUMBER(S):	41284 of 2005
CORAM:	Pain J
KEY ISSUES:	Costs :- whether should be awarded on an indemnity basis
LEGISLATION CITED:	Land and Environment Court Act 1979 s 69 Land and Environment Court Rules 1996 r 9 Local Government Act 1993 s124 Local Government (General Regulation) 2005
CASES CITED:	Ballina Shire Council v Stubberfield and Anor [2006] NSWLEC 324; Port Stephens v Randell [2000] NSWLEC 169 ; Stelios Christofidellis & Ors v Ned & Visjna Zdrilic & Ors [2000] FCA 679; Westfield Management Ltd & Ors v Direct Factory Outlets Homebush Pty Ltd & Ors (No. 4) [2005] NSWLEC 168
DATES OF HEARING:	written submissions: Applicant (28/06/2006) First Respondent (31/07/2006)
DATE OF JUDGMENT:	08/31/2006
LEGAL REPRESENTATIVES:	APPLICANT Mr D Wilson (barrister) SOLICITOR WJ Grace & Co FIRST RESPONDENT In person and on behalf of Second Respondent

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

Pain J

31 August 2006

41284 of 2005 Ballina Shire Council v John Richard Stubberfield and Dorothy May Stubberfield (No 2)

JUDGMENT ON COSTS

1 Her Honour: I handed down judgment in this matter on 16 June 2006; see Ballina Shire Council v Stubberfield and Anor [2006] NSWLEC 324. In this case, the Applicant sought to enforce an order issued under s 124 of the Local Government Act 1993 (the LG Act) by requiring the Respondents to connect to the Council’s sewerage system. The relevant background to the proceedings is recorded in my earlier judgment at [2]-[20]. I ordered that the Respondents was to comply with the s 124 order and connect to the Council’s sewerage system, and that the parties were to make written submissions on costs. The Council is seeking its costs on an indemnity basis. The Respondents oppose this and seek payment of out of pocket expenses. The First Respondent acts on behalf of himself and the Second Respondent. I now need to determine those costs issues.

Legislation

2 These are Class 4 proceedings. Section 69 of the Land and Environment Court Act 1979 (“the Court Act”) states that:

…

( 2) Subject to the rules and subject to any other Act:
(a) costs are in the discretion of the Court,

(b) the Court may determine by whom and to what extent costs are to be paid, and

(c) the Court may order costs to be assessed on the basis set out in Division 6 of Part 11 of the Legal Profession Act 1987 or on an indemnity basis.

3 I have broad discretion to award costs as long as my discretion is exercised judicially. The general rule in Class 4 proceedings is that the successful party ought obtain their legal costs. The Applicants were successful in the proceedings and now seek their costs. A successful party is usually entitled to an award of costs unless there is disentitling conduct.

Applicant’s submissions

4 The Council relied on the affidavit of its solicitor, William J Grace, sworn 27 June 2006 which annexes correspondence between the Council and the First Respondent in relation to the commencement and continuation of these proceedings. Based on this evidence, the Council argued that:

(a) Between 9 August 2004 and 25 November 2005, the Council, through its solicitor, offered the Respondents time to connect the premises to the sewer;

(b) That the correspondence identified the high cost of litigation;

(c) That it gave the Respondents further opportunities beyond reasonable time limits to comply with the orders; and

(d) That the Council, in its letter dated 8 June 2005, provided the Respondents with the Class 4 application in draft, and the unsworn affidavits of Mr Spring and Mr Plumb (the evidence of Council officers relied on in the proceedings), prior to commencing proceedings and extended in that letter a final opportunity to connect to the sewer without penalty as to costs.

Therefore, the Council argued that it was reasonable for it to commence proceedings, in light of the Respondents’ failure to comply with the various opportunities presented to them by the Council.

5 The affidavit of Mr Grace annexes a series of letters which, although cannot be considered Calderbank offers, are nevertheless genuine offers to settle the matter on reasonable terms. The Council submitted that the Respondents’ rejection of these weighs in its favour in respect of my consideration of whether indemnity costs should be ordered.

6 The Council further submitted that although my power to make an order requiring the Respondents to comply with the s 124 order was discretionary, the defences raised by the First Respondent during the proceedings as to why I should not exercise my power to make the order were without foundation.

7 It submitted that the conduct of the Respondents over an extended period of time was unreasonable. In asserting this, the Council also relied on the findings of fact made in my judgment dated 16 June 2006.

8 The Council relied on Port Stephens v Randell [2000] NSWLEC 169 and Westfield Management Ltd & Ors v Direct Factory Outlets Homebush Pty Ltd & Ors [No. 4] [2005] NSWLEC 168. These are considered below in my finding.

First Respondent’s submissions

9 The First Respondent submitted that no costs should be awarded against them, and further, that the Applicant should be ordered to pay the Respondents’ out of pocket costs. The First Respondent submitted that it is implicit in the LG Act and the Local Government (General Regulation) 2005 that Councils, in carrying out their regulatory functions, act equitably by giving prior warnings of problems and offences, and their intention to act on them, so as to allow time to make representations to the Council, and that the Council in this case did not do that.

10 The First Respondent also submitted that the orders made by this Court on 16 June 2006, ordering him to connect to the Council’s sewerage system at his own cost and expense, were beyond the power conferred on the Court by the LG Act and invalid, because of lack of notice given to the Respondents regarding the Council’s intention to enforce the s 124 order against it, depriving the Respondents of an opportunity to respond, and therefore, denying the Respondents natural justice.

11 The First Respondent raised issues in his costs submissions further contesting issues raised in the substantive proceedings relating to alleged improper conduct and negligence on the part of the Council, the fact that the septic systems had never had problems with discharge in the past, and alleging the Council has not disclosed to the First Respondent all documents relevant to the proceedings. The First Respondent again criticised the evidence of the Council officers, Gavin Spring and Graham Plumb in the substantive proceedings.

12 The First Respondent also sought the leave of the Court to rely on an affidavit of Mr Gregory Albert Alderson, sworn 18 July 2000, engineer, who gave evidence about the septic system on the Respondents’ premises. This affidavit was said to be an independent assessment by an expert witness on matters which I have already determined in my judgment.

13 The First Respondent also sought to rely on his own affidavit dated 29 July 2006 which annexed letters between himself and his tenant concerning sewage disposal on the relevant land.

14 The First Respondent further submitted that there was no evidence of him acting improperly, negligently or in such as way as to cause environmental harm.

Finding
Leave to rely on new evidence

15 The First Respondent has sought leave to rely on new evidence in relation to matters that were considered in the substantive hearing and about which I have made findings and consequential orders. This material can only be considered if my orders are set aside. The orders have been perfected. The Land and Environment Court Rules 1996 set out in r 9 the circumstances in which orders can be set aside. These are:

(a) if the order has been made in the absence of a party, whether or not the absent party is in default of appearance or otherwise in default, and whether or not the absent party had notice of the motion for the order,
(b) if notice of motion for the setting aside or variation is filed before the signing and filing of the minute of the order under rule 4,
(c) if the order was obtained by fraud,
(d) if the order is interlocutory,
(e) if the order does not reflect the intention of the Court,

(f) if the party in whose favour the order was made consents.

16 None of these circumstances apply here. The First Respondent cannot be given leave to rely on the new affidavit evidence of Mr Alderson. There is no basis upon which further leave should be given to allow the First Respondent to rely on evidence relating to issues already determined in the substantive proceedings.

17 The further affidavit of the First Respondent attaching correspondence between the First Respondent and his tenant is simply not relevant to this costs determination. As I noted in my first judgment at [50]:

I do not consider the resolution of trade waste disposal from Betta Hire is a reason to delay making the order sought by the Council but as stated in the Council’s letter quoted above there should be discussion with the tenant about how connection to the Council’s sewer is best achieved from Lot 4.

18 Further, given that the First Respondent obtained this evidence of his own volition after the matter has been determined, the costs of obtaining the material must be borne by him.

Additional issues raised by the First Respondent

19 The balance of submissions made by the First Respondent do not appear to concern the issue of costs, meaning the particular conduct of the parties in the case relevant to a determination of costs, but rather seek to argue matters I have determined in the substantive hearing. No issue is raised in relation to the correspondence attached to Mr Grace’s affidavit. In relation to the First Respondent’s submissions concerning the lack of prior notice given to him by the Council of its intention to act in regards to enforcing the s 124 order, this cannot be substantiated in light of the evidence put before me at the substantive hearing and the letters attached to Mr Grace’s affidavit outlining the various attempts by the Council to urge the Respondents to connect to its sewerage system. There was no denial of natural justice towards the Respondents.

20 In relation to the other submissions of the First Respondent concerning the improper conduct and allegations against the Council, I consider that all of these submissions have been dealt with in my substantive judgment and are irrelevant to the current costs determination. If the First Respondent does not agree with my legal findings on any issue, the appropriate course of action is to lodge an appeal.

Should Council get indemnity costs?

21 The Council seeks costs on an indemnity basis. Port Stephens involved a claim for indemnity costs in Class 4 proceedings, where the applicant had made a “without prejudice” offer of compromise to the respondent. The offer was not accepted, court proceedings ensued and the applicant obtained judgment in its favour. In considering its application for indemnity costs, Cowdroy J at [6] adopted the following principles identified by Einfeld J in Stelios Christofidellis & Ors v Ned & Visjna Zdrilic & Ors [2000] FCA 679:

In my opinion, the two recent decisions of a Full Court of this Court in Re Wilcox: Ex parte v Venture Industries Pty Ltd (1996) 141 ALR 727 (Black CJ, Cooper and Merkel JJ) and Abbott v Random House Australia [1999] FCA 1540 (Beaumont, Miles and Drummond JJ) have settled this question. In this respect, the following extract of the judgment in Re Wilcox (at page 732-3 was quoted with approval in Abbott :
In order to exercise the discretion [to award indemnity costs] judicially the following principles have been accepted by the court as applicable:
(a) the court ought not to depart from the rule that costs be ordered on a party and party basis unless the circumstances of the case warrant the court in departing from the usual course;
(b) the circumstances which may warrant departure from the usual course arise as and when the justice of the case so requires or where there may be some special or unusual feature in the case to justify the court in departing from the usual course;

…these three authorities suggest that an order for indemnity costs is only appropriate in a case where an offer of settlement has been rejected in circumstances that made the further litigation of the proceedings plainly unreasonable.

22 In Westfield Management, I struck out the applicant’s case, resulting in claims for indemnity costs from all respondents involved. In deciding whether to grant indemnity costs, I had regard to the following principles at [35]:

Woodward J in [Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397] at 401:
I believe that it is appropriate to consider awarding "solicitor and client" or "indemnity" costs, whenever it appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success.

Sheppard J in [Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225] a t 233:
In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether her or in England. The tests have been variously put. The Court of Appeal in Andrews v Barnes ... at 141 said the Court had a general and discretionary power to award costs as between solicitor and client "as and when the justice of the case might so require". Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v Preston ... at 637; namely, there should be some special or unusual feature in the case to justify the Court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, or warranting a departure from the usual rule. But as French J said (at p 8) in Tetijo , "The categories in which the discretion may be exercised are not closed". Davies J expressed (at p6) similar views in Ragata ...

Mason P in [Rosniak v Government Insurance Office 41 NSWLR 608] at 616:
Later cases have emphasised that the discretion to depart from the usual "party and party" basis for costs is not confined to the situation of what Gummow J described as the "ethically or morally delinquent party" ( Botany Municipal Council v Secretary, Department of the Arts, Sport, the Environment, Tourism and Territories (1992) 34 FCR 412 at 415): see Baltic Shipping Co v Dillon, "Mikhail Lermontov" [1991] 22 NSWLR 1 at 34; Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 233-234. Nevertheless the court requires some evidence of unreasonable conduct, albeit that it need not rise as high as vexation. This is because party and party costs remain the norm, although it is common knowledge that they provide an inadequate indemnity. Any shift to a general or common rule that indemnity costs should be the order of the day is a matter for the legislature or the rule-maker: Huntsman Chemical Co Australia Ltd v International Pools Australia Ltd [1995] 36 NSWLR 242 at 248.

23 The Court should not award indemnity costs lightly, as these cases emphasise. The usual rule is that costs are payable on a party to party basis. On the facts of this case, the circumstances warranting indemnity costs, as set out in Port Stephens and Westfield do not arise. The Respondents, who are not legally represented, were entitled to dispute the case the Council made against them and from the case argued by the First Respondent on behalf of himself and the Second Respondent, did reasonably dispute the facts relied on by the Council. The First Respondent was ultimately unsuccessful in doing so but I do not consider his conduct was so unreasonable as to suggest indemnity costs ought be awarded. Nor did he act for an improper purpose.

24 The Council was successful in the proceedings and there is no disentitling conduct on its part. I order that costs be awarded in its favour. There is no basis for an order for out of pocket expenses in favour of the Respondents.

The Court makes the following orders:

1. That the First and Second Respondents are to pay the Applicant’s costs of the proceedings.