Brent v Levick

[2009] NSWLEC 40

Land and Environment Court

of New South Wales

CITATION:

Brent v Levick and Others [2009] NSWLEC 40

PARTIES:

APPLICANT
Jennifer Anne Brent

FIRST RESPONDENT
Glenn Levick
SECOND RESPONDENT
BCA Certifiers Australia Pty Ltd
THIRD RESPONDENT
Margaret Ann Hainsworth
FOURTH RESPONDENT
Willam Denis Hainsworth

FILE NUMBER(S):

40560 of 2008

CORAM:

Sheahan J

KEY ISSUES:

COSTS :- discontinued class 4 proceedings, was any party successful? were all parties necessarily joined?

LEGISLATION CITED:

Environmental Planning and Assessment Regulation 1994
Environmental Planning and Assessment Act 1979

CASES CITED:

Australiawide Airlines Ltd t/as Regional Express v Aspirion Pty Ltd [2006] NSWCA 365
Baulkham Hills Shire Council v Dix and Another [2004] 13 LGERA 149
Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32
Fordyce v Fordham & Another (2006) 67 NSWLR 497
Garwolin Nominees Pty Ltd v Statewide Building Society [1984] VR469
Kiama Council v Grant [2006] NSWLEC 96; (2006) 143 LGERA 441
Ku-ring-gai Council v Minister for Planning (No.2) [2008] NSWLEC 276
Latoudis v Casey (1991) 170 CLR 534
McCrohon v P J Gann and Another [2009] NSWLEC 8
Newcastle City Council v Wescombe [2008] NSWLEC 301
One.Tel Ltd and Others v Deputy Commissioner of Taxation [2000] FCA 270; (2000) 101 FCR 548
Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72
Prodromos Anastasi Foukkare v Angreb Pty Limited & Ors [2006] NSWCA 335
Ray Fitzpatrick Pty Limited v Minister for Planning (No.5) [2008] NSWLEC 183
Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin (1997) 186 CLR 622
Shellharbour City Council v Dunmore Equestrian Centre Pty Ltd & Anor [2008] NSWLEC 163
Shellharbour City Council v Stewart [2007] NSWLEC 727
Telstra Corporation Ltd v Australian Telecommunications Authority and Ors (Vic Supreme Court, Hayne J, Unreported, 30 June 1994)

DATES OF HEARING:

18 March 2009

 
DATE OF JUDGMENT: 

9 April 2009

LEGAL REPRESENTATIVES:

APPLICANT
Mr C Ireland
SOLICITORS
O'Sullivan Saddington Lawyers

FIRST AND SECOND RESPONDENTS
Mr R deMeyrick
SOLICITORS
Lovegrove & Lord

SECOND AND THIRD RESPONDENTS
Ms C Amato
SOLICITORS
Turnbull Hill

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

9 April 2009

40560 of 2008 Brent v Levick and Others

JUDGMENT

Introduction

1 His Honour: All parties to these discontinued class 4 proceedings seek an order for costs in their favour and oppose any orders for costs being made against them.

2 For convenience the four Respondents may be grouped and referred to in two pairs – the first and second as “BCA” (Mr Levick being an accredited certifier employed by that company), and the third and fourth as “The Hainsworths” (Mrs Hainsworth being the applicant named in the relevant development application, on behalf of her husband and herself, apparently as joint owners of the subject site, seeking the development consent at the heart of the proceedings).

3 On or about 3 April 2006, the Hainsworths obtained development consent 05/1195 (“the DC”) from Newcastle City Council for construction of two new residences at 36 Lloyd Street, Merewether (“No.36”), and renovations to their existing residence on that site.

4 About 28 May 2007, the Charlestown-based certifier BCA was appointed as the project’s certifier, and, on 3 July 2007, it issued construction certificate No.CN070032 (“the CC”).

5 Mrs Brent and her husband live next door to the subject site, at 38A Lloyd Street (“No.38A”), and became concerned in April/May 2008 about changes apparently made to the Council’s consent by BCA, and about their impact on her privacy and amenity – it is common ground that there were approximately 11 “departures”, but there is scope for some confusion in the evidence as to precisely what they were seen to be at any particular time, and by whom (see pars [10], [30] and [46] below).

6 In the circumstances I will shortly outline, Mrs Brent commenced these proceedings and put on her Points of Claim (“POC”), and then allowed the matter to stand in the court’s lists while negotiations about settlement continued, and there was further consideration of the project by the Council.

7 When Council concluded its further consideration, the proceedings were discontinued.

The pleadings filed in the proceedings

8 The class 4 application was filed on 11 June 2008 and claimed the following relief:

1. A declaration that the CC is void, invalid and of no force or effect.
2. A declaration that the building work carried out at No.36 pursuant to the CC, and otherwise than strictly in accordance with Amended Plans dated January 2006 and referenced in Condition 1.1 of the DC, is unlawful, having been carried out contrary to s76A(1)(b) of the Environmental Planning and Assessment Act 1979.
3. An order that the Hainsworths, and their servants and agents, be restrained from erecting any building work or carrying out any other development at No.36, whether or not depicted in the CC Plans dated March 2007, other than work which is strictly in accordance with the Amended Plans.
4. An order that the Hainsworths rectify the building work and other development carried out at No.36 so as to bring it into strict compliance with the DC and the Amended Plans.
5. Costs.

9 No claim was made for interlocutory relief.

10 The POC filed on 7 July 2008, shortly after the first return date, relevantly include the following detail regarding the DC and the challenge to the CC:

“8. Condition 1.1 of the Development Consent required the proposed development to be carried out strictly in accordance with the details set out in the amended plans prepared by Scott Bradley and Associates Pty Ltd dated January 2006 (Amended Plans), the Statement of Environmental Effects and the development application.
9. Conditions 3.1 to 3.13 of the Development Consent required the inclusion of various details in the documentation forming part of any construction certificate application, and the lodgement of various reports as part of that application.
10. Conditions 3.1 to 3.13 of the Development Consent required the inclusion of various details in the documentation forming part of any construction certificate application, and the lodgement of various reports as part of that application.
11. Further paragraph 9 above:
(a) condition 3.9 required the inclusion in the application for the Construction Certificate of full details of fences to be constructed in a high quality presentation style of attractive appearance and of sufficient height to afford adequate privacy to residents in accordance with the performance criteria and provisions of Section 4.7 of Council’s adopted Lower Hunter Urban Housing Development Control Plan; and
(b) condition 3.13 required amended plans for the privacy screening to be provided to decks to ensure adequate privacy to neighbouring premises to the satisfaction of Council to be submitted and approved by Council prior to the issue of a Construction Certificate.
Construction Certificate
12. The construction certificate plans dated March 2007 (Certified Plans) were approved by the First Respondent (or in the alternative, by the Second Respondent, or both) as part of the Construction Certificate.
13. The Certified Plans are inconsistent with condition 1.1 of the Development Consent in that they are not strictly in accordance with the Amended Plans.
Particulars
The Certified Plans are not strictly in accordance with the Amended Plans in the following respects:
i. The Certified Plans provide for the excavation and construction of a “store room” or New Bedroom of 4.12m x 3.47m as part of Unit 2;
ii. The Certified Plans provide for a set of steps to the upper rear deck of Unit 2;
iii. The Certified Plans provide for the addition of 2 windows to the Unit 1 garage, western side;
iv. The Certified Plans provide for the addition of 2 windows to the Unit 2 garage, western side;
v. The Certified Plans provide for the addition of a computer room to Unit 1 and reduce the size of the laundry and ensuite;
vi. The Certified Plans provide for the addition of a computer room to Unit 2;
vii. The Certified Plans provide for roof line changes to Units 1 and 2, western side, being replacement of pitched roofline with a flat roof;
viii. The Certified Plans provide for the addition of above ground decking to the Unit 1 and 2 courtyards instead of brick paving;
ix. The Certified Plans rearrange the Unit 2 ensuites;
x. The Certified Plans delete the privacy screen on the Unit 2 upper deck outside the meals area, North elevation; and
xi. The Certified Plans fail to provide a highlight window to the meals area of Unit 1 and bedroom 1 of Unit 2 (eastern façade).

14. Condition 3.9 was not complied with at the time of the grant of the Construction Certificate as the required fencing details were not included in the Construction Certificate application.
15. Condition 3.13 was not complied with at the time of grant of the Construction Certificate as the required amended plans for privacy screening were not provided to Council and approved by Council prior to the issue of the Construction Certificate.”

11 Paragraph 16 of the POC particularises nine ways in which the alleged non-compliances of the Certified Plans with DC conditions 1.1, 3.9 and 3.13 had “adverse amenity impacts” on the Brent home, and allegedly “result in development breaching applicable Council policies”.

12 Paragraphs 17-25 set out the grounds of challenge to the legality of the CC, paragraphs 27-31 deal with the building work carried out allegedly in breach of the DC, and the POC then repeat (in pars 32-37) the relief sought by the Applicant.

13 Before this hearing on costs, the matter came before the court for mention or directions on 4 July, 25 July, 29 August, 17 October, 12 December, 19 December 2008, and 29 January 2009. Because of matters ventilated whenever the matter was before the court for mention or directions, the Respondents filed no points of defence, other “pleadings”, or any evidence, prior to the discontinuance. Sensibly all parties appear to have tried to keep their costs down.

The path to discontinuance of the proceedings

14 On or about 1 July 2008, ie just before the first return date, the Hainsworths made a s96 modification application to the Council, seeking “retrospective approval” for the departures from the DC, brought about by the CC.

15 The modification application went through Council’s notification procedures, and Council officers carried out inspections to assess potential privacy impacts. As Mr Hainsworth is a Council employee, it was referred to an Independent Planning Consultant, Ms Leanne Saccaro, for assessment.

16 The Hainsworths were informed on or about 26 August 2008 that it could not be supported, and they amended their modification proposal, lodging further amended plans and details on 15 September 2008. Those amendments were then (re)notified on 14 October, and assessed by the consultant, and a site visit made to the Brent house.

17 Some further additional information was provided in November, and, the final independent assessment having been favourable to the modified proposal, it was approved on various amended and additional conditions. The conditions amended under the DC were 1.1, 3.11, 3.13, 4.8 and 4.9.

18 The modification effectively made some 18 amendments to the original consent, and incorporated the further amended plans (it would appear that at least some of the plans for the project were “amended” on 20 January 2006, 18 June 2008, 15 September 2008, and 10 November 2008).

19 The approval issued on 18 December 2008.

20 As the Brents were happy with the outcome of the modification process, they obtained leave on 19 December 2008 from Pain J to discontinue the proceedings, and the Notice of Discontinuance was filed on 17 March 2009.

The evidence

21 The court had the benefit of affidavit evidence from the following:

· Garry Keith Warnes, an expert town planner engaged by the Applicant Brent.

· Paul O’Sullivan, solicitor for Brent.

· Evan Walker, solicitor for the Hainsworths.

· Justin Michael Cotton, solicitor for BCA.

· Margaret Ann Hainsworth, the Third Respondent.

22 Copies of most of the relevant correspondence is annexed to one or more of the affidavits, but also tendered was a relevant letter dated 7 May 2008 from the Respondent Levick to the Applicant’s Husband (Exhibit A1).

The background in more detail

23 I have already referred ([3]-[4]) to the granting of the DC around 3 April 2006, the appointment of the certifier, and the issuing of the CC on 3 July 2007.

24 By 7 May 2008 the Respondent Levick was already in touch with the Applicant’s husband (Mr Noel Brent) about the Brents’ concerns about the development at No.36 (see Exhibit A1).

25 By that date Levick had discussed the issues with Mr Brent, with the Hainsworths, and with Council planners, to get a more complete understanding of them “and determine the best course of action”. Council had indicated to him that as the principal certifying authority it was up to him to resolve any issues arising during the course of construction.

26 The letter from Levick to Brent dated 7 May 2008 (Exhibit A1) refers to the occurrence of differences between development plans and construction plans. Often there are minor differences, but major or significant differences would usually be referred back to the Council to determine if the relevant DC requires modification. “Sometimes things that are considered as not of significance from a construction certificate perspective are not identified as issues in the broader context until somebody voices their particular concerns”. Levick being now aware of Brent’s concerns about the likely impact of the changes on Brent’s privacy, he went on to deal with those issues under six headings, explaining how he had addressed Brent’s concerns.

27 The letter concluded: “Although you are probably not going to entirely agree with how I have decided to deal with the issues I have made every endeavour to resolve matters so that the intent of the development consent is preserved, your privacy is not compromised and nobody is disadvantaged by the outcome”.

28 Mrs Hainsworth deposes (par 5) to having seen a copy of a letter from Newcastle City Council to Mr Levick dated 9 May 2008, but it is not before the court. I have no real information about any dealings between BCA and the Council regarding the certification of the project, nor about any complaints to Council about that process. It is clear, however, that the Brents remained aggrieved after Levick’s letter of 7 May, and had begun to take steps to (better) protect their interests, including privacy and amenity.

29 On 15 May 2008 Mr O’Sullivan, acting on behalf of the Applicant, sent to the Hainsworths a letter of demand asserting that their building works “currently taking place” at No.36 were unlawful, as they contravene the consent and, therefore, the Environmental Planning and Assessment Act 1979. He further asserted that the CC was invalid, having been granted contrary to cl 145(1)(a) of the EPA Regulation 2000. He compared the DC and the CC plans dated respectively January 2006 and March 2007, noting that “It is the CC Plans, not the Approved Plans, that are being implemented by the building work on site”, whereas condition 1 of the DC required that the proposed development be carried out “strictly in accordance” with the approved plans.

30 The letter next asserted that:

“The work not authorised by the Approved Plans and the Development Consent include (and is not limited to) the following:
1. The excavation for and construction of a Store Room of 4.12m x 3.47m as part of Unit 2. The Store Room is being constructed with a window and carpet. It is completely absent from the Approved Plans.
2. The construction of a set of steps to the upper rear deck of Unit 2. Such steps are completely absent from the Approved Plans.
3. The addition of 2 windows to the Unit 1 garage, Western side overlooking the western neighbours front courtyard.
4. The addition of 2 windows to the Unit 2 garage, Western side.
5. The addition of a computer room to Unit 1.
6. The addition of a computer room to Unit 2.
7. Roof line changes to Unit 1 and Unit 2, Western side.
8. Addition of above ground decking to the Unit 1 and 2 Courtyards instead of brick paving.
9. Re-arrangement of the Unit 2 bathroom.
10. Deletion of the Privacy Screen on the Unit 2 upper deck, North East elevation.
11. Deletion of eastern and western boundary 1800 mm lapped timber paling fence.”

31 The letter went on to claim that these breaches “have serious amenity impacts on our clients’ residential amenity”, to require that all building work cease immediately, and to ask for a written undertaking not to carry out any further building work prior to a new CC being granted which was not inconsistent with the DC. That undertaking was required by 5pm the next day, Friday 16 May, or proceedings might be commenced without further notice, seeking relief including a declaration that the CC is invalid, and “final and urgent interlocutory injunctive relief restraining all building work at the premises”.

32 Mrs Hainsworth says that following receipt of O’Sullivan’s letter she had a telephone discussion and an email exchange with him. If her version of the conversation is to be accepted (par 10), there being no evidence from Mr O’Sullivan to refute it, it would appear that he took a very strong stand in his discussions with her, insisting upon all work stopping immediately.

33 Mrs Hainsworth appears to have instructed Turnbull Hill to act for her on 16 May and, on 19 May, on her instructions, they replied to Mr O’Sullivan. That letter relevantly included the following:

“ Our clients deny that the building works are unlawful in any way. Our clients have received a valid construction certificate issued by a private certifier who has appropriate powers under the legislation.
Our clients deny that any alleged breach of the development consent affects your client’s ‘residential amenity’.
We confirm that the private certifier and the Newcastle City Council are currently holding discussions in relation to the building works. We are instructed that our clients will cease the building works until those negotiations are finalised.”

34 Mr O’Sullivan wrote to Turnbull Hill on 19 May confirming the “agreement to cease all building works until such time as Council has completed its investigation into the certification by the private certifier”. He requested three days’ notice of any intention to recommence building works. The evidence indicates that work ceased on 19 May.

35 On 21 May Turnbull Hill asked Mr O’Sullivan to obtain instructions from the Hainsworths in relation to the following:

“(a) In addition to the ‘building works’ (being the additional dwellings to be constructed at the rear of our clients residence) we are instructed that our clients are also renovating their existing residence. The builder is able to continue work on the existing residence while the negotiations between the private certifier and the Council continue;
(b) Your client has specified 11 ‘issues of contention’ in your letter addressed to our client dated 15 May 2008. The builder is able to provide an updated scope of works addressing proposed construction works which can commence tomorrow that do not affect the ‘issues of contention’;
(c) Your letter dated 15 May 2008 refers to ‘Approved plans’ and ‘CC plans’. Please advise which version of the plans and drawings that your client is referring to and any relevant dates .”

36 Mr O’Sullivan sought further particulars of the works referred to in par (b) and Turnbull Hill replied later on 21 May:

“ We are instructed that the proposed scope of works is as follows:
1. Carry on with upper floor framing to unit 2.

2. Erect upper floor walls to unit 2.
3. Perform roof framing to upper floor of unit 2.
4. Continue with the brick veneering to unit 1.
5. Erect scaffold to both units when ready.
6. Once scaffold is erected then install fascias and eves on both units.”

37 On 23 May Turnbull Hill wrote to Mr O’Sullivan saying, inter alia, that the Hainsworths intended to engage their builder to carry out work not related to the “contentious” issues. They undertook to be in further contact regarding those contentious issues, but maintained their position that they would cease contentious building work “pending the outcome of negotiations between the Newcastle City Council and the private certifier”.

38 Mr O’Sullivan wrote to Turnbull Hill on 23 May indicating Hainsworths’ agreement “to the following works being continued:

1. All work in respect of Unit 1 with the exception of the changes to the garage roofline.
2. Completion of the retaining wall on the eastern boundary and re-instating the fence.
We re-iterate that no work is to be done in respect of Unit 2”.

39 At 3.12pm on that afternoon, Turnbull Hill sent an email to the Hainsworths’ builder instructing him to recommence work on Monday 26 May on those six nominated items.

40 On 26 May Mr O’Sullivan wrote to Turnbull Hill noting work occurring on Unit 2 and asserting that “such work is in breach of your client’s agreement dated 19 May 2008 and varied on 23 May 2008”. Turnbull Hill responded rejecting the assertion that work on Unit 2 was “in breach of any alleged agreement” between the respective parties, and confirming that the builder had been instructed to “carry out the non-contentious building work as advised in” the letter dated 21 May.

41 There is then, on the evidence presented to me, a lull in the correspondence until 10 June, when Mr O’Sullivan wrote to ask if Turnbull Hill had instructions to accept service of the class 4 application. Turnbull Hill agreed to accept service, but went on to say (1) that they had heard nothing from Mr O’Sullivan since 26 May, (2) that non-contentious building work was continuing, and (3) that there had been no complaint about it. Turnbull Hill expressed their view that Class 4 proceedings were “premature and ill founded”.

42 The class 4 application was duly filed at the court on 11 June, and Turnbull Hill wrote to Mr O’Sullivan on 13 June in respect of the assertion contained in it that certain building work was unlawful, saying:

“ We refer to your letter addressed direct to our client dated 15 May 2008 which particularises a number of allegations of the proposed development not being carried out strictly in accordance with the approved plans. You state that work not authorised by the plans included but was not limited to 11 items.
We request that you particularise whether the 11 items complained of in your correspondence dated 15 May 2008 represents the totality of your client’s complaint. If your client claims that any additional work is unlawful, then please specify”.

43 On 17 June Mr O’Sullivan responded that “the unlawful building work, of which the Applicant is aware, is the eleven (11) items referred to in our letter of 15 May …”, but reserved the Applicant’s rights “in respect of any further unlawful building works which come to the Applicant’s attention during the course of” the proceedings.

44 As noted above, the Hainsworths lodged a s96 modification application with Council on or about 1 July 2008. On 3 July Turnbull Hill notified the solicitors for BCA that that s96 application had been lodged in the interest of compromise and early resolution of the dispute. “… if the Section 96 application is successful then the proceedings may well be resolved. It is premature and a waste of time and resources to proceed to pleadings at this juncture”.

45 On 7 July the Applicant filed her POC. Some of those are set out in par [10] above, and par 13 of them enumerated eleven “inconsistencies” between the Amended and the Certified Plans.

46 Plainly that formulation of the departures/inconsistencies does not strictly accord with that in the letter of demand (see par [30] above). It might also be observed on this point that the Council papers concerning the s96 modification acknowledge 13 “differences” and 18 proposed changes, and the written submissions from BCA note only six “differences”.

47 On 11 July, Mr O’Sullivan wrote two letters to Turnbull Hill. The shorter letter was an open letter and a copy was forwarded to the solicitors for BCA. In it he foreshadowed filing Amended POC (that he enclosed) should the proceedings not settle prior to 25 July. “They have not yet been filed having regard to the not yet finalised settlement correspondence between the parties”. That letter goes on to say (effectively to all four respondents):

“It is apparent to us that the s96 modification as lodged with Council does not correct all the departures from the Amended Plans, and in any event cannot meet or cure the jurisdictional error voiding the Construction Certificate, which in itself (apart from any reliance that is placed on s76A(1)(b)) entitles our client to declaratory and consequential relief in the present Class 4 Proceedings”.

48 Mr O’Sullivan’s second letter dated 11 July to Turnbull Hill was a longer letter, marked “Without Prejudice Except as to Costs”. Its material contents are set out in full:

“ We confirm, as you advised her Honour Jagot J on 4 July 2008, that your client has undertaken to our client not to continue to carry out any of the contentious work the subject of these proceedings. Please note that we understand this undertaking to preclude your client from carrying out any work at 36 Lloyd St Merewether that is not shown on the Amended Plans referred to in condition 1.1 of the development consent DA 05/1195. If your understanding of the extent of your client’s undertaking differs from ours in any way, please let us know as a matter of urgency as we would in that event require you to (and have no doubt you would in any event seek to, this having been pointed out to you) correct the statement made by you to the Court on 4 July 2008, at the next mention on 2-5 July 2008. We trust this embarrassing step shall not be necessary.
Our client has notified Council that it is objecting to the grant of the proposed s96 and has been allowed until 23 July 2008 to lodge a town planning objection to it. Our client will lodge such an objection unless a negotiated settlement of this matter is reached prior to that date.
In our opinion, the s96 in its present form, even if granted by Council, would manifestly not have the effect that our client would not be entitled to the relief it is seeking in these proceedings, and in particular to the declaration and consequential relief voiding the Construction Certificate and restraining further work on that basis. As you should be aware, the grant of the s96 cannot correct the jurisdictional error that has rendered the Construction Certificate void from the date of its grant on 3 or 4 July 2007. We have served you by open letter today a draft amended Points of Claim that our client will seek leave to file on 25 July 2008 if this matter is not resolved prior to that date.
Our client is prepared to settle these proceedings by discontinuing the proceedings with each party bearing its own costs on the following terms.
Our client requires that your client amends its s96 modification as lodged and the plans forming part of that modification application to implement the following design features, closely based on the Amended Plans the subject of Condition 1.1 of the development consent and Annexure B forming part of Council’s resolution granting consent:
1. The eastern facing window of the meals area of Unit 1 to be changed to a highlight type window with a minimum sill height of 1600mm above floor level.
2. The eastern facing window within Bed 1 of Unit 2 to be changed to a highlight type window with a minimum sill height of 1600mm above floor level.
3. A privacy screen with a minimum height of 1600mm being erected along the eastern side of the north-western deck of Unit 2.
4. The vertical louvered screen of 2000mm located on Unit 2’s upper deck outside of the meals area north-eastern elevation being changed to a fixed screen of 2000mm with no capacity for opening/swivelling.
5. The fence on the eastern boundary with 38A Lloyd Street of approximately 25 metres, to be a 2200mm high lapped timber paling fence, all at full cost to the developer, notwithstanding the provisions of the Dividing Fences Act.
6. The stairway on the eastern side providing access to rear deck of Unit 2 being fitted with a gate at the base of 2200mm height to prevent visibility from Lloyd Street. Screening along the boundary fence of sufficient height to prevent overlooking onto 38A Lloyd Street rear private deck.
If these changes to the s96 modification are acceptable to your clients, and are made by notification to Council prior to 23 July 2008, our clients will not lodge an objection to the s96 modification application but instead will lodge a letter in support on that date. It is also a condition of this offer that the Class 4 proceedings be stood over on 25 July 2008 for 8 weeks, with liberty to restore, to allow Council to determine the s96.
Our client would then file and serve a notice of discontinuance noting that each party shall pay its own costs upon being notified that the s96 modification had been issued incorporating the matters 1-6 inclusive above.
This offer remains open until 5pm on 22 July 2008.
We invite your client to accept this reasonable offer in the interests of averting the costs and inconvenience of further litigation and in the interests of preserving neighbourly relations.”

49 Turnbull Hill replied on 21 July, on a “without prejudice” basis:

“ We confirm that the undertaking given by our clients to your client, and by which our clients continue to abide, is to refrain from carrying out all contentious works the subject of these proceedings. The meaning of ‘contentious works’ is the 11 matters set out at 13(i)-(x) (sic) of your client’s Points of Claim dated 2 July 2008.
It is difficult to see the basis on which your client could object to our client’s current s96 application given that the very purpose of that application is to resolve the concerns your client has raised and which form the basis of the present proceedings.”

50 The letter went on to detail a possible further s96 application proposing eight further modifications “in the interests of protecting the privacy of both parties”. The letter also set out a timetable and some other possible terms of settlement.

51 There followed then a fairly hectic exchange of letters and offers between the parties from 22 July to 6 August (both inclusive), but a settlement of the proceedings was not concluded.

52 On 15 August Mr O’Sullivan wrote to Turnbull Hill alleging that the Respondents were in breach of the undertaking “given to the applicant and to the court”. The letter says:

“ The breaches include the following:
1. Work is being done on the computer room in Unit 1, including internal walls and wiring
2. Work is being done on the large eastern window in Unit 1
3. Work is being done on the laundry and ensuite in Unit 1
The above is part of the ‘contentious works’ referred to in paragraph 13 of the Applicant’s Points of Claim dated 2 July 2008”.

53 On 18 August Turnbull Hill wrote a lengthy letter to Mr O’Sullivan asserting that only the following four matters remained “contentious” between the parties and subject to the s96 amendment application:

“ 1. Excavation of and construction of a storeroom as part of unit 2.
2. Construction of a set of steps to the upper rear deck of unit 2.
3. Addition of two windows to the unit 1 garage on the western side.
4. Addition of two windows to the unit 2 garage on the western side”.

54 The letter went on to list a further eight matters which, in the Hainsworths’ opinion, “are not longer contentious works”. I will not set out those in detail here, but Unit 2 figures in several of them. Mr Walker deposes in respect of these eight matters (par 33b) that they appeared “to no longer be in contention, in light of the Applicant’s letter of objection to the s96 application”. The letter went on to state the Hainsworths’ intention to “commence building in relation to the non-contentious items in one weeks time”.

55 The letter concluded with a response to the breaches asserted on 15 August, in the following terms:

“1. The wiring is required regardless of whether this room is dedicated as a computer room or not
2. This item has not previously been raised as a contentious item
3. This item was not raised as a contentious item in your letter dated 15 May 2008. Our client’s undertaking was given in response to this letter.
Our clients shall comply with their undertaking in relation to the remaining contentious work”.

56 The relevant events between 15 August and the discontinuance in December were described in pars [15]-[19] above, culminating in the Council decision on 16 December that adequately addressed the major concerns felt by the Brents, and indeed made other improvements to their position.

The legal principles

57 The question of costs must be determined in this case under Uniform Civil Procedure Rules 42.19, which suggests that the discontinuing party will normally be responsible for the costs of the defendant/respondent, but that the court may, in its discretion, “otherwise order” if the discontinuing party not wishing to pay costs can satisfy the court it should so “otherwise order”. Prodromos Anastasi Foukkare v Angreb Pty Limited & Ors [2006] NSWCA 335. See also discussion by Basten JA in Bitannia Pty Ltd v Parkline Constructions Pty Ltd (“Bitannia”) [2009] NSWCA 32, at [70]-[81]. The discontinuing party needs to satisfy the court that there is “some positive ground or good reason for departing from the ordinary course” (per Bryson JA in Australiawide Airlines Ltd t/as Regional Express v Aspirion Pty Ltd (“Australiawide”) [2006] NSWCA 365, at [54]).

58 Each case turns on its own facts, but there are many decided cases to give the trial courts guidance on the principles to be applied.

59 An order for costs is designed to adequately compensate a successful party for the expense held to be reasonably incurred, but not to punish the unsuccessful party for bringing and failing in the proceedings (or raising and losing a point in them). Latoudis v Casey (1991) 170 CLR 534.

60 Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 (“Oshlack”) makes clear that the costs power is “purely discretionary” (per Bryson JA in Australiawide at [46]).

61 The power or discretion must be exercised “judicially”, and the conduct of the litigation by and on behalf of all parties must be examined for its “reasonableness”, in order to arrive at a “just” outcome in all the circumstances.

62 However, the Court in adjudicating costs must not hypothetically try the substantive proceedings (Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin (“Lai Qin”) (1997) 186 CLR 622), and there is no absolute rule that, in the absence of “disentitling” conduct, the party seen as “successful” will necessarily succeed in achieving a compensatory costs order. See Oshlack, and Fordyce v Fordham & Another (“Fordyce”) (2006) 67 NSWLR 497. Fordyce and Bitannia place McHugh J’s judgment in Lai Qin into the UCPR context, in which these cases must now be decided.

63 On the subject of entitling/disentitling conduct, the relevant authorities were discussed by Biscoe J in Shellharbour City Council v Stewart [2007] NSWLEC 727 at [22] and in Ku-ring-gai Council v Minister for Planning (No.2) [2008] NSWLEC 276, and by me in Ray Fitzpatrick Pty Limited v Minister for Planning (No.5) [2008] NSWLEC 183 (“Fitzpatrick”) at [39]-[43], and I need not restate the principles here.

64 On the subject of success/capitulation, One.Tel Ltd and Others v Deputy Commissioner of Taxation (“One.Tel”) [2000] FCA 270; (2000) 101 FCR 548 (Burchett J) is a good example of a case where the courts have endorsed the general principle that when one party “effectively surrenders” (a popular charge and counter-charge in this case) a costs order generally follows. See also Kiama Council v Grant [2006] NSWLEC 96; (2006) 143 LGERA 441, at [80].

65 Where a “supervening event” (here the Council’s approval of the modification application) “removes” the subject matter at the heart of the case, a costs order may not necessarily or automatically follow (Burchett J in One.Tel at [6]).

66 “Precipitately” commencing the proceedings may become a relevant factor (Newcastle City Council v Wescombe [2008] NSWLEC 301 at [16]).

Consideration

67 In this case the Brents were apparently content for the project at No.36 to be built in accordance with the DC and its (then) Amended Plans, but they became concerned when the project appeared to take a different shape (c.f. McCrohon v P J Gann and Another [2009] NSWLEC 8). Their concerns were not resolved by the actions taken by BCA following Brents’ complaint, and they had no expectation of intervention by the Council.

68 Their solicitor then negotiated an appropriate “holding” undertaking, while Council and the certifier considered the matter, albeit that the Hainsworths’ solicitor put on the record on 19 May a total denial of all the alleged breaches and illegalities (see [33]). It should also be noted that the undertaking so negotiated fell significantly short of the terms of the undertaking the Applicant sought (see the highlighted words in [31]). Such as it was, the Applicant was entitled to have the undertaking noted by the court which might eventually determine the competing claims.

69 Within two days the Hainsworths were seeking some relaxation of their commitment to cease all work, so as to confine it to “issues of contention” ([35]ff). A dispute quickly arose regarding work on Unit 2 ([36]-[40]), then everything went silent, and two weeks later these class 4 proceedings were commenced.

70 On those facts I could not conclude that the commencement of proceedings was either “premature” or “precipitate”. The Council by 11 June had still shown no signs of taking any action on the CC. Until this court struck it down the Hainsworths had every right to rely upon it, and work to it, rather than “capitulate” on the point without litigation. On the other hand, the Applicant had no obligation to delay beyond 11 June commencing proceedings designed to give the owners of Nos. 36 and 38A some certainty in their dealings.

71 I do not accept Mr de Meryck’s submission that his clients (BCA) should not have been joined in the proceedings, either at the outset or otherwise, and I rely on my reasoning in Shellharbour City Council v Dunmore Equestrian Centre Pty Ltd & Anor [2008] NSWLEC 163. Who else other than the certifier him/itself can properly defend a Wednesbury challenge to the CC, such as the Applicant here framed in the class 4 application and her POC? In this case the certifier was defensive of the CC when approached before the litigation commenced. (Exhibit A1). A submitting appearance might become an option, but I consider the certifier needed to be a party.

72 Furthermore, I am far from satisfied that the Applicant’s case against the certifier was “doomed to failure”. Talbot J’s decision in Baulkham Hills Shire Council v Dix and Another [2004] 13 LGERA 149; NSWLEC 404 and a close examination of the relevant clauses (e.g. 145, 146 and 161) of the EPA Regulation 2000 indicate the lively and serious issues that can arise in cases such as this, where a CC could be set aside. BCA’s own submissions (par 11) acknowledge that giving an “unreasonable” CC can amount to unsatisfactory professional conduct on the part of the certifier.

73 The Hainsworths having lodged their s96 modification application before case management of the proceedings commenced, all parties appear to have behaved very reasonably in agreeing to or accepting a series of adjournments while the s96 application was considered and the parties were negotiating. I can find no disentitling conduct in the usual “argy-bargy” which we see here. Indeed, the attitude of the Hainsworths began to “soften” towards the end of July ([49]-[50]).

74 It must be noted, however, that the original s96 application was designed merely to have the Council vary its consent to match what the certifier had done. It was only when Council indicated that it would not be approved in that form that the Hainsworths took steps, from 15 September 2008, to address more seriously the Applicant’s concerns ([16]). What was always needed for the Brents’ concerns to be resolved, in the absence of any initiative by the Council or the certifier, was a major shift in the position and attitude of the Hainsworths, either in substance or as presented on their behalf. That shift began to take effect really only when more information and further amended plans began to come forward on 15 September at the insistence of the Council.

75 There is absolutely no evidence to suggest that that necessary shift in the Hainsworths’ position was even remotely likely to have occurred, absent the commencement of these proceedings, so the principles enunciated in Latoutis v Casey (see [59] above) would dictate that the Applicant should recover her costs from the Hainsworths.

76 The approval in December of the much modified s96 modification application was the “supervening event” which totally eliminated the need for action to continue against the Hainsworths.

77 The Applicant was, therefore, “successful”, outside the Court and apart from the proceedings, as against the Hainsworths, as were the protagonists in Garwolin Nominees Pty Ltd v Statewide Building Society [1984] VR 469, Telstra Corporation Ltd v Australian Telecommunications Authority and Ors (Vic Supreme Court, Hayne J, Unreported, 30 June 1994), and similar cases among the relevant authorities to which counsel referred me.

78 Returning to the case against BCA, I note that throughout the negotiations the Applicant’s solicitor does not appear to have retracted from his position that the s96 process (albeit that his position was stated before the Council’s adverse indication in August) would not conclude the case against the CC ([47]). That position was firmly put on the record on 11 July, but serious “without prejudice” negotiations soon followed between the Brents and the Hainsworths. The Brents achieved their objective, the CC was superseded, and there was no need to pursue BCA further.

79 Having reached that stage where the Council’s decision achieved her objectives, the Applicant sensibly concluded that there was neither a need for, nor any utility in, further pursuit of the certifier and its certificate, and she was perfectly entitled to relax her position in that regard. I do not believe, however, that she has made out any entitlement to an order that BCA should pay her costs.

80 On the question of the actual timing of the discontinuance, I reject the submission that the Applicant should have found/taken an earlier opportunity to discontinue the proceedings. She was entitled to await the relevant “supervening event”.

81 In all these circumstances I conclude that the Applicant ought not to be ordered to pay any of the costs of any of the Respondents. Nor is there any basis for any order to be made as between the two pairs of Respondents.

Conclusions

82 I have, therefore, concluded that, as between the Brents and the Hainsworths, the latter should be ordered to pay the former’s costs.

83 As between the objecting neighbour and the certifier, I think the most “just” result is that each party pay its own costs.

84 In so far as this costs hearing is concerned, all parties were perfectly entitled to pursue orders in their favour, and the most appropriate order here again is that each party pay its own costs.

Orders

85 The orders of the court are:

1. As between the Applicant and the Third and Fourth Respondents, those Respondents are ordered, jointly and severally, to pay the Applicant’s costs on a party-party basis as agreed or assessed.
2. As between the Applicant and the First and Second Respondents, each party is ordered to pay its own costs.
3. Each party is ordered to pay its own costs in respect of the court’s determination of the competing applications for costs.
4. Exhibit A1 may be returned.