Eather v Mosman Municipal Council

[2012] NSWLEC 92

Land and Environment Court

New South Wales

Medium Neutral Citation:

Eather v Mosman Municipal Council [2012] NSWLEC 92

Decision date:

01 May 2012

Jurisdiction:

Class 4

Before:

Pepper J

Decision:

(1) the proceedings are discontinued;

(2) Mrs Eather is to pay 25% of the council's costs of the proceedings; and

(3) the council is to pay 75% of Mrs Eather's costs of the motions.

Catchwords:

COSTS: who should pay costs upon discontinuance of the proceedings upon negotiated settlement - operation of r 42.19 of the UCPR - no hearing on the merits - no surrender - whether a supervening event removed or modified the subject-matter of the proceedings leaving only the issue of costs - conduct of the parties during the preparation of the proceedings

Legislation Cited:

Civil Procedure Act 2005, s 98
Environmental Planning and Assessment Act 1979, s 101
Uniform Civil Procedure Rules 2005, r 42.19

Cases Cited:

Baulderstone Hornibrook Engineering Pty Limited v Gordian Runoff Limited (No 2) [2009] NSWCA 12
Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32
Fordyce v Fordham [2006] NSWCA 274; (2006) 67 NSWLR 497
Prodromos Anastasi Foukkare v Angreb Pty Limited [2006] NSWCA 335
Kiama Council v Grant [2006] NSWLEC 96; (2006) 143 LGERA 441
Latoudis v Casey [1990 HCA 59]; (1990) 170 CLR 534
ONE.TEL Ltd v Deputy Commissioner of Taxation [2000] FCA 270; (2000) 101 FCR 548

Category:

Procedural and other rulings

Parties:

Julian Eather (Applicant)
Mosman Municipal Council (First Respondent)
Richard Madden (Second Respondent)
Rosamond Wood (Third Respondent)

Representation:

Mr I Hemmings (Applicant)
Mr J Lazarus (First Respondent)
Diamond Conway Lawyers (Applicant)
Pikes Lawyers (First Respondent)

File Number(s):

40212 of 2011

Ex Tempore Judgment

The Applicant Discontinues Judicial Review Proceedings Following Settlement With Other Parties

1. These proceedings, at a substantive level, concern a judicial review challenge to a decision made by the first respondent, Mosman Municipal Council ("the council"), on 7 October 2010 to grant development consent in respect of a development application concerning premises in Mosman owned by the second and third respondents. The applicant, Mrs Julian Eather, owns the adjoining property.

1. The gravamen of the dispute between the parties was the position of an inclinator and the materials to be used in its construction. As initially approved by the council, the inclinator was to pass directly in front of the master bedroom of Mrs Eather, thereby impacting upon her privacy. Mrs Eather was not able to object to the development application during the period of notification. The negative impact on the amenity of Mrs Eather was exacerbated by the fact that the side of the inclinator was to be a translucent material thereby permitting the occupants of the inclinator to look directly into Mrs Eather's bedroom.

1. As pleaded in the points of claim, there were four grounds upon which the consent was claimed to be invalid by Mrs Eather:

(a) an alleged failure to notify the development application in accordance with the Notification Development Control Plan;

(b) an alleged denial of procedural fairness arising from the inability of Mrs Eather to be heard at the council meeting at which the development application was considered;

(c) alleged uncertainty surrounding the terms of the consent insofar as, first, the development was to be carried out with an inclinator plan design prepared on 9 December 2009 by YSCO Geometrics, and second, that the northern side of the inclinator car was to be constructed from a translucent material with the information to be shown on plans submitted with the construction certificate, but absent any, or sufficient, details in the inclinator plan appended to the consent; and

(d) manifest unreasonableness by the council in granting the consent.

1. On 19 July 2011, the matter was listed for final hearing for two days on 12 and 13 October 2011.

1. On 28 July 2011, Mrs Eather's solicitors wrote to the council informing it that Mrs Eather and the second and third respondents were pursuing settlement discussions.

1. Notwithstanding that settlement discussions were ongoing between Mrs Eather and the second and third respondents, Mrs Eather regrettably did not approach the Court to have the preparation of the matter for final hearing adjourned to permit those settlement discussions to continue absent any party incurring additional legal costs that might be wasted if the matter was to settle. Accordingly, the council continued to prepare for the final hearing.

1. On 28 September 2011, an in-principal agreement was reached between Mrs Eather and the second and third respondents to resolve the matter by lodging a s 96 modification application with the council that satisfactorily ameliorated the impact of the inclinator on Mrs Eather's amenity.

1. On 7 October 2011, an application was made to the Court to vacate the hearing dates. As it transpired, that application came before me as list judge. The application was made by way of notice of motion and affidavit filed in the Court on that day during the list and purportedly returnable instanter. Unconvinced on the available evidence of the merit of the application, rather than dismiss it, I ordered that the motion be returnable on 11 October 2011 before the trial judge listed to finally hear the proceedings.

1. On that day, Moore AJ, as the allocated trial judge, proceeded to vacate the hearing dates in light of the settlement that had been reached between the parties. The vacation was not opposed by the council, but it sought its costs thrown away by the vacation. The trial judge reserved this issue.

1. Subsequently, the s 96 application was approved by the council and a notice of motion seeking to discontinue the proceedings was filed in the Court by Mrs Eather.

1. The second and third respondents have agreed to the proceedings being discontinued on the basis that as between Mrs Eather and themselves, each party is to bear their own costs.

1. The council also consents to the proceedings being discontinued but, by a separate notice of motion, seeks payment of its costs by Mrs Eather pursuant to the discontinuance. Mrs Eather submits that the appropriate order is, again, that each party bear their own costs.

1. It is this outstanding costs issue between the council and Mrs Eather which must be determined by the Court. For the reasons below I find that an appropriate exercise of my discretion to award costs is that Mrs Eather pay 25% of the council's costs of the proceedings.

Evidence of the Parties in Support of the Applications for Costs

1. The council read the affidavit of Mr Peter Jackson sworn 8 March 2012. Mr Jackson is the solicitor for the council.

1. The affidavit was voluminous, unpaginated, and effectively did no more than annex the correspondence passing between the parties in the matter. With the exception of the four items of correspondence that the Court was specifically referred to, I found it to be of little assistance.

1. This correspondence demonstrated that as at 28 July 2011 the council had been put on notice that Mrs Eather and the second and third respondents had entered into discussions with a view to reaching a settlement of the proceedings, but that no settlement had yet occurred.

1. In a reply letter dated 29 July 2012, from the council to the solicitors for Mrs Eather, the council advised Mrs Eather that it had incurred considerable legal costs in defending the allegations raised by her and that "if the parties do reach agreement in this matter then Council will be seeking reimbursement of its legal costs incurred after the date of any negotiated settlement." And that "your client ought to keep the issue of costs in mind as part of the negotiations". I found the robust tone of the council's letter unfortunate and antithetical to the promotion of a goal that was in the interests of all parties, namely, the settlement of the proceedings, with its resultant savings in time and costs.

1. The final paragraph of the letter was in similarly bullish language and made it abundantly clear that it was the council's position that in the absence of any finalised agreement, the council would continue preparing its case for hearing, and thus it may be inferred, incurring costs, and moreover, that if there was any material slippage in the Court's timetable, it would bring the matter back for a further directions hearing.

1. In fact there was a material slippage in the timetable on two occasions by Mrs Eather, and on each occasion Mrs Eather was sanctioned by an adverse costs order being made.

1. Mrs Eather relied on two affidavits from Mr Michael Mazzone sworn on 10 October 2011 and 23 April 2012. Mr Mazzone is the solicitor for Mrs Eather.

1. Mr Mazzone deposed in his affidavits that the proceedings were commenced by Mrs Eather as a matter of necessity in order to preserve her position and to ensure that any challenge to the validity of the consent was not statute barred pursuant to s 101 of the Environmental Planning and Assessment Act 1979 ("the EPAA").

1. Mr Mazzone also provided details of the settlement reached between Mrs Eather and the second and third respondents. A settlement, which, on any view, was a reasonable one given the circumstances of the proceedings.

Applicable Legal Principles in Relation to the Payment of Costs Where One Party Discontinues the Proceedings

1. Costs in discontinued Class 4 proceedings in this Court are determined pursuant to s 98 of Civil Procedure Act 2005 and the application of r 42.19 of the Uniform Civil Procedure Rules 2005 ("UCPR").

1. Rule 42.19 of the UCPR relevantly provides as follows:

42.19 Proceedings discontinued

(1) This rule applies to proceedings that are discontinued by the plaintiff, as referred to in rule 12.1.

(2) Unless the court orders otherwise or the notice referred to in rule 12.1 (2) otherwise provides, the plaintiff must pay such of the defendant's costs as, at the date on which the notice of discontinuance was filed, had been incurred by the defendant in relation to each claim in respect of which the proceedings have been discontinued.

1. It is trite law that orders for costs are designed to compensate for expenses reasonably incurred and not to punish a particular party (Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534).

1. In Baulderstone Hornibrook Engineering Pty Limited v Gordian Runoff Limited(No 2) [2009] NSWCA 12 Allsop P noted the following in relation to costs applications (at [5]):

5. Three things need be borne in mind in a judgment such as this on costs: the desirability of avoiding unnecessary recitation of cases (abounding as they are in this area); the desirability of not restating, in different terms, approaches to the broad discretion that have been well settled; and the desirability of dealing with the arguments without over-elaboration, if this is possible.

1. His Honour's observations are equally apposite here.

1. Generally costs will follow the event in Class 4 proceedings. But where, as in the present case, the proceedings are discontinued absent a determination on the merits, and thus an 'event', the issue of costs becomes complex. Thus, in ONE.TEL Ltd v Deputy Commissioner of Taxation [2000] FCA 270; (2000) 101 FCR 548 Burchett J said (at [6]):

6. In my opinion, it is important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event or settlement so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the Court's discretion otherwise than by an award of costs to the successful party. It is the latter type of case which more often creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs. In Ex Parte Lai Qin, McHugh J was careful to state (at 624) that the principles with which he was concerned were those that "govern an application for costs when a party elects not to pursue an action because he or she has achieved the relief sought in the action either by settlement or by extra-curial means". ...

1. In Kiama Council v Grant [2006] NSWLEC 96; (2006) 143 LGERA 441 Preston J drew together some of the relevant guiding legal principles governing the position at that time and said (at [80]):

80. The principles that emerge from these cases are that in a civil enforcement or judicial review case where there has been no hearing on the merits:

(a) where one party effectively surrenders to the other party by:(i) discontinuing without the consent of the other party; or(ii) giving undertakings to the Court or submitting to the Court making orders against the party substantially in the terms or to the effect claimed by the other party; the proper exercise of the costs discretion will ordinarily be to make the usual order as to costs, unless there is disentitling conduct on the part of the other party; and(b) where some supervening event or settlement so removes or modifies the subject of the dispute that no issue remains except that of costs, the proper exercise of the costs discretion will ordinarily be to make no order as to costs unless:(i) one of the parties has acted so unreasonably that the other party should obtain the costs of the action; or(ii) even if both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried so that the party should obtain the costs of the action.

1. In Kiama, however, no reference was made to r 42.19 of the UCPR because it was not applicable. The decision must therefore be read with this in mind.

1. It has been said that r 42.19 does not give rise to a "presumption" that costs will be ordered against the discontinuing party (Fordyce v Fordham [2006] NSWCA 274; (2006) 67 NSWLR 497; Prodromos Anastasi Foukkare v Angreb Pty Limited [2006] NSWCA 335 (at [65]); Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32 (at [53]).

1. But in Bitannia it was stated that (at [54]):

54. However, like UCPR 42.20, UCPR 42.19 states what the order for costs is to be unless there is a discretionary decision to order otherwise: Australiawide Airlines Limited v Aspirion Pty Limited [2006] NSWCA 365 at [53]. This means there is an onus on the discontinuing party to make an application in respect of costs if it does not propose to pay the costs of the other parties: Foukkare at [65]. In my opinion, it also means that there must be "some sound positive ground or good reason for departing from the ordinary course": Australiawide Airlines at [54].

1. This view is consistent with the opinion expressed by Santo JA in Fordyce (at [3]) where his Honour said:

3. I would wish to add this observation on one aspect of the reasons on UCPR 42.19 and 42.20. I consider the fact of discontinuance is likely to be a factor of some weight in exercising the discretion to determine whether the discontinuing party should be ordered to pay the other party's costs. While it is true the Court may otherwise order, the onus remains on the discontinuing party to justify such an order by reference to the circumstances said to justify exception to the normal cost outcome in such event. That the Court retains discretion to accommodate such circumstances does not alter their character as being by way of exception nor the consequence in terms of onus. That said, the discretion remains to otherwise order.

1. To the extent that the earlier 'non-presumptive' position expressed in Fordyce may be seen as inconsistent with subsequent pronouncements as to the intended operation of r 42.19 of the UCPR, in Bitannia Basten JA attempted to reconcile the tension in the following nuanced way (at [72]-[75]):

72. One question raised in these proceedings is the relevance of the default provision with respect to the exercise of the discretion to otherwise order. In Fordyce v Fordham [2006] NSWCA 274; 67 NSWLR 497, McColl JA (Beazley JA agreeing) concluded that the "default orders do not create a presumption" that the plaintiff ought to pay the costs of the proceedings: at [84]. Her Honour also indicated that the default order is "a relevant, but not determinative, consideration".

73. The use of the term "presumption" in this context is unclear and was properly rejected. In some circumstances, a presumption may do no more than indicate on which party lies the onus of proof of primary facts. In other cases it will supply evidence of the fact presumed: see McCormack v Federal Commissioner of Taxation [1979] HCA 18; 143 CLR 284 at 314 (Jacobs J). In other cases again, clearly not relevant to the present circumstance, it may be a way of stating a rule of law, as with respect to the capacity of a young child to form a relevant criminal intent. In other circumstances, the burden of persuasion may be expressed in terms of a presumption. For example, in Australian Coal & Shale Employees' Federation v The Commonwealth [1953] HCA 25; 94 CLR 621 at 627, Kitto J expressed the principle limiting appellate review of discretionary judgments in terms that "there is a strong presumption in favour of the correctness of the decision appealed from, and that that decision should therefore be affirmed unless the court of appeal is satisfied that it is clearly wrong". This range of meanings undoubtedly renders adoption of such terminology undesirable.

74. However, it is less clear what was intended in Fordyce by stating that the default order constituted a material consideration in exercise of the discretion to otherwise order. No doubt it is true to say that the default order is relevant in the sense that it identifies that from which the court is invited to depart. Beyond that, the existence of the default consequence is not itself helpful in deciding whether to depart from it. Rather, it is the underlying reason for the default position with respect to costs that may bear upon the exercise of the discretion. A party which seeks to discontinue must generally, in a relevant sense with respect to costs, be treated as an unsuccessful party. The general costs rule set out in s 98 of the Civil Procedure Act 2005 (NSW) does not identify the limits of the court's discretion with respect to costs. The most important limitation for present purposes is the requirement that, again subject to the court otherwise ordering, costs should follow the event: see r 42.1. If that rule were to be applied, absent persuasion that the court should otherwise order, the plaintiff would be required to pay the costs of discontinuance. It seems likely that it is consistency with that general principle which underlies the default consequence provided in r 42.19. If that rule has application with respect to a discontinuance (and no reason was proffered as to why it should not) the discretion to make a costs order under r 42.19 will be confined by that general principle. In that respect, it may be misleading to describe the discretion under r 42.19 as "unconfined": see Fordyce at [87]. In some cases (though not necessarily all) discontinuance will involve the termination of proceedings without the court knowing what the result would have been had they been determined on the merits. In one sense, the existence of a hearing on the merits may be largely irrelevant, just as the actual result of a hearing on the merits will not be affected by the fact that the proceedings might have been run differently and might then have achieved a different result.

75. There are, nevertheless, circumstances in which it is entirely appropriate for the court, by order, to depart from the consequence provided by the rule. For example, discontinuance may result from the plaintiff obtaining a favourable result in other proceedings, in circumstances where it had not been unreasonable to commence the discontinued proceedings. Such cases frequently arose in challenges to decisions made under the Migration Act 1958 (Cth), when the scope for judicial review in the Federal Court was limited and it was commonplace for applicants to commence proceedings in both the Federal Court and in the original jurisdiction of the High Court.

1. To summarise, while not rising as high as a presumption, pursuant to r 42.19 of the UCPR the discontinuing party must demonstrate a good reason why a court should not exercise its discretion in the ordinary way by ordering that the discontinuing party pay the costs of the other parties. Such an approach is consistent with both the language and objective purpose of the rule.

Mrs Eather Should Pay 25 Per Cent of the Council's Costs

1. Applying the above applicable legal principles, there can be no doubt that Mrs Eather, being the moving party for discontinuance, bears the onus of proving that an alternative costs order is appropriate.

1. The council submitted that this burden has not been discharged by Mrs Eather and that she should pay the entirety of its costs. It submitted that it could neither be suggested that it did anything other than conduct the proceedings in a bona fide and reasonable manner, with no hint of any disentitling conduct on its part; nor could it be contended that Mrs Eather was bound to succeed in the proceedings.

1. The council further submitted, adopting the language employed in ONE.TEL and Kiama, that Mrs Eather had surrendered to the council because it was implicit in the filing of the s 96 modification application as part of the settlement that she considered that the consent was valid. Alternatively, it put that the supervening event of the settlement between Mrs Eather and the second and third respondents did not 'remove or modify the subject of the dispute' between Mrs Eather and the council because the dispute between these parties concerned the validity of the development consent and not the impact of the development on her amenity, the latter of which was the subject of the dispute between Mrs Eather and the second and third respondents.

1. Mrs Eather responded by arguing that there was in fact a surrender of the consent by the second and third respondents manifested by their filing of the s 96 modification application, but that there was no surrender by Mrs Eather vis-à-vis the council. On the contrary, she was wholly successful in achieving what she wanted from the institution of the proceedings, namely, the removal of the detrimental impact on her privacy occasioned by the inclusion of the inclinator in the development consent as approved by the council.

1. Mrs Eather submitted that the proper characterisation of the unfolding events was that a supervening event had occurred, viz, the negotiated settlement of the proceedings between herself and the second and third respondents, which had the practical effect of removing the subject of the dispute between herself and the council so that no issue remained except that of costs. In these circumstances, the proper exercise of the Court's costs discretion was to make no order to costs, particularly when Mrs Eather had not acted unreasonably in commencing, or continuing with, the litigation and where it could not be said that the council was almost certain to have succeeded if the matter had been fully tried so that it should obtain its costs of the action.

1. Mrs Eather was also critical of the extent of the council's participation in the proceedings in circumstances where the second and third respondents were, she argued, the proper protagonists. The council could, and ought, it was contended have limited their participation in the proceedings to that of assistance rendered to the court.

1. I do not agree. Given the challenges made to the consent by Mrs Eather, particularly those based on a failure to notify and a failure to afford procedural fairness - both matters squarely impugning the conduct and decision-making processes of the council - I do not think that the council can in any way be criticised by the manner in which it has defended the proceedings. The council was entitled to rebut the allegations pleaded against it by Mrs Eather.

1. Similarly, I am of the opinion that Mrs Eather can neither be criticised for commencing the proceedings. Her only basis for challenging the granting of the development consent was to institute judicial review proceedings in Class 4 of this Court's jurisdiction. Pursuant to s 101 of the EPAA she was compelled to do so within three months of the decision by the council granting consent. She did not have the luxury of attempting to negotiate a settlement with the second and third respondents and then ensuring that the council facilitated any such agreement prior to the expiration of the three month limitation period.

1. Equally, I do not believe, subject to one important exception with respect to her conduct discussed below, that she acted unreasonably in continuing to pursue the litigation until such time as an agreement had been reached with the second and third respondents. Once the agreement had been brokered, she moved relatively swiftly to vacate the hearing dates in order to permit the negotiated settlement to come to fruition.

1. In my view it is not correct to characterise the events that occurred as a surrender by Mrs Eather of the consent with respect to the council. While, strictly speaking, the submission of the council is accurate that the practical relief ultimately afforded to Mrs Eather by the settlement of the proceedings meant that the consent has not been declared invalid, there has been no surrender of the type envisaged in ONE.TEL or Kiama. Mrs Eather has not accepted the council's defence of its position or in any way agreed to terms that suggest that her position was untenable.

1. I agree with the submissions of Mrs Eather that the extra-curial settlement with the second and third respondents has meant that it was unnecessary for the proceedings to be litigated to their conclusion and that there has been no determination on the merits. The settlement has had the practical effect of removing or modifying the real subject of the dispute, namely, the detrimental impact of the original location and construction of the inclinator on the privacy of Mrs Eather. So much so is evident from the affidavit material of Mr Mazzone.

1. In circumstances where the proceedings were reasonably commenced, where a settlement was properly negotiated in savings for all parties of both costs and time, and where there has been no determination of the merits of the proceedings nor orders made against any party substantially in the terms sought by anyone, then, subject to the question of the reasonableness of the conduct of Mrs Eather during the proceedings, the ordinary exercise of the Court's discretion under r 42.19 of the UCPR is appropriately displaced and each party should bear their own costs.

1. Where Mrs Eather has ultimately achieved the real relief that she wanted by commencing the proceedings, it would be perverse, to say the least, if she was all but compelled to continue with the action against the council solely in the hope of avoiding a costs order being made against her. Such a result would be an inefficient use of curial resources and parties' time, and not, in my opinion, consistent with the objective purpose of r 42.19 of the UCPR.

1. Having said this, there is force in the submission by the council that by reason of the late notification by Mrs Eather that the parties were in settlement negotiations, and by reason of her failure to inform the Court of this fact and to seek a cessation of the timetable for the preparation of the proceedings in order to permit the settlement negations to be pursued in a manner that did not cause the parties to incur wasted costs, Mrs Eather has acted sufficiently unreasonably that the council should obtain some or all of its costs.

1. There is no doubt that Mrs Eather must be criticised in this regard. Adjournment applications of this nature are not uncommon in Class 4 of the Court's jurisdiction and are readily acceded to where it can be demonstrated that the parties are genuinely engaged in settlement discussions.

1. On this basis, I am of the opinion that the council is entitled to part, but not all, payment of its costs of the proceedings. This is because the failings of Mrs Eather were not, in my view, so unreasonable that the council should be awarded the entirety of its costs.

1. In all the circumstances of this case, therefore, I consider that it is an appropriate exercise of the Court's discretion, consequent upon the discontinuance by Mrs Eather of the proceedings, that Mrs Eather pay 25% of the council's costs of the action. I readily accept that there is a degree of arbitrariness in this figure, but it is calculated not to punish Mrs Eather, but to compensate the council for the legal expenses it has incurred as a consequence of Mrs Eather's less than satisfactory conduct of the proceedings, as explained above.

Costs of the Motion

1. Mrs Eather has been partially, but not wholly, successful with respect to the orders she sought in her notice of motion. In my view her success with respect to the primary costs application made by the council should be mirrored in any order crafted by the Court in determining who should pay the costs of the two motions. It is therefore appropriate that the council pay 75% of Mrs Eather's costs of the motions.

Orders

1. The orders of the Court are therefore as follows:

(1) the proceedings are discontinued;

(2) Mrs Eather is to pay 25% of the council's costs of the proceedings; and

(3) the council is to pay 75% of Mrs Eather's costs of the motions.

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Decision last updated: 15 May 2012