F & D Bonaccorso Pty Ltd v City of Canada Bay Council (No 3)

[2007] NSWLEC 569

Land and Environment Court

of New South Wales

CITATION:

F & D Bonaccorso Pty Ltd v City of Canada Bay Council (No 3) [2007] NSWLEC 569

PARTIES:

APPLICANT:
F & D Bonaccorso Pty Ltd

FIRST RESPONDENT:
City of Canada Bay Council

SECOND RESPONDENT:
Arinson Pty Ltd

THIRD RESPONDENT:
Omaya Holding Pty Ltd

FOURTH RESPONDENT:
Omaya Investments Pty Ltd

FIFTH RESPONDENT:
The Registrar General

FILE NUMBER(S):

40134 of 2003

CORAM:

Biscoe J

KEY ISSUES:

Costs :- applicant successful in judicial review proceedings - principles relating to departure from usual order for costs, indemnity costs and apportionment of costs - whether applicant behaved unreasonably in sustaining challenge to earlier development consent that had been suspended - whether applicant behaved unreasonably by unnecessarily prolonging proceedings in respect of challenge to development consent - whether applicant should pay costs thrown away occasioned by joinder of a party during the hearing - whether respondent council behaved unreasonably in disputing ground of invalidity which it later conceded - whether respondent council behaved unreasonably in contesting claim that a park was community land - whether applicant's costs of obtaining injunctions against other respondents should be excluded from applicant's costs against respondent council - whether applicant's costs of obtaining those injunctions as against other respondents should be determined in these proceedings or in other proceedings to which the issue had been transferred - whether appropriate to determine on a costs application whether a development consent which had been surrendered was invalid when that issue had been neither pressed nor determined in the substantive proceedings, in order to decide whether to order costs against a respondent which had defended that issue for a time - whether there should be any order as to the costs of the costs application

CASES CITED:

Cutcliffe v Lithgow City Council (2006) 147 LGERA 330;
F & D Bonaccorso Pty Ltd v Canada Bay City Council [2007] NSWLEC 233;
F & D Bonaccorso Pty Ltd v City of Canada Bay City Council [2007] NSWLEC 159;
F & D Bonnaccorso Pty Ltd v City of Canada Bay Council (No 2) [2007] NSWLEC 537;
GPT Re Ltd v Wollongong City Council (2006) 151 LGERA 174;
Harrison v Schipp [2001] NSWCA 13;
Hayden Theatres Pty Ltd v Penrith City Council (1998) 105 LGERA 230;
James v Surf Road Nominees Pty Ltd [No 2] [2005] NSWCA 296;
Latoudis v Casey (1990) 170 CLR 534;
Mead v Watson as Liquidator for Hypec Electronics (2005) 23 ACLC 718, [2005] NSWCA 133;
Oshlack v Richmond River Council (1998) 193 CLR 7;
Roads and Traffic Authority (NSW) v McGregor (No 2) [2005] NSWCA 453;
Rosniak v Government Insurance Office (1997) 41 NSWLR 608;
Stena Rederi Aktiebolag v Austal Ships Sales Pty Ltd [2007] FCA 1141

DATES OF HEARING:

20 August 2007

 
DATE OF JUDGMENT: 

6 September 2007

LEGAL REPRESENTATIVES:

APPLICANT:
Mr P Tomasetti and Mr J L Doyle
SOLICITORS:
Thomson Playford

FIRST RESPONDENT:
Mr S J Free
SOLICITORS:
Maddocks

THIRD AND FOURTH RESPONDENTS:
Mr J A Ayling SC
SOLICITORS:
DLA Phillips Fox

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

BISCOE J

6 September 2007

40134 of 2003

F & D BONACCORSO PTY LTD v CITY OF CANADA BAY COUNCIL

JUDGMENT

1 HIS HONOUR: This is a costs application. The applicant was successful in obtaining relief going to the validity of a development consent granted in 2003 (2003 development consent) for the demolition of existing buildings and as to the status of Chapman Reserve as community land and an order for rectification of the Register under the Real Property Act 1900 to show the first respondent (council) as the registered proprietor of the lots comprising Chapman Reserve: F & D Bonaccorso Pty Ltd v City of Canada Bay City Council [2007] NSWLEC 159.

2 The applicant claims the following costs orders:

(a) costs against the council for the whole of the proceedings;
(b) indemnity costs against the council in relation to declaration 1 and order 1 after 27 September 2006;
(c) indemnity costs against the council in relation to the preparation of evidence from 5 December 2006 and argument that Chapman Reserve was a public reserve within the meaning of the Local Government Act 1993 as at 1 July 1993;
(d) costs against the second respondent ( Arinson ) of obtaining declaration 1 and order 1 up until the date a liquidator was appointed to Arinson on 8 March 2004; and
(e) costs against the third and fourth respondents (jointly and severally Omaya ) of obtaining declaration 1 and order 1 from 6 July 2006 up until the date they filed a submitting appearance on 3 October 2006.

3 Council submits that the appropriate order, as between the applicant and the council, is that each party should bear its own costs of the proceedings, on the basis that this is a just result in light of the outcome of the proceedings and the conduct of the parties. Alternatively, the council submits that, if the Court considers that the applicant is entitled to a costs order to the extent that the applicant was successful, the Court should make the following orders (noting that Omaya are not liable for costs incurred after 3 October 2006 when they filed submitting appearances):

(a) that the respondents pay on a party/party basis, the applicant’s costs as they relate to the challenge to the validity of the 2003 development consent and Chapman Reserve, save that the applicant is not entitled to its costs incurred after 20 October 2006 relating to the challenge to the validity of the 2003 development consent;
(b) that the applicant pay council’s costs on a party/party basis to the extent that those costs relate to the challenge to the validity of the 2003 development consent after 20 October 2006;
(c) that the applicant pay, on an indemnity basis, council’s costs incurred on or after 25 August 2003 as they relate to the challenge to the validity of the development consent granted by council in 2002 ( 2002 development consent ); and
(d) that the applicant pay the council’s costs thrown away as a result of the late addition of the Registrar-General as a party to the proceedings.

BACKGROUND

4 In order to understand the costs submissions (including the dates referred to therein), it is necessary to note the following.

5 The precise substantive relief granted was as follows:

The Court declares that:
1. The development consent in respect of development application No. 336/03 for the premises at 2-10 and 13-21 Chapman Street, Strathfield, granted by the first respondent on 1 July 2003 permitting the demolition of existing buildings and the erection of a residential flat building and basement car parking is invalid and of no force or effect.
2. The land described by Folio Identifiers 12/2409 and Folio Identifier 13/589132 known as 17 and 19 Chapman Street, Strathfield (collectively Chapman Reserve), is community land within the meaning of the Local Government Act 1993.
3. The sale of Chapman Reserve by the first respondent to the third respondent was a breach by the first respondent of section 45(1) of the Local Government Act 1993.

The Court orders that:
1. The development consent granted by the first respondent for development application No 336/03 is set aside.
2. The Registrar General is to amend the Register maintained under the Real Property Act 1900 to show the Council as the registered proprietor of the lots comprising Chapman Reserve.
3. Upon
a) the first respondent by its solicitor undertaking to the Court to seek expedition of the hearing of its appeal to the Court of Appeal
b) the third respondent by its counsel undertaking to the Court not to dispose of or deal with or attempt to dispose of or deal with the Lots comprising Chapman Reserve until further order
c) the Registrar General stating that it will place the Registrar General’s caveat on the title to the said land and will attach these orders to it
Order 2 is stayed until such time as the parties appeal rights to the Court of Appeal have been exhausted.

4. The Second Further Amended Application insofar as it relates to paragraphs 11 and 12 thereof is to be heard together with proceedings no. 40171 of 2007.
…

7. Save as aforesaid, the proceedings are dismissed.

6 The proceedings as commenced in February 2003 against council and Arinson only, involved a challenge to the validity of a development consent granted in 2002. The 2003 development consent was granted in July 2003. The 2002 development consent was surrendered in August 2003, as required by a condition of the 2003 development consent. Later, on 25 August 2003, the applicant amended to add a challenge to the invalidity of the 2003 development consent but continued to seek a declaration of invalidity in relation to the 2002 development consent. Council in its Points of Defence to Amended Points of Claim filed in November 2003 contended that the challenge to the validity of the 2002 consent was of no utility. In some written submissions dated 17 December 2003 council explained the continuing relevance of the validity of the 2002 consent on the basis that, in considering the 2003 development application, council had regard to the 2002 development consent which was an irrelevant consideration because it was invalid. The applicant amended on a number of further occasions.

7 A liquidator was appointed to Arinson on 8 March 2004. Arinson filed a submitting appearance on 12 October 2006. In early July 2006 Omaya were joined as respondents in the context of a successful motion by the applicant to restrain them from demolishing houses on certain of the subject properties. Omaya filed a submitting appearance on 3 October 2006.

8 In Further Amended Points of Claim filed on 28 July 2006, the alleged invalidity of the 2002 development consent was linked to the invalidity of the 2003 development consent by pleading as a ground of invalidity of the 2003 development consent that, in determining it, council had regard to the 2002 development consent which was an irrelevant consideration because it was invalid. In September 2006 a Further Amended Application was filed which sought an order that the Register under the Real Property Act 1900 be rectified to show council as registered proprietor of Chapman Reserve. On 27 September 2006 council filed Points of Defence in which it denied the applicant’s allegation that the 2003 development had not been advertised in the manner required by the regulations for advertised development. On 20 October 2006 council made an offer to settle.

9 The hearing dates were fixed for 25, 26 and 27 October 2006. They proved to be insufficient and the hearing continued on 7 and 8 March 2007. On the first day of the hearing (a) council filed an amended defence which conceded that the 2003 development consent was invalid for failure to comply with the advertising requirements; (b) the applicant acknowledged that there was no utility in pressing for relief in relation to the 2002 development consent which had been surrendered; (c) the applicant amended its Application to join the Registrar-General as a respondent; and (d) that morning, the hearing was adjourned until next day in order to permit the Registrar-General to be served and to appear.

10 The applicant continued to press other grounds of alleged invalidity of the 2003 development consent (additional to the advertising ground which council had conceded) until, on the fourth day of the hearing, I ruled that there was insufficient utility in it further doing so: F & D Bonaccorso Pty Ltd v Canada Bay City Council [2007] NSWLEC 233.

RELEVANT costs principles

11 As a general rule, a successful party is prima facie entitled to its costs unless it has engaged in disentitling conduct as a litigant: Cutcliffe v Lithgow City Council (2006) 147 LGERA 330 at 335 [13] citing Oshlack v Richmond River Council (1998) 193 CLR 72 at 88, 97 – 98 and Latoudis v Casey (1990) 170 CLR 534 at 567.

12 In order to award costs on an indemnity basis, there has to be sufficient special or unusual circumstance in the case justifying such an award. In Harrison v Schipp [2001] NSWCA 13 at [139] Giles JA (Handley and Fitzgerald JJA agreeing) said: “Departure from the settled practice of costs on a party and party basis is discretionary, and beyond the need for a sufficient special or unusual feature in the case no fixed rule can be laid down. Some of the matters thought to justify it are collected by Sheppard J in Colgate-Palmolive Pty Ltd v Cussons (1993) 46 FCR 225 at 233-4” (emphasis added).

13 Similarly, in Mead v Watson as Liquidator for Hypec Electronics (2005) 23 ACLC 718, [2005] NSWCA 133 at [8] – [10] Sheller, Ipp and Tobias JJA said in their joint judgment:

The primary judge set out these principles in [40]-[46] inclusive of the costs judgment and there is no challenge to their accuracy. In summary, although the discretion to award indemnity costs is absolute and unfettered, it must be exercised judicially in the sense that there is some special or unusual feature in the case justifying such an award . Thus, for instance and relevantly, the discretion is enlivened where a party persists in what should have been seen to be a hopeless case .

Furthermore, the impugned conduct of the party against whom such an award of indemnity costs is sought must be connected with the litigation itself. In particular, it must be related to the way the litigation is conducted. It is thus insufficient that the party against whom the award is sought has engaged in unconscionable conduct or breaches of fiduciary duty in a particularly deplorable way. The latter conduct comprises the subject matter of the litigation rather than a delinquency in its conduct. Thus, as Lindgren J observed in NMFM Property Pty Limited v Citibank Limited (No 11) (2001) 109 FCR 77 at 92,
In my opinion, there is no counterpart ordinary rule that in the absence of special circumstances indemnity costs will be ordered where the losing party was guilty of ethical or moral delinquency in the antecedent facts which have given rise to the litigation. … The conduct of the party that is relevant to the issue of indemnity costs is the party's conduct as litigant .

It follows from the foregoing, and the primary judge acknowledged, that indemnity costs could only be awarded in the costs proceedings if there was found to be inappropriate conduct on the part of Hypec or Mr Watson in the conduct of the litigation itself.
(emphasis added)

14 In Rosniak v Government Insurance Office (1997) 41 NSWLR 608 at 615 Mason P (Clarke AJA agreeing) referred to the case as one where the trial judge had held “this was a case where the plaintiff, properly advised, should have known that she had no chance of success on the [particular] issue”. After referring to several authorities, Mason P said 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 …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.
(emphasis added)

15 Costs may be apportioned where there are multiple issues involved and the successful applicant fails on a particular issue or group of issues which is clearly dominant or separable. The apportionment principles are conveniently stated by the Court of Appeal in James v Surf Road Nominees Pty Ltd [No 2] [2005] NSWCA 296 at [32] – [36] (applied by the Court of Appeal in Roads and Traffic Authority (NSW) v McGregor (No 2) [2005] NSWCA 453 at [17]):

32. The effect of Pt 52A r.11 is that an unsuccessful party may be ordered to pay the entirety of the costs of the successful party, even though the successful party did not succeed on all issues. However, as is specified by the rule itself, the Court is entitled to make a different order. That may occur where there are multiple issues involved. This was the subject of comment in Waters v. P C Henderson (Aust) Pty. Limited (unreported CA(NSW) Kirby P, Mahoney and Priestley JJA, 6 July 1994) where Mahoney JA said:
Where the proceedings involve multiple issues the application of the rule that costs follow the event may involve hardship where a party succeeds on some issues and yet fails on others. Particularly is this so where, for example, a defendant succeeds on issues that occupied the bulk of the time taken by the proceedings. Nevertheless, unless a particular issue or group of issues is clearly dominant or separable, it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed.

33. Similarly, Toohey J made the following observations in Hughes v Western Australian Cricket Association (1986) ATPR 40-748:
1. Ordinarily, costs follow the event and a successful litigant receives his costs in the absence of special circumstances justifying some other order.
2. Where a litigant has succeeded only upon a portion of his claim, the circumstances may make it reasonable that he bear the expense of litigating that portion upon which he has failed.
3. A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the party’s costs of them. In this sense, issue does not mean a precise issue in the technical pleading sense but any disputed question of fact or of law. (references omitted)


34. Where a matter involves multiple issues and the question before the court is whether it should make some other order as to costs other than the order that costs follow the event, a distinction is commonly drawn between cases which involve clearly discrete issues for determination, and those in which all issues are inseparable, or at least sufficiently linked, with respect to the overall disposition of a particular matter. In Permanent Trustee Aust Ltd v FAI General Insurance Co Ltd (unreported, NSWSC, 3 June 1998), Hodgson CJ in Eq noted that the obvious examples of a matter involving discrete issues is one where a plaintiff makes separate claims for different relief, or a claim by a plaintiff and a cross-claim by a defendant. Another example is where a respondent is successful in having an appeal against an earlier decision dismissed, but for reasons other than those raised in the respondent’s Notice of Contention. This is not to say that so-called discrete issues , for the purposes of apportioning costs, only exist in cases where there are separate claims made within a single matter. As Toohey J stated in the passage quoted at [33] above, it can relate to any disputed question of fact or law before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter.

35. In Madden v Connell [2001] NSWSC 1051, Hamilton J referred to there being a rule that where there are discrete issues and the time taken on each issue at the hearing can be identified or realistically estimated , an order for costs may be made against the party which fails on such issues, or alternatively, that party may be deprived of its costs for that portion of the matter. In the Court’s opinion it is preferable not to speak in terms of rules . However, the underlying approach to the rule stated by his Honour may be an available approach to the exercise of the court’s discretion as to costs in a particular case, depending upon all of the circumstances.

36. Where the court does exercise its discretion to apportion costs, the apportionment itself involves the exercise of discretion. As Gummow, French and Hill JJ recognised in Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261:

Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion for the trial judge. Mathematical precision is illusory and the exercise of the discretion will often depend upon matters of impression and evaluation.

16 When considering apportionment of costs, a balance has to be maintained between not discouraging litigants from canvassing all material issues and not rewarding them for unreasonable conduct in the pursuit of issues. In GPT Re Ltd v Wollongong City Council (2006) 151 LGERA 174 at 178 [9] I said:

[9] The three principles enunciated by Toohey J in Hughes were cited by the Full Federal Court in Dodds Family Investments Pty Ltd (formerly Solar Tint Pty Ltd) v Lane Industries Pty Ltd (1993) 26 IPR 261 at 271:
The propositions enunciated in that case are subject to the further consideration that justice may not be served if parties are dissuaded by the risk of costs from canvassing all issues that might be material to the decision in the case: Cretazzo v Lombardi (1975) 13 SASR 4 at 12. In Trade Practices Commission v Nicholas Enterprises Pty Ltd (No 3) (1979) 42 FLR 213; 28 ALR 201, Fisher J regarded the discretion to apportion costs as one to be exercised only in the most exceptional circumstances. Nevertheless he accepted that where a considerable part of the trial is taken up in determining issues upon which a party fails, it is a proper exercise of the discretion to reduce the costs allowed to that party. Generally speaking, and notwithstanding the considerations referred to by Toohey J and the other authorities mentioned above, the demands of the community for greater economy and efficiency in the conduct of litigation may properly be reflected in a qualification of the presumption that a successful party is entitled to all its costs.

17 Similarly, in Stena Rederi Aktiebolag v Austal Ships Sales Pty Ltd [2007] FCA 1141 at [12] Tamberlin J commented that: ”When apportioning costs, however, a Court should be mindful not to discourage litigants from canvassing all material issues for fear of an adverse costs order…Equally, litigants should not be rewarded for the injudicious pursuit of issues without substance”.

COSTS ORDERS SOUGHT BY COUNCIL AGAINST APPLICANT

18 It is convenient to address first the orders sought by the council set out earlier at [3].

Did the applicant behave unreasonably in sustaining a challenge to the 2002 development consent after it had been surrendered on 7 August 2003?

19 Council seeks an order that the applicant pay, on an indemnity basis, council’s costs incurred on or after 25 August 2003 as they relate to the challenge to the validity of the 2002 development consent. Council submits that this order should be made because the applicant behaved unreasonably from that date in maintaining a challenge to the 2002 development consent after it had been surrendered on 7 August 2003. The council continued to incur costs in relation to the production of documents and preparing a defence with respect to the claims pressed by the applicant relating to the 2002 development consent.

20 Council selects 25 August 2003 as the relevant date because that was the date that the applicant filed an amended application challenging the validity of the 2003 development consent but maintaining its challenge to the validity of the 2002 development consent following its surrender earlier that month. The history of that matter has been recounted above at [6].

21 On 28 July 2006 the applicant filed Further Amended Points of Claim addressing in some detail the various bases on which the 2002 development consent was said to be invalid. In addition, the applicant linked the alleged invalidity of the 2002 development consent to the validity of the 2003 development consent in paragraphs 85 and 86 of that pleading as follows:

85. In its determination of the 2003 DA the Council had regard to the consent issued for the 2002 DA.

86. As the consent to the 2002 DA was invalidly issued and of no force and effect, its issuing and the contents of that consent were an irrelevant consideration and the Council should have had no regard to it.

22 The applicant’s Third Further Amended Points of Claim filed on 20 October 2006 maintained the challenge to the validity of the 2002 development consent and, in paragraphs 116 and 117, repeated the allegations in paragraphs 85 and 86 of its previous pleading.

23 On the first day of the hearing, 25 October 2006, senior counsel for the applicant, in his opening oral address, referred to the Second Further Amended Application filed that day:

Your Honour can see that para 1 asks a declaration in relation to the development consent of December, 2002. Your Honour would not we think make that declaration because it would utterly lack utility if for no other reason that that, as is common ground, that development consent has been surrendered. So no issue about that.

24 Council submits that the applicant thereby abandoned its challenge to the validity of the 2002 development application and that it should have done so by 25 August 2003. If that were so in all respects and there were no other considerations, I would be inclined to the view that council should have its costs of that issue after 25 August 2003. It has been said that once a development consent has been surrendered, any question as to the validity of the consent is rendered “academic and of no utility”: Hayden Theatres Pty Ltd v Penrith City Council (1999) 105 LGERA 230 at 231.

25 However, there are other considerations. In the applicant’s written submissions dated 25 October 2006, the first day of the hearing, after noting that the 2002 consent had been formally surrendered, the following appears: “In anticipation therefore that it will not be in dispute at the hearing that the consent to the 2002 DA is now no longer of any effect, the relevance of the challenge to that consent is now limited to the extent to which it was relied upon in the consent to the 2003 DA”. This is consistent with maintaining reliance on the matters pleaded in paragraphs 116 and 117 of the applicant’s pleading. Furthermore, early in his opening oral address on the same day, senior counsel for the applicant said in relation to the 2002 development consent that “it has in fact ceased to be of particular relevance, it having been surrendered some little time ago although its circumstances and the processes which it generated have some residual background significance for the present application”. The applicant now relies upon that statement for the submission that it did not abandon its claim relating to the 2002 development consent and that it continued to rely upon council’s errors relating to that consent in relation to the making of the 2003 development consent. The applicant draws attention to paragraphs 116 to 117 of its pleading linking the alleged invalidity of the 2003 development consent to the invalidity of the 2002 development consent. The applicant’s counsel inform the Court, in their written submissions, that the applicant had intended to rely upon the evidence in respect of the 2002 development consent in its challenge to the 2003 development consent but that due to the council’s late concession that the 2003 development consent was invalid, this was not necessary.

26 At the hearing the applicant continued to press other grounds of challenge to the 2003 development consent. When the applicant filed written submissions on 6 March 2007 for the resumed hearing, there was no reference to the allegations in paragraphs 116 and 117 of its pleading. The grounds of invalidity which the applicant pressed, apart from the advertising ground, were not resolved because, as stated earlier, I decided on the fourth day of the hearing that there was insufficient utility in the applicant further agitating additional grounds of invalidity.

27 In my view, it was not unreasonable for the applicant to maintain a claim of invalidity of the 2002 development consent in the context of paragraphs 116 and 117 of its pleading, notwithstanding that otherwise there would have been no utility in doing so after it had been surrendered. What happened to the claim in that context at the hearing is not crystal clear. I have concluded that although it was pressed in the applicant’s written submissions of 25 October 2006, it was not pressed at the hearing. Reference to the 2002 development consent at the hearing was consistent with it being treated as only of “residual background significance”, as senior counsel for the applicant put it in his opening address. Significantly, the applicant’s counsel, in their submissions on this costs application, assure the Court that the applicant had intended to rely upon the evidence concerning the 2002 development consent in its challenge to the 2003 development consent, but that this was unnecessary due to council’s late concession that the 2003 development consent was invalid.

28 In those circumstances, I am not persuaded that there should be any departure from the usual order for costs by reason of the 2002 development consent validity issue.

29 Council submits that the applicant behaved unreasonably by unnecessarily prolonging the proceedings in respect of the challenge to the 2003 development consent. It therefore submits that the following costs orders should be made:

(a) that the respondents pay, on a party/party basis, the applicant’s costs as they relate to the challenge to the validity of the 2003 development consent and Chapman Reserve, save that the applicant is not entitled to its costs incurred after 20 October 2006 relating to the challenge to the validity of the 2003 development consent; and
(b) that the applicant pay the first respondent’s costs on a party/party basis to the extent that those costs relate to the challenge to the validity of the 2003 development consent after 20 October 2006.

30 The applicant succeeded in obtaining a declaration that the 2003 development consent was invalid and an order setting that consent aside. Council’s submission is that the applicant behaved unreasonably by prolonging the proceedings and agitating various grounds of review after 20 October 2006 when council, according to its submission, conceded that the 2003 development consent was invalid or made a settlement offer to that effect. On that date council’s solicitors wrote a letter to the applicant’s solicitors making a settlement offer which relevantly stated:

The First Respondent proposes the following settlement offer for consideration by your client:

1. Council will not contest the challenge to the validity of the development consent granted in respect of DA336/03. If the applicant files a second further amended application seeking an order quashing the development consent granted in respect of DA336/03, Council will consent to such an order;

2. The application should otherwise be dismissed, with no order as to costs.

The First Respondent considers it necessary that the Applicant file a second Further Amended Application, as the court would not likely grant declaratory relief in respect of the validity of the development consent based only on the content of the parties. Accordingly, it is necessary to amend the application to include an order quashing the development consent.

The remainder of the application should be dismissed on the basis that the Applicant’s challenge to the 2002 consent is of no utility as that consent has been surrendered. The claims made in relation to Chapman Reserve lack a sufficient evidentiary basis to persuade the court to make the orders in relation thereto. In any event, the Applicant seeks to obtain relief in relation to Chapman Reserve only for the purpose of challenging the 2003 development consent and the First Respondent consents to the quashing of that consent, in accordance with the terms of this offer.

This offer represents a reasonable settlement of the proceedings, is made in accordance with the principles of Calderbank v Calderbank and may be relied upon by the First Respondent in relation to an application for costs, whether on a party/party or indemnity basis.

31 On the same date the applicant’s solicitors replied stating:

In order that we may obtain instructions from our client as to the matters raised in your facsimile, please advise as a matter of urgency whether the Council now concedes that the consent to DA 336/03 is invalid.

As our client’s Counsel and Senior Counsel expect to put considerable preparatory work into this matter over the weekend a prompt response may well avoid considerable expense. Any delay in replying to this facsimile will of course be relevant to the costs of the proceedings.

32 On the same date the council’s solicitors replied, stating:

The First Respondent will consent to an order quashing the 2003 development consent on the basis that it was not validly granted.

Please provide the Applicant’s response to our offer of even date by close of business today, as the First Respondent continues to incur costs in relation to the other matters raised in the Applicant’s claim. Any delay in the Applicant’s response to our offer will, of course, be relevant to the court’s consideration of an application relating to costs of the proceedings.

33 On the first day of the hearing, 25 October 2006, council filed Points of Defence in which it admitted that the 2003 development consent was invalid on the advertising ground. It did not plead to the other grounds.

34 The letters from council’s solicitors evidence, in my view, a settlement offer rather than an unconditional and unambiguous concession that the development consent was invalid. Council submits that it was unreasonable of the applicant not to accept the settlement offer in circumstances where, it says, the applicant did not obtain better relief in the proceedings, and that therefore council should be awarded indemnity costs: Oshlack at 98 [69]. I do not accept the submission for two reasons. First, it was a term of the settlement offer that the applicant abandon its other claims, including the claim in relation to Chapman Reserve – on which the applicant ultimately succeeded. It is therefore incorrect to say that the applicant did not obtain better relief in the proceedings. Second, the applicant was not entitled to declaratory or other relief going to the validity of the 2003 development consent merely because the council surrendered in relation to one of the grounds of invalidity. It was still necessary for the applicant to satisfy the Court, by evidence and argument, that their complaints should be upheld and relief granted: see Cutcliffe v Lithgow City Council (2006) 147 LGERA 330 at 336 [18] where the authorities are reviewed. In my opinion, in the circumstances it was not unreasonable for the applicant to have proceeded as it did.

Costs thrown away by late addition of Registrar-General as a party

35 On the first day of the hearing the applicant sought and obtained leave to file a Second Further Amended Application which, inter alia, joined the Registrar-General as a respondent. This was necessary because the applicant sought (and had sought since its Further Amended Application filed on 5 September 2006) an order “that the Register be rectified to show the First Respondent as the registered proprietor of the lots comprising Chapman Reserve”. The late application to join the Registrar-General occasioned an adjournment on the first day of the hearing until the next day. The council seeks an order that the applicant pay council’s costs thrown away as a result of the late addition of the Registrar-General as a party to the proceedings. This was, properly, acknowledged by council to be a relatively minor matter in terms of quantum of costs.

36 The applicant submitted that no such costs order should be made because council made no reference to non-joinder of the Registrar-General in its Points of Defence and that in any event the hearing would not have finished in the three days allocated to it in October 2006 as it required two full additional days in March 2007 to complete. These facts are correct but I do not accept they inevitably lead to the conclusion that no such costs order should be made. The Registrar-General was a necessary party to the proceedings and should have been joined in a timely way. The applicant’s oversight in that regard necessitated an adjournment on the morning of the first hearing day until the second hearing day. If there were costs thrown away as a result then, in my view, prima facie the applicant should pay them.

37 However, that is not an end to the matter. The council did not produce, until the second and third day of the hearing, a substantial number of documents in relation to the Chapman Reserve issue, including the contract for the sale of Chapman Reserve, which it should have produced much earlier in response to the applicant’s repeated attempts. The applicant submits that an adjournment of the October hearing would have been necessary anyway to permit them to consider those documents if the case could otherwise have concluded in the three days allocated in October (which it could not). As I understand it, this was put forward as an offsetting consideration against the proposition that the applicant should pay any costs thrown away occasioned by the adjournment resulting from the joinder of the Registrar-General. I accept the submission. On balance, I think that the two events should be viewed as substantially offsetting so as to result in no order for costs against the applicant in relation to late joinder of the Registrar-General.

38 I turn now to the applicant’s costs claim set out earlier at [2]. The applicant claims indemnity costs in relation to:

(a) declaration 1 and order 1 (being the relief relating to the invalidity of the 2003 development consent) incurred after 27 September 2006; and
(b) the preparation of evidence from 5 December 2006 and argument that Chapman Reserve was a public reserve within the meaning of the Local Government Act 1993 as at 1 July 1993.

Indemnity costs regarding declaration 1 and order 1 (relief regarding invalidity of 2003 Development consent) incurred after 27 September 2006

39 The applicant submits that indemnity costs should be awarded in its favour against council from 27 September 2006 in relation to this invalidity issue because that was the date that council filed Points of Defence in which it denied the applicant’s allegation that the 2003 development had not been advertised in the manner required by the regulations for advertised development. The applicant submits that council, if properly advised, should have known that it had no chance of success in relation to that defence because there was no question that the approved development proposed was advertised development. That is because it included the demolition of two heritage items for which no previous consent had been obtained: cl 15 of council’s own Local Environmental Plan 103 (Heritage). The applicant contends that all council had to do was check whether a notice had been placed in the local newspaper as required. The applicant points to the admission made by the council in its Amended Defence filed on the first day of the hearing that the 2003 development consent was invalid because of failure to meet the advertising requirement.

40 The period in question is between 27 September and 25 October 2006. Although it was unreasonable, in my view, for council not to concede the advertising point in its Points of Defence of 27 September 2006, I consider that it would have made no significant difference to the applicant’s conduct of the case or costs incurred. That is because the applicant, at both the October 2006 and March 2007 tranches of hearing, elected to press other grounds of alleged invalidity notwithstanding council’s late admission of invalidity on the advertising ground and because the Court still had to be satisfied by evidence and submissions that the advertising ground, which was a short point, was sound. I am not persuaded that, in the circumstances, it is appropriate to order indemnity costs as sought by the applicant in relation to this issue.

Chapman Reserve

41 The applicant seeks an order for indemnity costs against the council in relation to the applicant being put to proof that Chapman Reserve was a public park from 5 December 2006. That date is selected by the applicant because it was the date that the applicant’s solicitors set out, in a letter to council’s solicitors, a list of facts in relation to the park which, according to the applicant’s submission, were incontrovertible. From that date, the applicant submits, the council, properly advised, could only reasonably have made the concession sought. The applicant had earlier sought a concession from council that Chapman Reserve was a public reserve on 11 September and 17 October 2006 but received no response. The applicant says that it was put to additional expense after 5 December 2006 in preparing a third volume of a tender bundle in relation to the Chapman Reserve issue, preparing two affidavits and adducing oral evidence. The applicant explains that the bulk of the documents filed in relation to Chapman Reserve were only produced by council in the two volume tender bundle made available on the second day of the hearing despite earlier attempts by the applicant to obtain such documents.

42 I do not accept that council, in defending this issue after 5 December 2006, engaged in unreasonable conduct that would justify an award of indemnity costs. The fact that the applicant was successful on the issue does not demonstrate that council behaved unreasonably. I do not consider that the position taken by council in relation to Chapman Park was patently hopeless, doomed to fail or otherwise such as to attract an order for indemnity costs.

Applicant’s claim for costs against council for whole of proceedings

43 The applicant claims costs against the council for the whole of the proceedings. The council submits that there should be excepted from such an order the applicant’s costs of obtaining an injunction against the second, third and fourth respondents to prevent works to demolish heritage items on the site. Council points to the fact that in the applicant’s notice of motion seeking the injunction and in the notice of motion as amended from time to time, the applicant never sought costs against the council but only against other respondents. In oral submissions the applicant conceded this point. It seems that this was understood by council to be conceded from the outset because council in its written submissions noted that it appeared that the applicant, properly, did not seek to recover those costs from council. Accordingly, when making an order that the council pay the applicant’s costs for the proceedings, I propose to make an exception in relation to the costs of obtaining the injunctions.

COSTS ORDER SOUGHT BY APPLICANT AGAINST ARInSON

44 The applicant seeks an order for costs against Arinson of obtaining declaration 1 and order 1 up until the date a liquidator was appointed to Arinson on 8 March 2004. Arinson was not represented at the trial on the costs hearing.

45 Arinson filed Points of Defence to the applicant’s claim as it related to the 2002 development consent in April 2003. On 1 July 2003 council granted the 2003 development consent. It was a condition of that consent that Arinson surrender the 2002 development consent which it did on 7 August 2003. The applicant claim against Arinson on the basis, as I understand it, that the Court should be satisfied that the 2002 consent was invalidly granted. In my view, it is quite inappropriate to embark on an inquiry as to the validity of the 2002 development consent on a costs application particularly when no relief in respect of that issue was pressed nor was the issue determined in the substantive proceedings. I reject this costs claim.

COSTS ORDER SOUGHT BY APPLICANT against omaya

46 The applicant claims costs against the Omaya respondents of obtaining declaration 1 and order 1 from 6 July 2006 up until the date they filed a submitting appearance in the proceedings on 3 October 2006.

47 Omaya filed an earlier appearance on 11 July 2006 but did not file a Defence and did not actively defend the proceedings. In the relatively short period between being joined as parties and submitting, Omaya did take the following steps in the proceedings which, in my view, do not now attract any costs order:

(a) on 31 July 2006 Omaya filed a notice of motion seeking security for costs from the applicant in response to which the applicant filed evidence and submissions. Omaya did not press the motion. On 31 August 2007 the Court ordered that there will be no order as to the costs of the motion;
(b) Omaya by letter dated 16 August 2006 indicated that it would oppose the extension of the interlocutory injunction. However, it did not in fact do so;
(c) Omaya received notices to produce from the applicant and there were discussions or disputation as to whether they had produced all documents required to be produced or whether the notices to produce were too wide. Ultimately that was resolved by orders made by the Court on 29 August 2006. I am unable to conclude, on the material before me, that any costs order should be made in relation to the notices to produce.

48 The applicant mentions the fact that Omaya registered the transfer of 17 and 19 Chapman Strathfield in the middle of the proceedings in circumstances in which they knew that the applicant was asserting that Chapman Reserve was community land. As such conduct was outside the litigation itself, I doubt that that is relevant to costs: see Mead quoted above at [13]. In any event, I do not consider it to weigh in favour of the costs order that is sought.

49 The costs of the applicant’s notice of motion seeking the injunction against Omaya were reserved. The applicant now claims from Omaya its costs of obtaining that injunction. Omaya were joined as respondents as a result of carrying out demolition works in reliance upon the 2003 development consent, which council subsequently conceded to be invalid, and in the context of the applicant seeking and obtaining an injunction to restrain them from carrying out such work. The issues relating to such demolition works were, in effect, transferred to be determined with proceedings No 40171 of 2007 in which the applicant claimed that a development consent granted by council in February 2007 was invalid. Omaya submits that all relevant breaches of law as determined by the Court in these proceedings were breaches by the council and not by Omaya and that, as such, no order for costs should be made against them.

50 In my view, in the circumstances, no order for costs should be made against Omaya in these proceedings. However, the costs of the applicant’s notice of motion for an injunction against Omaya, which have been reserved, should be determined in the 2007 proceedings to which they have been effectively transferred. I recently delivered judgment in those proceedings but the final form of relief and costs have not yet been determined: F & D Bonnaccorso Pty Ltd v City of Canada Bay Council (No 2) [2007] NSWLEC 537.

Previous Costs Orders

51 The applicant has already been ordered to pay council’s costs thrown away by reason of amendment to the applicant’s pleadings for which leave was granted on 23 August 2006. Council submits that any wider order for costs should be made subject to this order. This is unnecessary , in my view, because I do not propose to vacate any earlier costs orders. Therefore they continue in force and are unaffected by the costs orders that I propose to make.

COSTS OF THE COSTS APPLICATIONS

52 Overall, in my view, the various contests in relation to costs have broadly resulted in a draw as between the parties represented at the costs hearing. Accordingly, I propose to make no order as to costs in relation to the costs applications.

53 The Court makes the following costs orders:

1. The first respondent is to pay the applicant’s costs of the proceedings as agreed or assessed with the exception of the applicant’s costs of obtaining injunctions against the second, third and fourth respondents.
2. The issue of the applicant’s costs of obtaining injunctions against the third and fourth respondents is to be determined in proceedings No 40171 of 2007.
3. No order as to the costs of the costs applications.
4. The exhibits may be returned.