Halliday v Filmlock Pty Limited

[2007] NSWLEC 477

Land and Environment Court

of New South Wales

CITATION:

Halliday v Filmlock Pty Limited and Ors [2007] NSWLEC 477

PARTIES:

APPLICANT
Austin Michael Halliday

FIRST RESPONDENT
Filmlock Pty Limited

SECOND RESPONDENT
Jakesam Developments Pty Limited

THIRD RESPONDENT
Andcorp Pty Limited

FOURTH RESPONDENT
JGT Investments Pty Limited

FIFTH RESPONDENT
Gosford City Council

SIXTH RESPONDENT
John Robar Boring Contractors Pty Limited

FILE NUMBER(S):

40159 of 2006

CORAM:

Pain J

KEY ISSUES:

Costs :- civil enforcement - extra-curial settlement - no hearing on merits - each party ordered to pay its own costs

LEGISLATION CITED:

Land and Environment Court Rules 1996 Pt 15 r 7
Land and Environment Court Act 1979 s 69

CASES CITED:

Belmore Residents’ Action Group Inc v Canterbury City Council (2006) 147 LGERA 226;
Centro Properties Pty Limited v Hurstville City Council and Ors [2006] NSWLEC 78;
Cutcliffe & Anor v Lithgow City Council & Ors (2006) 147 LGERA 330;
Hayden Theatres v Penrith Council (1999) 105 LGERA 230;
Kiama Council v Grant (2006) 143 LGERA 441;
One.Tel Ltd & Ors v Commissioner of Taxation (2000) 101 FCR 548;
Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia and Anor; Ex Parte Lai Quin (1997) 186 CLR 622

DATES OF HEARING:

26 July 2007

EX TEMPORE JUDGMENT DATE:

26 July 2007

LEGAL REPRESENTATIVES:

APPLICANT
S Berveling
SOLICITOR
Conditsis & Associates

FIRST, SECOND, THIRD AND FOURTH RESPONDENTS
A Pickles
SOLICITOR
Kernans Lawyers

FIFTH RESPONDENT
M Fraser
SOLICITOR
PJ Donnellan & Co

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

Pain J

26 July 2007

40159 of 2006 Halliday v Filmlock Pty Limited and Ors

EX TEMPORE JUDGMENT

1 Her Honour: The Applicant commenced Class 4 proceedings seeking the declaration of invalidity of a development consent issued by the Council and an order restraining use of that consent. Points of Claim and defences were filed, affidavits filed and hearing dates were allocated on 8 and 9 March 2007. These were vacated by consent on 28 February 2007. No further order was made and the Applicant has not filed a notice of discontinuance. The Applicant seeks his costs today and otherwise states that as he does not wish to proceed with the matter it can be dismissed. The Council has also filed a “defensive” motion seeking an order that its costs be paid.

2 The Applicant relied on two affidavits of Mr Dawson and the exhibits to those were tendered. An extensive history of the matter and relevant documents were referred to and are reflected in the chronology in the Applicant’s counsel’s submissions at par 3 which appears below, adding that there was a Deed entered into by the Applicant and the First, Second Third and Fourth Respondents in February 2007.

Date	Event
11 May 2005	The Council received Development Application No. 27526 of 2005 (‘the First DA’) for a residential flat building
1 November 2005	The First DA was the subject of a Report to the Council (‘the First Report’). The First Report recommended approval of the First DA subject to conditions, including a deferred commencement condition
8 November 2005	The Council grants consent subject to conditions (“the First Consent”).
1 March 2006	The Applicant filed an Application Class 4 dated 28 February 2006 seeking a Declaration and Orders
30 November 2006	The Applicant’s solicitors sent letters to the respondents’ solicitors, namely Kernans Lawyers and P J Donnellan & Co.
1 December 2006	The Council’s solicitors P J Donnellan & Co, Solicitors sent a letter to the Applicant’s solicitors
11 December 2006	The Council received Development Application No. 31949 of 2006 (‘the Second DA’) for an amended development which exhibited certain essential features arising from the negotiations and agreement between the Applicant and 1st-4th Respondents
18 January 2007	The Applicant’s solicitors sent “Without Prejudice Except As to Costs” letters to the Respondents’ respective solicitors Kernans Lawyers and to P J Donnellan & Co
19 January 2007	The Council’s solicitors sent a “Without Prejudice Except As to Costs” letter to the Applicant’s solicitors
February 2007	Deed between Applicant and 1st – 4th Respondents
20 March 2007	The Council’s Development Assessment Unit considered a Report to it regarding the Second DA (‘the Second Report’) and granted deferred commencement consent (“the Second Consent”).

3 Parts of the deed were relied on in submissions as follows:

…
2.2 If, and only if, the Respondents in the Proceedings agree to pay his costs, Halliday will discontinue or otherwise dispose of the Proceedings within seven (7) days of the Owners and the Owners’ Directors providing written evidence of the surrender of the Consent pursuant to clause 2.1 hereof.
2.3 In the event that the Respondents in the Proceedings do not agree to pay his costs, Halliday will, together with the Owners and the Owners’ Directors, advise the Court, that, save for the question of costs (upon which question each party hereto reserves their position), the need for the declaration in the Proceedings has been resolved by the granting of development consent to the Second DA, but the parties wish to argue the question of costs of the Proceedings.

4 The Council planning report of March 2007 states in part that:

Under the heading “Background” to the March 2007 Report, the following is recorded by the officer preparing the report:

1. DA27526/2005, being an application on the subject site was approved by Council on 11/11/05. Two objections … were received.

2. … although listed for hearing by the Court, the main reason for the Class 4 action was a belief by the objector that the proposal provided unreasonable view impact on his property…

…

6. The previous objector who has lodged the Class 4 action in the LEC and the Applicant have now come to an agreement regarding an acceptable design and the plan submitted under this new DAA 31949/06 is the result of that agreement.

7. The current proposal, which differs from the approved DA27526/05 in that it is the same building albeit approximately 1.3 metres lower in height is now the subject of this assessment.

On page 6 of the report, the officer continued:

As part of an agreement with the adjoining owner, the original proposal, approved as DA27526/05 has been amended in accordance with the requirements of the owner of No 8 Barnhill Rd such that minimal view impact will occur to No 8 Barnhill Rd. As stated in the LEC planning principle on view loss, an expectation of retention of such views across other properties is often unrealistic. Notwithstanding that retention of the views from No 8 Barnhill Rd is an unrealistic expectation, the Applicant has amended the proposal such that a substantial part of the currently available view is retained.

With regard to the above it is considered that the original proposal (DA27526/05) involving some view loss to No 8 Barnhill Road was reasonable. The current proposal is to be commended as is the Applicant in proposing a scheme that retains views to a property located in such a position where retention of views would be considered unrealistic.

5 The Council relied on an affidavit of Mr Dobbs, Council officer dated 21 June 2007, concerning the application of the draft SEPP 1.

6 As identified in the Council planning report, there has been a settlement as between the First, Second, Third and Fourth Respondents and the Applicant, whereby the development consent the subject of the proceedings has been surrendered. The Council has issued development consent to the First, Second, Third and Fourth Respondents for a second application which is for a building 1.3m lower than the development consent the subject of these proceedings.

Applicant’s submissions

7 The Applicant argues he should have his costs on three bases:

(i) there has been an effective surrender by the Respondents to the Applicant see [80(a)] of Kiama Council v Grant (2006) 143 LGERA 441 (although noting the circumstances in (i), (ii) do not exist here). The First, Second, Third and Fourth Respondents lodged the second development application with the Council, surrendered the first development application to the Council as agreed in the Deed dated 12 February 2007, and as part of the requirements of the second development consent conditions imposed by the Council
(ii) Part 15 r 7 of the Land and Environment Court Rules 1996 (the Court Rules) applies as the First, Second, Third and Fourth Respondents satisfied, or caused to be satisfied, the Applicant’s claim
(iii) the Applicant was certain to succeed on the Council’s failure to consider draft SEPP 1 issue raised at par 15 of the Further Amended Points of Claim given that there is clear evidence from the Council that it was not considered, relying on Centro Properties Pty Limited v Hurstville City Council and Ors [2006] NSWLEC 78, Belmore Residents’Action Group Inc v Canterbury City Council (2006) 147 LGERA 226.

Council’s submissions

8 Firstly, there should be no order as to costs, relying on [37] of Kiama Council v Grant, particularly Hayden Theatres v Penrith Council (1999) 105 LGERA 230. Where some “supervening event or settlement so removes or modifies the subject of the dispute” and it cannot be said that one party has “simply won”, the issue of costs “often creates problems since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs”: One.Tel Ltd & Ors v Commissioner of Taxation (2000) 101 FCR 548 at [6] to [7]. This matter is indistinguishable from the decision of Bignold J in Hayden Theatres v Penrith City Council, particularly his reasoning on the application of Pt 15 r 7 at 234-235. Applying that decision to the facts of this case suggests that no order for costs ought be made. What has occurred is an extra-curial settlement which has resulted in the subject matter of the proceedings no longer being in existence.

9 Secondly, on the basis of the Applicant’s pleadings, it could not be concluded that one party was almost certain to have succeeded if the matter had been fully tried. In such circumstances, the Court might exercise its discretion under s 69 of the Land and Environment Court Act 1979 (the Court Act) to make an order for costs where there is an obvious outcome “but such cases are likely to be rare”: McHugh J in Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia and Anor; Ex Parte Lai Quin (1997) 186 CLR 622 at 624-626. The result of the failure to consider the draft SEPP ground was not certain, contrary to the Applicant’s argument.

10 Thirdly, in the alternative the Council’s costs ought be paid because by commencing these proceedings the Applicant was really seeking to prevent view loss and has achieved that through the extra-curial settlement of the matter. The second development consent is for a building that is 1.3 metres lower.

11 The principles elucidated by McHugh J in Lai Qin at 624 are cited by Preston J in Kiama Council v Grant at 452. The predication of those principles is that they are principles:

which 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. (Per McHugh J at 624.)

12 What the Applicant has achieved by means outside the proceedings is a better development outcome on the land next door by negotiation with the Respondents. These proceedings were merely a lever to prise that concession from the First to Fourth Respondents. The actual issues raised by the Further Amended Points of Claim were not resolved by that settlement. The real objective having been attained the Applicant did not then wish to proceed with the action which had been commenced, but which should have been discontinued at that time. In that sense, the Applicant has abandoned the proceedings and costs ought follow the event. The resolution of the action bears no relationship to whether or not the action was likely to succeed.

13 There has been no Notice of Discontinuance filed. By not filing a Notice of Discontinuance, the Applicant is seeking to avoid the natural consequence identified in the numerous cases cited by Preston J at [57] in Kiama Council v Grant.

14 Applying those principles, the Council’s submission to the Court is that either the Applicant should pay the Council’s costs of the proceedings on the basis that the Applicant has discontinued its multitudinous claims against the Council (and the other Respondents), or alternatively that each party pay its own costs on the basis that there was a supervening event removing the subject matter of the legal challenge.

First, Second, Third and Fourth Respondents

15 There should be no order for costs in favour of the Applicant as none of his grounds can be sustained. If there is such an order the Council should be liable for costs, not the First, Second, Third or Fourth Respondents, applying Cutcliffe & Anor v Lithgow City Council & Ors (2006) 147 LGERA 330 at 345-6.

Findings

16 Section 69 of the Court Act states that costs are in the discretion of the Court. The Court may determine by whom and to what extent costs are to be paid. The usual rule where there has been no hearing on the merits of the case is that there be no order for costs and the Court should not try a hypothetical action between the parties; Lai Qin per McHugh J.

17 The relevant principle to apply where proceedings have not had the benefit of a final hearing and determination is as McHugh J stated at 625:

If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until litigation was settled or its further prosecution became futile, the proper exercise of the costs discretion will usually mean that the Court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases.

18 In Kiama Council v Grant, Preston J considered the circumstances where costs may be awarded and summarises relevant principles in [80(a)] and [80(b)].

(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.

19 I consider the characterisation of the settlement between the First, Second, Third and Fourth Respondents and the Applicant as demonstrated in the Deed dated February 2007, is that the parties have resolved their differences by extra-curial means which has resulted in the subject matter of the dispute being no longer in existence. I do not consider the circumstances of the case suggest that [80(a)] in Kiama Council v Grant, where a party effectively surrenders to the other party, arises. Neither of the two subsections identified in [80(a)] apply in this case. The fact that the First, Second, Third and Fourth Respondents have chosen to surrender the first development application the subject of these proceedings does not alone suggest surrender in relation to the litigation.

20 The opening words of [80(b)] apply. There is no evidence that one party has acted unreasonably; ([80(b)(i)]).

21 In the absence of a hearing on the merits of the matter, and no admissions being made by the Council whose decision-making process is the subject of the challenges identified in the Further Amended Points of Claim, I do not accept the Applicant’s submission that he was bound to succeed on the failure to consider the draft SEPP ground (as identified in [80(b)(ii)] in Kiama Council v Grant). Matters raised in the evidence in Council’s and arguments suggest that the result was not a foregone conclusion. There are numerous cases including Lai Qin where it is stated that the Court must not embark on a hearing of the merits of a case as part of the resolution of the question of costs. No costs should be awarded on that basis.

22 Part 15 r 7 states:

The Court may order the respondent to pay the costs of the proceedings where a respondent satisfies or causes to be satisfied the claim of the applicant after the proceedings have been commenced.

23 The circumstances in this case are similar to those in Hayden Theatres as identified at 234. Bignold J considered two possible events which could be considered to “satisfy” the applicant’s claim,

(i) an undertaking not to rely on the existing development consent until the further DA had been finally dealt with

(ii) the imposition by the Council of the condition on the grant of the further development consent requiring the surrender of the original DA.

24 In this case there were undertakings given in October 2006 by the First, Second, Third and Fourth Respondents not to proceed under the development consent challenged (or construction certificate), pending the outcome of these proceedings. That cannot satisfy Pt 15 r 7.

25 In relation to the condition of development consent requiring the surrender of the second consent, his Honour identified three reasons why this also did not give rise to the application of Pt 15 r 7 at 235. These reasons also apply here, albeit in slightly different circumstances. While in this case a deed was entered into under which the First, Second, Third and Fourth Respondents agreed to surrender the first DA as part of the process of lodging the second DA, that was done without admission as to the substantive matters in the proceedings. It is also clear from the Council’s planning report of March 2007 in exhibit A that it was also aware of the settlement discussions between the other parties. The Council was bound to accept and process the second DA lodged in any event. The fact it did so does not allow the Applicant to establish that there was surrender by the Respondents in the context of the proceedings. None of the substantive matters have been determined.

26 I consider the appropriate costs order is that there should be no order as to costs. I do not accept the alternative submission that the Applicant should pay the Council’s costs because he commenced and then effectively abandoned these proceedings.

27 This finding means that I do not need to consider the arguments made in reliance on Cutcliffe as the threshold to the application of the principles at [15] of that decision is that the Applicant is successful.

28 The Applicant has been unsuccessful in his application for costs and the other parties have incurred legal expenses. The usual rule that costs “follow the event” should apply and the Applicant should pay the other parties’ costs. Very little time was spent on the Council’s motion for costs and I need make no order in relation to that matter.

Orders

29 The Court makes the following orders:

1. The Class 4 Application is dismissed.

2. There is no order as to costs in the substantive proceedings.

3. The Fifth Respondent’s Notice of Motion of 20 July 2007 is dismissed.

4. The Applicant is to pay the Respondents’ costs of the hearing on costs on 26 July 2007.

5. The exhibits are to be returned.