King v Potts

[2015] NSWLEC 22

Land and Environment Court

New South Wales

Medium Neutral Citation:	King v Potts [2015] NSWLEC 22
Hearing dates:	13, 18 February 2015
Date of orders:	20 February 2015
Decision date:	20 February 2015
Jurisdiction:	Class 4
Before:	Biscoe J
Decision:	See [60]-[61]
Catchwords:	CIVIL ENFORCEMENT – whether respondent carried out works on common property of a duplex under a strata plan that required development consent and without obtaining development consent – whether heads of agreement extinguished applicant’s cause of action when entered into or upon performance of agreement – performance by respondent of carrying out works to reduce size of balcony under agreement expressly dependent upon Council indicating it would issue a building certificate – before Council would assess building certificate application it required development application to use deck and a construction building application for completion of unauthorised works to be submitted and approved – whether implied contractual obligation of cooperation required applicant to do all that was necessary to cause owners corporation to consent to the making of the development application – whether parties’ proposed consent orders in the nature of specific performance of provisions of the heads of agreement should be on terms that respondent pay applicant compensation for alleged costs incurred by applicant beyond those contemplated by the heads of agreement caused by unreasonable conduct of respondent – whether proceedings should be dismissed because the heads of agreement extinguished applicant’s cause of action.
Legislation Cited:	Civil Procedure Act 2005 s 73 Environmental Planning and Assessment Act 1979 s 149E Environmental Planning and Assessment Regulation 2000 cl 49
Cases Cited:	Burger King Corp v Hungry Jack's Pty Ltd [2001] NSWCA 187, (2001) 69 NSWLR 558 Commissioner of Taxation v Sara Lee Household and Body Care (Australia) Pty Ltd [2000] HCA 35, (2000) 201 CLR 520 Jingalong Pty Ltd v Todd [2015] NSWCA 7 Mackay v Dick (1881) 6 App Cas 251 Nullagine Investments Pty Ltd v Western Australian Club Inc [1993] HCA 45, (1993) 177 CLR 635 Rothwell Boys Pty Ltd v Coffs Harbour City Council [2012] NSWLEC 19, (2012) 186 LGERA 366 Secured Income Real Estate (Aust) Ltd v St Martins Investments Pty Ltd (1979) 14 CLR 596
Texts Cited:	Foskett, The Law and Practice of Compromise (1996, 7th ed)
Category:	Principal judgment
Parties:	Graham King (Applicant) Victoria Potts (Respondent)
Representation:	COUNSEL: A M Pickles (Applicant) C R Ireland (Respondent) SOLICITORS: MCW Lawyers (Applicant)) Newhouse and Arnold (Respondent)
File Number(s):	40405/13

Judgment

1. These are civil enforcement proceedings. The applicant, Mr Graham King, and the respondent, Ms Victoria Potts, are neighbours. He owns Lot 1 and she owns Lot 2 in a two lot duplex fronting a canal at 37 Shearwater Parade, Tweed Heads. They are single storey dwellings divided by a wall. Around their perimeter is common property owned by the owners corporation of the strata plan. They each have the same unit entitlement in the strata plan. Annexed to this judgment is a copy of a plan of the site referred to in cl 6 of heads of agreement entered into between the parties in January 2014: see [10]-[11] below.

2. The applicant complains that in or about February 2013 the respondent has carried out building works on the common property without development consent in breach of the Environmental Planning and Assessment Act 1979. The works comprised enclosing Lot 2’s open patio, removing its supporting pillars and constructing in front of it an open deck, spa bath and metal fence. The applicant claims a declaration to that effect and an order that the respondent:

1. remove the partially constructed open deck, spa-bath and metal fence from the common property;

2. reinstate the common property to its former condition immediately prior to the unlawful building works;

3. reinstate the open patio on Lot 2;

4. reinstate a balustrade on the patio on Lot 2 to match the existing balustrade on Lot 1;

5. reinstate supporting pillars to the open patio.

3. At the hearing, the applicant did not press for the relief sought insofar as it refers to the metal fence.

4. The issues are defined by the respondent’s submissions that: (a)  heads of agreement entered into between the parties in January 2014 extinguished the applicant’s cause of action; (b) alternatively, the works constitute exempt development for which development consent is not required; and (c) in any event, the proceedings are defective because the owner of the common property, the owners corporation, is not a party to them.

5. The present hearing came to be limited to the heads of agreement because during the hearing the parties resolved that I should make consent orders in the nature of specific performance of provisions of the heads of agreement and should not at this time proceed to hear the other issues in the proceedings.

6. The parties also agreed that I should determine whether, and if so in what amount, such equitable relief should be on terms that compensation be paid by the respondent to the applicant. This was because the respondent sought such relief and the applicant seeks compensation for costs allegedly incurred by the applicant caused by the respondent’s unreasonable conduct beyond those contemplated by the heads of agreement. The respondent disputes that there are any such costs.

7. The respondent submits that in addition to the above consent orders, the proceedings should also be dismissed because the heads of agreement extinguished the applicant’s cause of action when they were entered into, and that the applicant should pay the respondent’s costs or there should be no order for costs.

8. The Court has power to determine settlement or compromise agreement questions under s 73 of the Civil Procedure Act 2005.

73 Power of court to determine questions about compromises and settlements

(1)   In any proceedings, the court:

(a)   has and may exercise jurisdiction to determine any question in dispute between the parties to the proceedings as to whether, and on what terms, the proceedings have been compromised or settled between them, and

(b)   may make such orders as it considers appropriate to give effect to any such determination.

(2)   This section does not limit the jurisdiction that the court may otherwise have in relation to the determination of any such question.

9. On 16 December 2013 a mediation culminated in an in principle agreement to be finalised by heads of agreement.

10. The heads of agreement entered into by the parties in January 2014 are a compromise and provide:

In settlement of the whole proceedings the parties agree:

1.   The alterations undertaken to enclose the balcony of Lot 2 are permitted to remain.

2.   The deck and spa attached to the rear of Lot 2 is permitted to remain, subject to a reduction in its dimensions as shown in the plan annexed and marked “A”.

3.   The respondent is to submit a 1:100 plan to the Applicant showing the final proposed deck in accordance with the plan annexed and marked “A” including an elevation of the proposed privacy screen and any safety fencing by 31 January 2014.

4.   The Applicant is to give its consent as an owner of 50% of the shares in the Owners Corporation to the making of the application for a building certificate submitted to Tweed Shire Council as amended by the plan provided in 3 above, by 24 January 2014.

5,   Subject to an indication from the Council that a building certificate will be issued in respect of the deck and spa as amended by the plan in 3 above, but not otherwise, the Respondent is to undertake the works necessary to reduce the size of the deck within # weeks of the making of consent orders.

6.   The parties are to resolve to adopt a by-law for exclusive use of areas of Lots 1 and 2 on terms to be agreed, such by-laws also to make provision for management and restriction of structures in exclusive use areas, including a prohibition on the erection of structures in the area hatched on the plan annexed and marked “A”. Draft by-laws are to be provided to the Applicant by the Respondent and the Applicant is to respond by 31 January 2014.

7.   The adopted by-laws are to be held in escrow by the respondent’s solicitor until final orders are made in these proceedings.

8.   Each party to pay its own costs of the proceedings.

11. The applicant signed and filed the heads of agreement on 20 December 2013. There was no cl 3 annexure “A” plan annexed. There was a cl 6 hatched plan annexed (a copy is also annexed to this judgment). On 22 January 2014 the respondent signed the heads of agreement and sent a copy to the Court (although no plan was attached). On 31 January 2014 a cl 3 annexure “A” 1:100 plan was filed by consent. That plan, however, omitted the details required by cl 3 to be included viz “an elevation of the proposed privacy screen and any safety fencing”. Except for these missing details, it elides the two plans referred to in cl 3. An amended 1:100 version of that plan including those details was provided by the respondent to the applicant on the first day of the hearing before me but was not agreed by the applicant. An agreed 1:100 version with those details was tendered on the second day of the hearing (Ex F).

12. The parties either have performed or are now ready, able and willing to perform all their obligations under the heads of agreement except that the respondent is not yet able to undertake the necessary works to reduce the size of the deck as required by cl 5. That is because Tweed Shire Council has not yet indicated that a building certificate will be issued in respect of the deck and spa, which is an express pre-condition to the performance of that work. The reason is that although the building certificate application referred to in cl 4 of the heads of agreement was duly lodged with Council, in March 2014 the Council wrote stating that it was unable to further assess that application until a development application (DA) for the “Use of the Deck” and a construction certificate for the “Completion of the Unauthorised Building Works” were submitted to and approved by Council. The DA requires the consent of the owner, being the owners corporation, before it can be made: cl 49 Environmental Planning and Assessment Regulation 2000. Although the applicant indicated for some time that he would sign the consent of the owners corporation to the making of the DA if it were amended in certain respects (which it was), on 26 June 2014 the applicant made it clear in writing that he would not do so unless the respondent paid his costs of the proceedings and provided the details required by cl 3. In September 2014 the applicant made an offer of compromise which included a term along the lines that he would do so if the respondent contributed $11,000 to his costs.

13. The applicant’s position was that he was not obliged under the heads of agreement to procure the owner’s consent to the making of the DA. I disagree.

14. There will normally be implied into any agreement a term of cooperation that neither party will prevent performance or, looking at it the other way, that each party will do all that is reasonably necessary to see that it is carried out: Mackay v Dick (1881) 6 App Cas 251 at 263; Secured Income Real Estate (Aust) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 at 607; Nullagine Investments Pty Ltd v Western Australian Club Inc [1993] HCA 45, (1993) 177 CLR 635 at 639; Federal Commissioner of Taxation v Sara Lee Household and Body Care (Australia) Pty Ltd [2000] HCA 35, (2000) 201 CLR 520 at [89]; Burger King Corporation v Hungry Jack’s Pty Ltd [2001] NSWCA 187, (2001) 69 NSWLR 558 at [171]. In my opinion, that term is implied in the heads of agreement in this case. The parties accepted that this is so. However, the applicant submitted that the implied term does not oblige him to cause the owners corporation to consent to the making of the DA given the fundamentally different nature of a development consent compared with a building certificate: s 149E Environmental Planning and Assessment Act 1979; and the fact that the consent of an owner to a DA cannot be withdrawn and is not required for an amendment to the DA: Rothwell Boys Pty Ltd v Coffs Harbour City Council [2012] NSWLEC 19, (2012) 186 LGERA 366 at [37] per Craig J. The Rothwell point later went away when the parties agreed that the heads of agreement prevent the DA being modified in a way that is outside the contemplation of the heads of agreement. Otherwise, I do not accept the applicant’s submission.

15. The heads of agreement contemplate that the respondent will lawfully use the reduced deck and complete the unauthorised building work. This can only be done lawfully with the required development consent and construction certificate. Therefore, the implied term requires the applicant to do everything necessary to obtain the consent of the owners corporation, as owner, to the making of the DA. In argument at the hearing, the respondent embraced this logic and the applicant acquiesced in it.

16. This implied term issue later fell away because of the following orders that the parties subsequently agreed I should make by consent, which are in the nature of specific performance of cll 5 and 6 of the heads of agreement and include a requirement that the applicant sign the DA (to the intent that it be by way of consent on behalf of the owners corporation to the making of the DA):

1.   The respondent is to prepare a development application and construction certificate generally in the form of the document at pp 137-154 of Exhibit A (except for the substitution of Exhibit F for the plan at p 154) by 4pm on 23 February 2014 and submit it to the applicant for signature.

2.   The applicant is to sign the development application and construction certificate in Order 1 within 48 hours of receipt and immediately return it to the respondent for lodgement with the Council.

3.   The applicant and respondent are to hold a general meeting of the owners corporation for the purposes of and to resolve to approve the by-law at Exhibit A pp 59-61 within 28 days.

4.   The respondent is to carry out the works approved by the construction certificate, building certificate and development consent within 10 weeks of all being granted.

5.   The applicant and respondent are to do everything reasonably necessary to register the by-laws referred to in Order 3 within 28 days of the meeting.

6.   Liberty to apply on 48 hours notice.

17. The respondent submits that, in addition, the proceedings should be dismissed because the heads of agreement have extinguished the applicant’s cause of action. I do not accept the submission.

18. The purpose of a compromise agreement is to put an end to the dispute between the parties. The agreement may be construed as extinguishing the original cause of action only upon performance of the agreement, or immediately upon entry into the agreement: Jingalong Pty Ltd v Todd [2015] NSWCA 7 at [63]-[70] per Sackville JA (Meagher, Leeming JJA agreeing) where the authorities are reviewed; Foskett, The Law and Practice of Compromise (1996, 7th ed) at [8.01]-[8.10]. In the former case, extinguishment of the cause of action is in consideration of performance. In the latter case, extinguishment of the cause of action is in consideration of the mere promise of performance. In the former case, pending performance of the agreement the cause of action remains alive and unimpaired, although it cannot be pressed until the time for performance of the agreement has expired. The proper construction of the agreement may show permutations on the two basic models of a performance settlement agreement and a promise settlement agreement.

19. In my opinion, the heads of agreement in this case should be construed as extinguishing the original cause of action only upon performance of the agreement, with one permutation. First, cl 7 indicates that the parties’ performance of their cl 6 obligation to adopt a by-law must precede “final orders” made in the proceedings, for the by-law is to be held in escrow until those final orders are made. Secondly, the most important element of the consideration for the settlement is the respondent’s reduction in the size of the deck required by cll 2 to 5. It is an express precondition to the respondent’s performance of the works necessary to reduce the size of the deck that Council indicate that a building certificate will be issued: cl 5. If Council does not give that indication and there is no successful merits appeal to this Court against its refusal to issue a building certificate, the heads of agreement will fail. In that case, the original cause of action, not having been extinguished, may be pressed. Such is the importance of the cl 5 works that there should not be attributed to the parties an intention that the applicant’s original cause of action is extinguished by a mere promise to do that work, particularly as it may never be done due to Council not giving the required indication. However, there is a permutation. In my opinion, as the applicant submits, the “consent orders” referred to in cl 5, to be made after Council has given that indication, are implicitly intended to be orders that the respondent do the work required by cl 5 within a specified time and that the proceedings be dismissed. Thus, at that point in time the important work to be done by the respondent under cl 5 obtains the sanction of a court order and the applicant’s original cause of action is extinguished.

20. Having reached that conclusion, I can see no basis for acceding to the respondent’s submission that I should make a costs order favourable to the respondent, particularly given the terms of cl 8 of the heads of agreement.

21. I turn to the applicant’s submission that the parties’ proposed consent orders should be on terms that the respondent pay the applicant compensation for costs allegedly incurred beyond those contemplated by the heads of agreement due to the unreasonable conduct of the respondent. I do not accept the submission for the following reasons.

22. The submission requires detailed analysis of the events that have occurred. I have already recounted the mediation in 2013 leading to the heads of agreement being entered into in January 2014 and the chronology of events covering their execution and content above at [9]-[11].

23. In December 2013, the respondent provided the applicant with a draft of the by-law contemplated by cll 6 and 7, and the applicant’s solicitor replied that he was taking instructions from the applicant.

24. After 31 January 2014 there were a number of directions hearings where the Court made orders affecting or progressing the requirements of the heads of agreement.

25. That process began on 21 February 2014 when the following consent orders were made:

1.   The Respondent is to provide the Applicant a building certificate application on or before 25 February 2014 attaching the proposed plan marked “Annexure A” to the Heads of Agreement (“building certificate application”);

2.   The Applicant is to lodge the building certificate application with Council on or before 4 March 2014.

3.   The Applicant is to provide the proposed By Law to the Respondent on or before 25 February 2014.

4.   The matter is listed for call-over on 4 April 2014.

5.   Liberty to apply on 48 hours notice.

26. Order 1 indicates a waiver of the cl 3 requirement that the annexure “A” plan include an elevation of the proposed privacy screen and any safety fencing. That is because the annexure “A” plan referred to in order 1 is that filed on 31 January 2014, which does not include those details.

27. Order 3 in effect required the applicant to respond by 25 February 2014 to the proposed draft cl 3 by-law that the respondent had provided to the applicant in December 2013.

28. The parties were each slightly late in complying with their respective obligations under orders 1 and 3.

26. On 27 February 2014 the applicant by his solicitor provided his proposed by-law, incorporating some minor changes, to the respondent’s solicitor.

27. Also on 27 February 2014 the respondent by his solicitor sent the applicant’s solicitor a copy of the building certificate application for signature by the applicant. The application attached the annexure “A” plan filed on 31 January 2014. Next day the applicant’s solicitor returned it duly signed by the applicant, incorporating some minor changes agreed by the parties. This reinforces the conclusion that there was a waiver of the cl 3 requirement to include specified details in the annexure “A” plan since the details were omitted from that plan.

28. The respondent duly lodged the building certificate application with Council for assessment.

29. On 18 March 2014 Council wrote an important letter which, as it turned out, has contributed to the heads of agreement going off the rails until the hearing before me. Relevantly, the letter stated:

I acknowledge receipt of the above application and advise that Council is unable to further assess the application until both a Development Application for the “Use of the Deck” and a Construction Certificate for the “Completion of the Unauthorised Building Works” have been submitted to and approved by Council.

33. On 1 April 2014 the respondent’s solicitor wrote to the applicant’s solicitor referring to this Council requirement, enclosing the proposed DA for signature by the applicant, and requesting its return before the following Friday’s call-over of the matter in this Court. The enclosed standard form named the owners corporation as the applicant and was titled “Application for Development/ Construction Certificate”. Under the “Approval Type” the “Development Application” box was ticked whereas, strictly, the “Development Application and Construction Certificate Combined” box should have been ticked. Under the heading “Description of proposed development”, the box “Erection of a building/structure” was ticked. The description provided was:

Decking area to the rear of lot 2/37 Shearwater Pde as per the attached plan marked A

Encloser [sic] of Balcony area 2/37 Shearwater Pde

34. The attached plan was the heads of agreement Annexure “A” plan filed on 31 January 2014.

35. On 4 April 2014 the Court made the following consent orders:

1.   The matter stood over until 16 May 2014 to enable respondent to lodge a development application.

2.   Liberty to apply to vacate the mention by e-Court by 2pm 15 May 2014 if Council has not determined the application before 16 May 2014.

36. On 27 April 2014 the respondent’s solicitor emailed the applicant’s solicitor inquiring whether the draft DA sent to the latter on 1 April had now been lodged with Council, and stating that they understood from counsel for the applicant that some minor non-material changes were to be discussed.

37. On 28 April 2014 the applicant’s solicitor replied stating that the DA was for the respondent to lodge, as the 4 April 2014 orders required. He was unduly critical of alleged deficiencies in the DA, and stated that before the applicant could sign it the following needed to be done:

1. the applicant on the DA needs to be named as Ms Potts;

2. the owner’s consent section is to be signed on behalf of the owners corporation by both parties;

3. a full copy of what is to be lodged is to be furnished to the applicant’s solicitors to ensure that what is consented to accords with the heads of agreement.

38. Notwithstanding that cl 8 of the heads of agreement provides that each party will pay its own costs of the proceedings, this letter raised the spectre of a costs claim by the applicant. As will be seen, this later disappeared but was revived on 26 June when it became a stumbling block. The letter of 28 April asserted that “ongoing delays” by the respondent “resulting in the need for more and more appearances imperils any earlier agreement that each party bears its costs”. The letter concluded that, at the very least, the applicant will be seeking his costs incurred since the termination of the mediation and reserves his rights to seek the costs of the whole proceedings.

39. On 29 April 2014 the respondent’s solicitor replied stating that at the 4 April callover the applicant’s counsel had mentioned his opinion that the DA should be in the name of the respondent, and that the writer had no issue with this and suggested that a handwritten amendment to the development application could remedy it to facilitate the urgent lodgement of the development application. To facilitate the urgent lodgement of the DA, he suggested in the letter that the applicant’s solicitor:

1. now make the handwritten amendment replacing the respondent’s name for the name of the owners corporation as applicant;

2. make the handwritten changes proposed at (b) of the applicant’s solicitor’s letter of 28 April 2014;

3. have the applicant sign the DA;

4. return the signed DA to the respondent’s solicitor.

The letter stated that if the applicant deviated from the heads of agreement in respect of costs, the respondent reserved her position to take all necessary steps to enforce the heads of agreement.

40. The applicant’s solicitor would not agree to the above suggestion. On 1 May 2014 he returned the DA, suggesting that the respondent’s solicitor prepare a fresh DA, and stating that on receipt of it he would attend to the applicant signing it in his capacity as a member of the owners corporation.

41. On 6 May 2014 the respondent’s solicitor sent the applicant’s solicitor the DA with the agreed handwritten changes and requested that the applicant urgently sign it so the respondent could lodge it without further delay. This DA, among other things, amended the description of the proposed development by also ticking the “Demolition” and “Other” boxes and by describing the development more accurately as:

Use of decking area to the rear of 37 Shearwater Parade as per the attached plan marked “A”

Part demolition of existing structure

42. At this point, it looked like plain sailing for the lodgement of the DA with the consent of the owners corporation: there was no squabble as to costs. However, that was not to be.

43. Some seven weeks passed punctuated only by a further letter from the respondent’s solicitor requesting the return of the signed DA to be lodged with Council. On 26 June 2014 the applicant’s solicitor broke his silence by writing a letter that the applicant was only prepared to sign the DA on condition that the respondent pay his costs and provide the additional details required by cl 3 of the heads of agreement. The letter was in the following terms:

We refer to the above proceedings and your client’s request that our client consents to the lodgement of a DA with the Council.

We have taken instructions from our client and he is not prepared to unconditionally sign the DA form. In particular, before doing so he seeks recompense for his legal costs in bringing these proceedings.

While it is acknowledged that pursuant to the Heads of Agreement each party was to pay its own costs, a number of other considerations now have a significant bearing on the issue of costs.

Firstly, it had been anticipated your client would be seeking a building certificate only from the Council. It is now evident that the Council requires a DA for the works. This demonstrates the correctness of our client’s original contention in these proceedings and that in all likelihood our client would have succeeded in these proceedings.

Secondly, our client has incurred substantial additional costs since the Heads of Agreement were agreed including multiple court appearances and delay largely brought about by your client’s discussions with the Council and the inadequacies of the DA first submitted.

Further, despite a requirement under clause 3 of the Heads of Agreement that plans accompanying the building certificate would include elevations of the privacy screen, none have been provided and no details of the screen have been given. He would require this detail before being prepared to sign the DA.

Our client is prepared to sign the DA on the condition your client pays his costs as agreed or assessed and the additional detail required is provided.

We await your client’s further instructions.

44. On 26 June 2014 the respondent’s solicitor replied that the respondent proposed to convene a meeting of the owners corporation to obtain its consent to the DA and, if that consent were refused, to appeal to the NSW Civil and Administrative Tribunal and obtain appropriate orders (including consent to the DA). Strict compliance with the heads of agreement was required. A copy of the by-law was requested in accordance with cl 6 of the heads of agreement (this overlooked that the applicant’s solicitor had proposed changes to the by-law in a letter to the respondent’s solicitors on 27 February 2014).

45. On 1 July 2014 the applicant’s solicitor indicated that there was no change in the applicant’s position and returned the DA.

46. On 24 July 2014 the respondent’s solicitor wrote to the applicant’s solicitor stating that the respondent had approached a strata manager to convene an owners corporation meeting, which he understood was to be held on 6 August. He said that the applicant had provided no reasons as to why he was unwilling to sign the DA. He said they were still awaiting the applicant’s input into the cl 5 proposed by-law forwarded to the applicant’s solicitors in December 2013 To save costs, the writer indicated willingness to mention the matter in Court on the coming Friday and have it stood over for 4 weeks to advise the Court of the outcome of the owners corporation meeting(s).

47. This prompted a letter of reply from the applicant’s solicitor on 24 July 2014 complaining of alleged short notice of the owners corporation meeting on 6 August and other matters and asserting for various reasons that the respondent’s solicitor’s letter touching on the appointment of a strata manager and associated comments was flawed.

48. On 24 July 2014 the respondent’s solicitor replied.

49. On 21 August 2014 the respondent’s solicitor wrote noting that the matter was in Court tomorrow and proposing that the matter be dismissed with no order as to costs, in accordance with the heads of agreement.

50. On 22 August 2014 the Court made orders for a mediation.

51. On 8 September 2014 the applicant’s solicitor wrote to the applicant’s solicitor stating that the requirement to submit a DA was never contemplated by the applicant as part of the settlement. The following offer was made to compromise the proceedings:

1. The applicant, as a member of the owners corporation, would consent to the submission of a DA to the Council for the erection of a deck and spa (as per the respondent’s amended plans) on the common property;

2. The respondent was to contribute an amount of $11,000 towards the applicant’s costs.

3. The proceedings be discontinued upon the grant of Council consent on terms that the respondent carry out the work pursuant to it within three months of its grant.

52. The reply on 22 September 2014 from the respondent’s solicitor was to attach proposed consent orders that the proceedings be dismissed with no order as to costs and noting that the parties have entered into the heads of agreement filed in December 2013. The solicitor stated that if the applicant refused to sign the consent orders within seven days, then he was instructed to commence proceedings in the Supreme Court to enforce the heads of agreement and seek costs without further notice.

53. On 17 October 2014 the proceedings were set down for hearing.

54. Having considered these events in some detail, I am unable to accept the applicant’s submission that the respondent should be ordered to pay compensation to the applicant for costs incurred by the applicant not contemplated by the heads of agreement attributable to unreasonable conduct of the respondent. I do not consider that there are any costs falling within this description. The problem that arose was the Council’s requirement in March 2014 for a DA and the legal necessity to obtain the consent of the owners corporation to the making of the DA. The applicant indicated in April and May that he would sign the owners corporation consent to the making of the DA subject to some amendments to the form of the DA, which were attended to. He changed his position on 26 June 2014 complaining of multiple court appearances and delay largely brought about by the applicant’s discussions with Council and the inadequacies of the DA first submitted. I do not think that this is a substantial complaint. Discussions with Council are unsurprising given Council’s March letter. The “inadequacies” of the first DA were technical errors capable of being rectified easily by either party.

55. It may not have been unreasonable for the applicant in June 2014 to seek the cl 3 details in the context of the DA. However, the applicant was clearly content to proceed without them for months before that time both in the relation to the building certificate application and the DA. The respondent could have provided a plan with those details earlier than the hearing, but this is not really what caused the matter to drag on. It was the issue of costs.

56. The applicant was incorrect in his contention that he did not have to cause the owners corporation to consent to the making of the DA. As discussed earlier, his implied contractual obligation of cooperation required him to do everything necessary to obtain the owners consent to the DA. All that was required was his signature. Indeed, the consent orders now proposed by the parties require him to do just that.

57. Given the applicant’s position, it was not unreasonable for the respondent to set about concerning a meeting of the owners corporation and then appealing to the NSW Civil and Administrative Tribunal. The respondent did overlook that the applicant had made his input into the by-law back in February 2014, but that is not significant.

58. Both parties have been unsuccessful in some respects at the hearing. The respondent was unsuccessful in her contention that the heads of agreement have already extinguished the applicant’s cause of action. The applicant was unsuccessful in his initial position that the heads of agreement are no bar to the substantive proceedings now being heard and that there is no obligation on the applicant to cause the owners corporation to consent to the making of the DA. During the hearing the parties came to an agreement that consent orders should be made by way of specific performance of the heads of agreement and that the substantive proceedings should not continue until those orders played out in order to see whether, ultimately, the agreement could and would be performed under cl 5.

59. In all the circumstances, I decline to order the payment of compensation by the respondent to the applicant.

60. By consent, the orders of the Court are as follows:

1. The respondent is to prepare a development application and construction certificate generally in the form of the document at pp 137-154 of Exhibit A (except for the substitution of Exhibit F for the plan at p 154) by 4pm on 23 February 2014 and submit it to the applicant for signature.

2. The applicant is to sign the development application and construction certificate in Order 1 within 48 hours of receipt and immediately return it to the respondent for lodgement with the Council.

3. The applicant and respondent are to hold a general meeting of the owners corporation for the purposes of and to resolve to approve the by-law at Exhibit A pp 59-61 within 28 days.

4. The respondent is to carry out the works approved by the construction certificate, building certificate and development consent within 10 weeks of all being granted.

5. The applicant and respondent are to do everything reasonably necessary to register the by-laws referred to in Order 3 within 28 days of the meeting.

6. Liberty to apply on 48 hours notice.

61. The exhibits other than Exhibits A and F may be returned. The parties are to list the matter for mention before the List Judge on no later than 26 June 2015.

**********

•   Annexure(33.0 KB, pdf)

Decision last updated: 23 February 2015