Marrickville Council v Cleary

[2015] NSWLEC 24

Land and Environment Court

New South Wales

Medium Neutral Citation:	Marrickville Council v Cleary [2015] NSWLEC 24
Hearing dates:	16 February 2015
Date of orders:	17 February 2015
Decision date:	17 February 2015
Jurisdiction:	Class 4
Before:	Craig J
Decision:	The First and Second Respondents must pay the Applicant’s costs of the proceedings. The proceedings are otherwise dismissed. Exhibits on the costs hearing may be returned.
Catchwords:	COSTS - Class 4 proceedings - interlocutory proceedings - s 121B of the Environmental Planning and Assessment Act 1979 - prohibited residential land use and unauthorised business use - whether conduct of Council is such that it is disentitled to an order for costs - r 42.1 of the Uniform Civil Procedure Rules - whether reasonable notice had been given by Council of its intention to commence proceedings - proceedings commenced and continued reasonably by the Council - orders for costs.
Legislation Cited:	Civil Procedure Act 2005 (NSW) Environmental Planning and Assessment Act 1979 (NSW) Marrickville Local Environmental Plan 2011
Cases Cited:	Council of the City of Sydney v Chapman [2007] NSWLEC 146 Marrickville Council v Cleary [2014] NSWLEC 203 Melbourne University Publishing Ltd v Williamson [2005] FCA 1910
Category:	Costs
Parties:	Marrickville Council (Applicant) Mark Stephen Cleary (First Respondent) Mark Cleary and Associates Pty Ltd (Second Respondent) Shu Min Zhang (Third Respondent) Edward Gee (Fourth Respondent)
Representation:	Counsel: M Cottom (solicitor) (Applicant) N Hammond (First and Second Respondents) No appearance (Third and Fourth Respondents) Solicitors: HWL Ebsworth Lawyers (Applicant) No appearance (Third and Fourth Respondents)
File Number(s):	40541 of 2014

EX TEMPORE Judgment

1. For all practical purposes, these Class 4 proceedings in which orders are sought by way of civil enforcement, have been resolved, save as to costs. Marrickville Council (the Council) seeks the payment of its costs by the First and Second Respondents. That order is opposed by those Respondents.

2. The First and Second Respondents contend that the conduct of the Council is such that it is disentitled to an order for costs. The disentitling conduct for which it contends is the absence of reasonable notice on behalf of the Council of its intention to commence proceedings before so doing. The appropriate exercise of discretion, so the First and Second Respondents submit, is that there be no order as to costs, to the intent that each party bears its and his own costs.

3. The parties acknowledge that while the Court has a discretion as to the order for costs that should appropriately be made (s 98 Civil Procedure Act 2005 (NSW)), costs should follow the event “unless it appears to the court that some other order should be made” (r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW)) (UCPR). Although no order finally disposing of the proceedings has yet been made, the “event” upon which the Council relies is the making of interlocutory orders with which the First and Second Respondents complied by agreeing to vacate the premises as the Council had sought. As the premises were vacated soon after the interlocutory orders were made, the Council accepts that there is no utility in further prosecuting the proceedings.

4. The Council also accepts that advance notice of an intention to commence the present proceedings was, in the circumstances, appropriate to be given. It also accepts that failure to give notice of such an intention to commence proceedings can, in a given case, constitute conduct on behalf of an otherwise successful applicant that disentitles it to an order for costs. As Jagot J observed in Council of the City of Sydney v Chapman [2007] NSWLEC 146 at [11]:

“The purpose of a notice before action is to inform respondents of the specific intention of a party to commence legal proceedings and thereby to give respondents an opportunity to take steps to avoid the need for that action and the associated costs.”

In support of that proposition her Honour cited the observations of Heerey J in Melbourne University Publishing Ltd v Williamson [2005] FCA 1910 at [4].

5. While accepting the principle that notice before action is appropriate, if not necessary, the Council submits that not only was notice given, it was in the circumstances, adequate. It is the adequacy of the notice that the First and Second Respondents contest. In order to address that issue it is necessary briefly to describe both the history of the proceedings and the events preceding their commencement.

6. On 25 July 2014 the Council commenced the present proceedings against four Respondents in relation to the use of premises at 31 Princes Highway, St Peters (the Premises). The only active Respondents to the proceedings were Mark Stephen Cleary, the First Respondent, and Mark Cleary and Associates Pty Ltd, the Second Respondent. Mr Cleary is the sole director and shareholder of the Second Respondent.

7. The proceedings were commenced on 25 July when Pain J, as Duty Judge, abridged the time for service of the summons, then filed in Court, together with a notice of motion seeking an interlocutory injunction. The summons sought declaratory orders together with injunctions restraining the use of the first floor of the Premises as residential accommodation as well as the use of that floor, or any part of the floor, for dance studio or office use. The interlocutory order sought was to restrain the residential use of the first floor pending final determination of the proceedings.

8. Mr Cleary was notified by the Council’s solicitor at about 6.00pm on the evening of 24 July of the Council’s intention to move the following day for the interlocutory orders that I have identified. When the matter came before Pain J on 25 July 2014, Mr Cleary was represented by counsel who indicated to her Honour that she had only been briefed that morning and was not in a position to argue the matter that day. As a consequence, the determination of the motion for interlocutory relief was adjourned until 29 July. It would appear from her Honour’s judgment (Marrickville Council v Cleary [2014] NSWLEC 203) that the application for interlocutory relief was considered by her Honour to be part heard on 25 July 2014 but that she declined to make any order, or to conclude the hearing for that relief, until the appropriate opportunity was given to Mr Cleary or his legal advisors to prepare submissions addressed to the orders sought.

9. On 29 July 2014 Pain J made a number of orders, including an order restraining residential use of the first floor of the Premises. The operation of that order was suspended until 14 August 2014. At that hearing Mr Cleary represented himself and his company. No longer was he represented by any legal advisor.

10. In an affidavit affirmed by Mr Cleary on 29 July 2014 and read by her Honour, Mr Cleary acknowledged that he was residing on the first floor of the Premises and had been doing so for a number of years. He also stated that on the previous day, namely 28 July, he had signed a lease for alternate accommodation but was not able to move to that accommodation until 14 August 2014. It was on the basis of that evidence that her Honour suspended the operation of the interlocutory order that she had made restraining residential use (Marrickville Council v Cleary at [10]).

11. The proceedings were next before Pepper J as List Judge on 8 August 2014. At that time the proceedings were adjourned, apparently by consent, for a further month in order to allow for the cessation of the commercial use that was also being made of the first floor of the Premises by Mr Cleary or his company or to allow for the lodgement of a development application to continue that use. However, on that same day, it appears that Mr Cleary told the Council’s solicitors that the Second Respondent intended to move from the Premises so that neither Mr Cleary nor his company would thereafter continue to occupy the first floor of the Premises.

12. By agreement, the Premises were inspected by Council staff on 15 August 2014. It is accepted that residential use had then ceased. Further inspection of the Premises on 4 September 2014 confirmed that the commercial use of the Premises by the Second Respondent, had also ceased. In short, neither Mr Cleary nor his company had by that date retained any desire to or at least claimed any entitlement to occupy the first floor of the Premises.

13. The matter was next listed before Pepper J on 5 September 2014, as List Judge, when her Honour was informed of the events that had occurred since the last mention. In short her Honour was then told that the only outstanding issue was the question of costs, the First and Second Respondents having, in effect, met the requirements of the Council to cease what was said to be the unlawful use and occupation of the first floor of the Premises. As a consequence, her Honour ordered that the question of costs be referred to mediation. Regrettably, that mediation was unsuccessful, with the result that the matter next returned to the Court on 24 October when Biscoe J, as List Judge, made directions for the hearing of the Council’s application for costs.

14. It might be observed that notwithstanding the relatively short time the substantive proceedings had occupied both the parties and the Court (with the consequence that the Council’s costs would be relatively modest) the appearances before the Court directed to the question of costs seem, in some respects, to be disproportionate to the time and expense involved in the substantive proceedings. This observation was made to the parties when the matter commenced before me yesterday. Unfortunately, no agreement could be reached to resolve the present application for costs.

15. Having identified the procedural history of the proceedings, it is necessary to say something about their background. The relevant land use controls upon the use of the Premises are those imposed by Marrickville Local Environmental Plan 2011. The land is zoned under that instrument as B6 “Enterprise corridor”. In respect of land so zoned, residential accommodation is prohibited while business premises are permissible with consent. There is no evidence of any consent having been granted for the business use of the first floor to the Premises, nor is there evidence of any historic consent suggesting that the residential occupation of the first floor had, under a previous planning instrument, been the subject of any development consent. In short, both uses contravened ss 76A and 76B respectively of the Environmental Planning and Assessment Act 1979 (NSW) (EPA Act).

16. The state of the Premises and their use came to the notice of the Council as a result of a communication from Fire and Rescue NSW. As a consequence of that communication, the Premises were inspected by Michael Simmons, an officer of the Council, on 8 July 2014 in company with an officer from Fire and Rescue NSW. At that time Mr Simmons, who was the Council’s Fire and Safety Officer, in conjunction with the representative of Fire and Rescue NSW, formed the opinion that the fire risks posed within the Premises were such as to be described as “great and urgent”, particularly as they concerned the safety of those occupying part of the first floor of the Premises as residential accommodation.

17. The first floor of those Premises was, as I have indicated, also used for the business of Mr Cleary and his company. At the time of the inspection on 8 July, there were employees of the company present. However, Mr Cleary was not present as he was then overseas.

18. The Third Respondent in the proceedings is the owner of the Premises. Following the inspection on 8 July 2014, Mr Simmons notified the managing agent of the Premises of the concerns he had as to the fire safety and use of the first floor in particular, with the request that the owner of the Premises be notified of those concerns and, I infer, of the likely intention to take some step to have those concerns addressed.

19. On the part of the Third Respondent prompt action was taken. On 9 July 2014 a notice was issued on his behalf by the managing agent, requiring that Mr Cleary or his Company cease the residential use of the first floor of the Premises and requiring that access be provided to the Premises for inspection by the managing agent. As it happened Mr Cleary had returned to Australia from overseas only on the evening of 8 July 2014, and it was not until 9 July that he became aware, through his staff, of the Council’s inspection of the Premises.

20. The Premises were visited by Mr Simmons and the managing agent on 10 July 2014 when Mr Cleary was present. At that time Mr Cleary denied both Mr Simmons and the managing agent access to the first floor of the Premises. Mr Simmons apparently carried out further inspection of the ground floor of the premises and concluded that his earlier observations that there was a “real and urgent fire risk” to the Premises, particularly those using the first floor, was indeed the correct conclusion to be drawn, having regard to the use and materials stored on the ground floor.

21. As a result, on 11 July 2014 the Council issued emergency orders under s 121B of the EPA Act. The orders then issued identified the source of concern, particularly directed to fire safety, and because residential use was not permitted, required, in terms, that the residential use of the first floor of the Premises cease by 5pm on 16 July. Those orders were sent by express post to the Respondents, including the First and Second Respondents. In addressing the orders to the Second Respondent, the address utilised was the registered office of the company, Mark Cleary and Associates Pty Ltd, being an address of a firm of accountants in Barrack Street, Sydney. Those accountants were said by Mr Cleary to be responsible for the incorporation of his company. The order addressed and posted to Mr Cleary was addressed to him personally at a known post office box address of which the Council had a record.

22. Evidence before the Court establishes that those orders, in particular those addressed to Mr Cleary and his company, were both received at their respective addresses on 14 July 2014. However, as will be seen, that is not the date upon which the orders came to Mr Cleary’s attention.

23. On 17 July 2014 the Premises were again inspected by Mr Simmons for the purpose of determining whether any action had been taken in response to the emergency orders. Again, access to the first floor of the Premises was denied by Mr Cleary who told Mr Simmons that he had not received the emergency orders which the Council claimed to have posted on 11 July 2014. However, there can be no doubt that at that time, given the evidence before me, the fact that orders had been made requiring the cessation of residential use and the fact that they had been posted, was drawn to the attention of Mr Cleary.

24. By reason of the refusal by Mr Cleary to allow the first floor of the Premises to be inspected, the Council applied for and obtained a search warrant to inspect the Premises. That search warrant was executed by a different officer of the Council, Mr Oustambasidis, who in company with a number of police officers, entered the premises on 22 July 2014. At that time it was observed that the first floor of the Premises was still being used for residential purposes as well as for the purpose of the Second Respondent’s business.

25. It is accepted by the Council that the discussion that occurred on 17 July 2014 between Mr Simmons and Mr Cleary was the first occasion on which the requirement to cease the residential use of the Premises was made known to Mr Cleary. While the inspections that had taken place before that date had clearly indicated a concern on the part of the Council as to the continued use of the Premises, the requirement to cease residential use had not, in terms, been identified until that date.

26. The response of Mr Cleary that he had not received the orders is relied upon by him to contend that he did not then understand the true basis of the Council’s actions and that it was not until he actually received the orders that he had some insight into the Council’s intention or requirement. As it happens, he did not receive any communication from the accountant’s office to whom the orders addressed to the Second Respondent had been sent. Moreover, he did not seek to clear his post office box until 21 July, notwithstanding his awareness that orders had been sent to him on 11 July 2014, addressed to him at that post office box. The fact that he first became aware on 21 July of these events is, as I have said, relied upon by him as important in understanding the content of the orders.

27. The approach that Mr Cleary took to the Council’s actions is also important to be noticed. In an affidavit affirmed by Mr Cleary on 9 February 2015 and filed for the purpose of the present application, he recites some of the events or conversations that took place during the course of the visits to the Premises by officers of the Council in July 2014. That affidavit reveals his awareness by 9 July of the Council’s visit to the Premises while he was absent overseas.

28. Importantly, it also reveals the content of a telephone conversation on 16 July with Mr Simmons. Having introduced himself as the Fire Safety Officer from the Council, Mr Simmons indicated an intention to attend the Premises the following day. Mr Cleary responded by indicating that this was the first occasion upon which he had heard from the Council and requested that before anything further be done he “receive something in writing” so that he could obtain legal advice as to “what my options are”. Mr Simmons confirmed in that conversation that he would come to the premises the following morning to see if they were being used as a residence. Mr Cleary responded by stating that he required something in writing and that he would not allow access until he received “a formal request”.

29. Important to his argument is a further conversation that took place on 22 July 2014 between him and two Council officers, one of whom was Mr Oustambasidis. Mr Cleary says that he complained to Mr Oustambasidis that “This is happening at an unreasonable pace. What can be done about this situation?” to which it is said Mr Oustambasidis replied “I am sure that we can reach an agreement to solve these issues. Give me a call.” Mr Cleary states that he made a number of attempts to speak to Mr Oustambasidis including on 24 July 2014 when, having unsuccessfully attempted to speak to Mr Oustambasidis, he sent a message by iMessage, the effect of which was to request that Mr Oustambasidis call him so that the matter could be discussed.

30. That evidence needs to be considered in the context of a discussion that was had on 23 July between Mr Cleary and the Council’s solicitor, Mr Cottom. Mr Cottom, in an affidavit that was before Pain J and is before me for the purpose of these proceedings, deposes to a conversation had with Mr Cleary at about 3.50pm on 23 July. Mr Cleary was informed that Mr Cottom was acting for the Council in relation to the Premises and Mr Cleary was asked whether he had contacted lawyers in relation to the matter. He indicated that he had not, but that he had not received anything from the Council “with the exception of the emergency orders” that had been issued on 11 July 2014, but which he had not seen until 21 July 2014. Following confirmation by Mr Cleary that the orders had been received by him, Mr Cottom is quoted as saying “The residential use of the premises poses a serious fire safety risk. Council seeks to commence urgent proceedings to restrain the use.” The recorded response of Mr Cleary, not challenged by him, is:

“I will contact lawyers. I think Council has treated me poorly. The law will allow different perspectives to be argued in Court, and I’m glad for that. Someone will do it for me pro bono.”

31. Later in that conversation he was asked the following question “Will you comply with Council’s order?” to which Mr Cleary responded “No. I don’t know the details, however I need a timeframe that will work. If we speak off the record I can be more frank.” What discussion took place “off the record” is not disclosed. Later he was asked by Mr Cottom to give an address for service. Mr Cleary responded by giving his post office box number. When asked whether he would accept service by email, Mr Cleary gave his email address.

32. As I have said, the essence of the opposition to an order for costs is that Mr Cleary did not really understand what it was that the Council required of him and his company until 21 July 2014 when he actually received the emergency orders. He says it was necessary for him to seek advice in order to understand what might be required of him, if he was to comply, or whether he was obliged so to do.

33. It is further submitted on his behalf that the events disclosed that the matter was not so urgent as to require the commencement of proceedings as quickly as occurred after Mr Cleary first became aware of the Council’s precise requirements as stated in the emergency orders. First, reference in that regard is made to the lapse of time between 8 July when the fire inspection was carried out and the time at which proceedings were commenced. Second, the fact that Pain J had suspended the operation of the order restraining residential use suggests, so it is submitted, that her Honour did not consider the fire safety issue to be so significant that immediate cessation of residential use was required.

34. As to the first of those contentions, it must be observed that the Council was endeavouring to accommodate Mr Cleary in meeting its objective without the necessity for litigation. In a sense it was damned if it did and damned if it did not allow a short time for compliance or for Mr Cleary to demonstrate a factual or legal basis upon which the Council’s requirement could not be sustained. As to the contention directed to her Honour’s suspension of the interlocutory order, I note that in the course of her judgment, her Honour stated (at [10]) that she relied upon the evidence given by Mr Cleary in the affidavit that he had filed in Court on 29 July 2014 that measures had been taken to mitigate the fire risk until he moved to new accommodation on 14 August.

35. In his affidavit filed on 29 July 2014, Mr Cleary stated: “I have formed the opinion through conversations and observations of the Court process last week that there was no achievable way that I can continue to reside permanently on the premises”. That, so it seems to me, is an indication that prior to commencement of the proceedings, Mr Cleary was at least indifferent to, if not challenging, the position the Council had taken, such that it was not until the proceedings were commenced that he had formed the view that there was no basis upon which he could realistically oppose the course the Council sought to have him take.

36. In short, there are, in my view three matters supporting the Council’s contention that the period of notice of intention to commence proceedings given to Mr Cleary, was sufficient. In the circumstances, it was not so short as to disentitle the Council to its costs.

37. First, the evidence establishes that there was a “great and urgent fire risk” to the occupants of the first floor of the Premises. That evidence was not contradicted or challenged by any expert evidence lead by Mr Cleary. It must therefore be accepted that Mr Simmons, no doubt informed by Fire and Rescue NSW, appropriately held the opinion that there was a real risk to further occupation of the premises that needed to be addressed as a matter of urgency, that risk being one of fire.

38. Second, Mr Cleary, so it seems to me, did have an opportunity prior to the discussion had with Mr Cottom on 23 July to seek to address or at least to obtain legal advice to address, the concerns the Council had expressed. He did not seek that advice prior to commencement of proceedings.

39. I accept that he did not, in fact, see the emergency orders until 21 July 2014. However, the Council was entitled to rely upon the fact that, utilising priority post, the emergency orders, detailing the Council’s requirements and the basis for them, would be received, as they were in fact received, on 14 July 2014.

40. Moreover, the evidence clearly discloses that on 17 July 2014, Mr Cleary was told that the orders had been given, requiring cessation of residential use and that they had been forwarded both to him personally and to his company. That he chose to take a further four days either to contact the registered office of his company or to attend or to have someone attend his post office box to collect the document is a delay of his own doing. It is a lapse of time that cannot be used to attribute some lack of appropriate action on the part of the Council such as to entitle him to say that he did not understand precisely what was required of him. He had the opportunity to inform himself in that regard but chose not to do so.

41. Third, Mr Cleary’s affidavit of 29 July 2014 discloses that it was not until the proceedings had been commenced that he sought to think further about the Council’s orders and then to decide what course he should take in order to address them. In that regard I refer to the earlier quote from his affidavit in which he identified the conversations and observations of the Court process on 25 July 2014 as demonstrating to him that he could not achieve the continuation of residential occupancy. Also relevant in this context, is the conversation that I have earlier recorded as having taken place with the Council’s solicitor on 23 July in which Mr Cleary indicated that he would not abide by the orders and that he welcomed the opportunity in Court to argue for a “different perspective”.

42. For those reasons I am persuaded that this is an appropriate case in which the costs discretion should be exercised conformably with r 42.1 of the UCPR, namely the costs should flow to the successful party, the Council.

43. I should add that in the course of argument advanced on behalf of Mr Cleary and his company it was contended that the Third Respondent, as the owner of the Premises, should also be made subject to an order for costs because he had ultimately accepted the Council’s position as to the use of the premises. I do not think that that is an appropriate course to take. The Third Respondent had accepted what was required by the Council before the commencement of proceedings. That is evidenced by the fact that he had instructed the managing agent to terminate the residential use of the Premises prior to proceedings being commenced, the notice of termination having been given on 9 July 2014. That circumstance, so it seems to me, demonstrates that the Third Respondent was in no way responsible for the Council commencing the proceedings or at least should not be ordered to bear any costs. The Third Respondent had done as much as he could lawfully do to secure compliance with the Council’s order.

44. As I have earlier indicated, given that the interlocutory orders have now been observed, the Council properly indicates that there is no further utility in pursuing the proceedings. It is necessary therefore for the Court formally to dispose of the proceedings. It is accepted that the appropriate course in that regard is to have an order for dismissal subject only to the order for costs which the Council seeks.

45. The orders that I make are therefore as follows:

1. The First and Second Respondents must pay the Applicant’s costs of the proceedings.

2. The proceedings are otherwise dismissed.

3. Exhibits on the costs hearing may be returned.

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Decision last updated: 04 March 2015