Megarry Excavation and Roadworks Pty Limited and Ors Ats Blacktown City Council

[2002] NSWLEC 198

Land and Environment Court

of New South Wales

CITATION:

Megarry Excavation and Roadworks Pty Limited & Ors Ats Blacktown City Council [2002] NSWLEC 198

PARTIES:

APPLICANTS:

MEGARRY EXCAVATION AND ROADWORKS PTY LIMITED; BLACKTOWN CITY COUNCIL

RESPONDENTS:

BLACKTOWN CITY COUNCIL; MEGARRY EXCAVATION AND ROADWORKS PTY LIMITED AND ORS

FILE NUMBER(S):

40141 of 2000

CORAM:

Bignold J

KEY ISSUES:

Costs :- Related class 4 and class 1 proceedings which are settled by consent orders (save as to costs).

LEGISLATION CITED:

Land and Environment Court Act 1979, s 69

CASES CITED:

Knox v Wingecarribee Council (1998) NSWLEC 83

DATES OF HEARING:

29/07/02

DATE OF JUDGMENT:

11/06/2002

LEGAL REPRESENTATIVES:

APPLICANT (Council):
Mr P Clay, Barrister
SOLICITORS
Michell Sillar

RESPONDENTS (Megarry):
Mr J Robson, Barrister
SOLICITORS
M McMahon

JUDGMENT:

IN THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

Matter No . 11044 of 2001

40141 of 2000

Coram : Bignold J

6 November 2002

MEGARRY EXCAVATION AND ROADWORKS PTY LTD

Applicant

v

BLACKTOWN CITY COUNCIL

Respondent

BLACKTOWN CITY COUNCIL

Applicant

v

MEGARRY EXCAVATIONS AND ROADWORKS PTY LTD AND ORS

Respondents

JUDGMENT

Bignold J:

A. INTRODUCTION

1. On 29 May 2002 the Court, by consent, made Orders regularly concluding these related class 4 and class 1 proceedings, save for the question of costs which were reserved in both proceedings. A copy of the Orders made in each proceeding is annexed hereto and marked A and B respectively.

2. The Council seeks an order for costs in both proceedings—in the class 4 proceedings upon the basis that the consent orders vindicate the Council’s position in the litigation, and in the class 1 proceedings upon the basis that the manner in which they were concluded (being tantamount to a belated discontinuance) demonstrates exceptional circumstances within par 10 of Court’s Practice Direction justifying an order for costs.

3. These orders are opposed, except to the extent that it is conceded that a very limited order in respect of the class 4 proceedings may be appropriate. In resisting the Council’s costs claims it is submitted that in view of the settlement outcomes in both proceedings, each party generally should, bear their own costs. The costs claimed by the Council are in the order of $280,000, which appears to be an extraordinary amount in proceedings which did not ultimately require any adjudication by the Court.

4. Since these are claims to costs in related class 4 and class 1 proceedings (which were concluded without the necessity for adjudication on the merits of the cases by the Court) it will be necessary to consider in some detail both the history and the outcome of the litigation in order to adjudicate upon the disputed question of costs.

5. The litigation was commenced with the filing of the class 4 proceedings claiming declaratory and injunctive (prohibitory and mandatory) relief, which proceedings at an early stage directly and deliberately foreshadowed and generated the related class 1 proceedings in respect of a development application that was mutually perceived as providing a potential solution to the Council’s claim in the class 4 proceedings. A detailed chronology of the litigation has been provided in the affidavit of Van Truong Tran sworn 15 July 2002 (Mr Tran is a Solicitor in the employ of the Council’s Solicitors who had the conduct of both cases). A copy of the detailed chronology is annexed hereto and marked “C”.
B. THE HISTORY OF THE LITIGATION

6. The following summary of the litigation is principally extracted from Mr Tran’s detailed chronology and the documentary evidence (Exhibit 1) which generally comprises multitudinous communications between the parties or their respective legal representatives from a time before the commencement of the litigation history and thereafter throughout that history. Importantly it is supplemented by notes extracted from the Court’s files in the related proceedings recording the progress of the litigation.

7. The litigation was commenced when the Council filed the class 4 proceedings on 19 September 2000 claiming declaratory and injunctive relief in respect of vegetation clearance and the deposition of fill material on land known as 73 Glengarrie Road, Marsden Park (the subject land) which activities were alleged to have been undertaken by the Respondents (whom I shall collectively refer to as the “Megarry Family” involving the corporation entity and its directors) without obtaining the necessary development consent under the Environmental Planning and Assessment Act 1979 (the EP&A Act). The subject land has an area of some 10 hectares and estimates of the amount of fill deposited on it range between 23,000 and 70,000 cubic metres, as recorded in the documentary evidence.

8. By Notice of Motion filed 6 December 2000, the Council claimed interlocutory relief but in response to that claim on 8 December 2000, the Court accepted undertakings proffered by the Megarry Family not to carry out specified development on the subject land and to provide within a stipulated time the Council with specified technical reports concerning the taking of precautionary or remedial action to protect the subject land from further environmental degradation or deterioration as a result of the alleged unlawful clearing and filling activities carried out thereon.

9. On 16 February 2001, the Court, by consent, made interlocutory orders, having noted inter alia (i) that the Megarry Family had advised the Council that they intended to lodge a development application with the Council “in respect of the development the subject of these proceedings”; and (ii) that pursuant to the Undertaking proffered on 8 December 2000, the Megarry Family had submitted a number of specified technical reports to the Council. The orders made by consent included an interlocutory injunction in similar terms to the Undertaking not to carry out specified development on the subject land and an order that an additional technical report (concerning the structural stability of the dam that had been constructed on the subject land) be submitted to the Council by a stipulated time. They also included an order that the Megarry Family carry out by 23 February 2001, the recommendations to prevent soil erosion contained in one of the technical reports that had been submitted to the Council pursuant to the Undertaking and the following orders in respect of the anticipated development application—

5. The Respondents must, on or before 9 March 2001, lodge with the Applicant the Development Application together with all supporting documentation

6. The Development Application must address the following matters:


(i) the origin, volume and composition of all fill and other material placed on the Land (including, without limitation, a contamination assessment in accordance with the requirements of State Environment Planning Policy No 55 if applicable);

(ii) an assessment of the impact of the fill:


(a) on the re-establishment of native vegetation of the Land;

(b) upon the remaining vegetation on the Land;

(iii) any further extraction or earthworks proposed on the Land;

(iv) proposed final contours of the Land.

7. If the Development Application is refused by the Applicant, the Respondents must commence any appeal pursuant to Section 97 of the Environmental Planning Assessment Act 1979 within 21 days of the date of the refusal.

10. In March 2001, the Megarry Family lodged with the Council a development application prepared by a consultant planner for the regrading and re-vegetation of the subject land. This development application was not determined by the Council until 7 December 2001 when development consent was refused for a number of stated reasons. The Megarry Family immediately commenced class 1 proceedings in this Court appealing the Council’s decision. The lodging of the development application and the commencement of the class 1 proceedings appear to be actions taken by the Megarry Family in accordance with the Court’s Orders made on 16 February 2001. Throughout the long period (March to December 2001) that the development application remained undetermined, the class 4 proceedings regularly were called over before the Registrar and were successively stood over for future mentions. On 17 January 2002, the class 1 proceedings were specially fixed for hearing on 20 to 24 May 2002 and in consequence the class 4 proceedings were, by consent, stood over to 11 June 2002 (evidently to await the outcome of the class 1 proceedings).

11. From that date (ie 17 January) until 14 May 2002, the class 1 proceeding provided the focal point of the litigation. However, on that day, Talbot J in response to the Council’s Notice of Motion filed on 9 May 2002 (seeking the vacation of the hearing dates fixed for the class 1 proceedings and the hearing on those dates instead of the class 4 proceedings or alternatively that fresh hearing dates be allocated for the class 4 and class 1 proceedings) made the following orders in the class 4 proceedings—

1. Direct the Applicant to file and serve Points of Claim for the relief sought by 4.00 pm 15 May 2002.

2. Applicant to serve particulars of evidence upon which it relies and filed in the class 1 in the appropriate form for a class 4 by 4.00 pm 15 May 2002.

3. Respondent to file and serve Points of Defence in answer to the Points of Claim by 4.00 pm 16 May 2002.

4. Respondent identify evidence upon which it relies and how it proposes to present that evidence by 4.00 pm 16 May 2002.

5. Pursuant to Par 5 Expert Witness Practice Direction, order that the following witnesses confer prior to 4.00 pm 17 May 2002 and present statement to the Court by 10.00 am 20 May 2002 identifying issues agreed and disagreed upon, together with reasons for disagreement. That is:


(a) Fauna -J Fakes, J Rawling, T James, Dr Clements

(b) Planning - G Apps, A Moore

(c) Soils - S Leake, R Morse

(d) Geotech – Dr Pells, Jeffery and Katauskas

(e) Hydrology - W Meynink, R Morse

(f) Land form - W Backhouse, R Morse


6. Matter listed for hearing or directions on 10.00 am 20 May 2002.

12. Additionally, Talbot J directed that the class 1 proceedings be mentioned for directions on 20 May 2002 but that the proceedings be not otherwise heard on that occasion.

13. On 17 May 2002, I adjourned until 20 May 2002 the Notice of Motion filed on 16 May 2002 by the Megarry Family that the class 4 proceedings not be heard on 20 May 2002. The Motion was supported by an affidavit of their Solicitor.

14. On 20 May 2002, by consent I adjourned both proceedings to 24 May 2002 for mention on which occasion, by consent I adjourned both proceedings to 29 May 2002 on which occasion I made the consent orders which concluded both proceedings (save for the unresolved question of costs).

15. The documentary evidence (Exhibit 1) indicates that throughout the litigation history—both pre and post the Council’s determination in December 2001 of the development application, the parties were negotiating to resolve the dispute. These negotiations involved the parties obtaining a considerable amount of expert advice. The development application lodged by the Megarry Family proposed the retention on the subject land of all of the imported fill material. The Council’s Solicitors oftentimes advised the Megarry Family legal representatives that the Council did not accept such an outcome—it wanted the fill to be exported from the subject land. In September 2001, whilst the development application remained undetermined, the Megarry Family changed its lawyers. Upon being retained, Mr McMahon Solicitor immediately informed the Council’s Solicitors that his clients desired the dispute to be settled and suggested mediation or neutral evaluation as the best way forward. Even at this stage it would have been apparent to all parties that the cost of effective rehabilitation of the subject land would involve several hundred thousand dollars. (The rehabilitation programme ultimately adopted by the consent orders requires an expenditure of nearly $400,000). Throughout this same period, the Megarry Family were implementing expert advice obtained to prevent soil erosion and sedimentation. This work was undertaken with the approval of the Council, although it appears that the Council at least initially did not think that it had been effective in preventing soil erosion and sedimentation and the initial remedial work required supplementation.

16. Negotiations between the parties and their respective expert advisors continued after the class 1 proceedings were commenced following the Council’s refusal of development consent in December 2001 but this process was temporarily interrupted in April 2002 when the Council’s experts following inspection of the subject land concluded that additional works had been carried out on the subject land, which in their opinion had undermined the utility and viability of the development application.

17. These conclusions led the Council’s Solicitors to allege that the Megarry Family had breached their undertaking and the interlocutory injunctions made on 16 February 2001. These allegations were reflected in an amended class 4 application and amended Points of Claim served and filed by the Council following the directions given by Talbot J on 14 May 2002.

18. Despite the emergence of these amended claims the parties continued to confer via their respective experts conferring in accordance with the directions given by Talbot J, and this process doubtless had a considerable, if not determinative influence, on the ultimate decision reached by the parties to settle both proceedings.

19. There are some particular aspects of the preparation stages of the class 1 proceedings which should be noted for their relevance to the disputed question of costs.

20. When the hearing dates in May 2002 were allocated, the Council had filed its Statement of Issues (dated 16 January 2002) which reflected the grounds for the Council’s determination refusing development consent to the development application.

21. Two months later, the Council filed a Notice of Motion raising three points of law in the proceedings, namely—

(i) whether EP&A Act, s 78A required the development application to be accompanied by a species impact statement and an environmental impact statement;

(ii) whether the development application could not be lawfully approved because it had not been supported by the requisite species impact statement and environmental impact statement; and

(iii) whether the development application could not be lawfully approved because it was seeking “to regularise development that had already occurred”.

22. The raising of question (iii) was totally at odds with the fundamental assumption upon which the entire litigation had hitherto been conducted, namely that the obtaining of development consent under the EP&A Act for the apparently unlawfully carried out development was a mutually recognised potential solution to the Council’s class 4 proceedings which had been deliberately stood over to await the outcome of the development application process and the class 1 proceedings appealing the Council’s determination.

23. The other aspect to be noted is the fact that the Megarry Family had filed no expert evidence in the Class 1 proceedings and that although the Council had served and filed a number of expert statements, they had not been filed in accordance with the time stipulated by the Rules of Court and the Court’s Practice Direction for the filing of expert evidence.

24. There are also some features of the class 4 proceedings which need to be particularly noted for their relevance to the disputed question of costs. These are the following:

(i) As originally formulated, the injunctive relief claimed was—

(a) to restrain the carrying out of further unlawful development;

(b) to remove the fill placed on the subject land;

(c) to re-establish the surface contours of the subject land to the condition immediately prior to the deposition of fill; and

(d) to revegetate cleared portions of native vegetation within the subject land;

(ii) the Undertaking accepted and Interlocutory Injunctions granted very early in the history of the class 4 proceedings secured the restraining order and put in place (via the development application and appeal process) a structure or scheme to achieve the mandatory relief (except for the removal of the fill);

(iii) from the time the development application was lodged (in March 2001) until the Council re-activated the class 4 proceedings (in May 2002) the class 4 proceedings were deliberately left to lie dormant pending the outcome of the development application and appeal processes (which had been mutually adopted by the parties in the consent orders granting interlocutory injunctions made on 16 February 2001, as the potential solvent to the Council’s claims);

(iv) In the suddenly reactivated class 4 proceedings, the Council’s claims were expanded (via its amended Class 4 application and amended Points of Claim) to include relief (declaratory and injunctive) under the National Parks and Wildlife Act 1974 but the amended claims significantly abandoned the Council’s claim that the imported fill material be removed from the subject land.

(v) The affidavit evidence which was ultimately filed by the Council on 22 May 2002 in the reactivated class 4 proceedings involved essentially no more than the translation into affidavit form of the content of expert statements that had been filed by the Council a week or so earlier in the class 1 proceedings.

(vi) The consent orders disposing of the class 4 proceedings effectively granted the injunctive relief claimed in the Council’s amended class 4 application, reflecting the results of the joint experts conferences..
C. THE COMPETING ARGUMENTS

25. As I have earlier noted, the Council’s claims to costs in both proceedings are based upon the outcomes obtained in the proceedings and the circumstances in which those outcomes were achieved.

26. In particular, its claim to costs in the class 4 proceedings is based upon the fact that the consent orders made in those proceedings very substantially vindicated the Council’s original claims (they did not fully vindicate the Council’s claim that the fill deposited on the subject land be removed therefrom) and effectively granted the injunctive relief claimed in the amended class 4 application.

27. In respect of its claim for costs in the class 1 proceedings, the Council submitted that because the Megarry Family had not filed and served any expert evidence, their appeal would have been bound to fail. Alternatively, it submitted that the circumstances in which the proceedings were concluded, by virtue of the settlement and consent orders, was tantamount to a belated discontinuance of the class 1 proceedings. On either ground the Council submitted that exceptional circumstances had been established for the purposes of par 10 of the Court’s Practice Direction, justifying the costs order.

28. So far as concerns the obvious overlap between the costs incurred in respect of the related class 4 and class 1 proceedings, the Council relies upon the decision of Lloyd J in Knox v Wingecarribee Council (1998) NSWLEC 83 where his Honour ordered the unsuccessful party to pay costs in favour of the successful Council in related class 1 and class 4 proceedings which he had heard together.

29. The competing arguments advanced on behalf of the Megarry Family focussed attention on the fact that the litigation had been settled, without the necessity for an adjudication by the Court, in the following circumstances—

(i) the Megarry Family had never disputed the Council’s claims that the subject land be rehabilitated;

(ii) throughout the litigation history, the Megarry Family had sought to settle the litigation by consenting to interlocutory relief and by seeking to implement the mutually perceived potential solution of obtaining development consent for the regrading of the levels of the subject land (by retaining imported fill material) and rehabilitating the native vegetation;

(iii) although the potential solution via the development application and appeal processes were not ultimately realised in that form, nonetheless the settlement of the class 4 proceedings was tantamount to the obtaining of development consent.

(iv) Because of the effect of the settlement of the class 4 proceedings the dismissal, by consent, of the class 1 proceedings did not mean that those proceedings were a futility. On the contrary, they provided the focus and the vehicle for the continuing settlement negotiations between the parties and their respective expert advisors which ultimately bore fruit in the settlement of both proceedings.

(v) Since the principal component of costs in the proceedings was referable to the fees payable to the expert advisors and since those costs were principally incurred by the Council in the class 1 proceedings, they should not be recoverable costs in the class 4 proceedings because they were only very belatedly imported into those proceedings when the Council sought the Court’s leave to reactivate those proceedings for adjudication in advance of, or in conjunction with, the adjudication in the related class 1 proceedings rather than awaiting the outcome of the class 1 proceedings which had been the fundamental basis for the parties’ mutual decision implemented in the consent orders made on 16 February 2001 that any adjudication in respect of the class 4 proceedings await the outcome of the class 1 proceedings.
D. ADJUDICATION

30. In adjudicating upon these competing submissions on the disputed costs question, the starting point for the exercise of the broad discretion in relation to costs orders conferred by the Land and Environment Court Act 1979, s 69 is an appreciation of the following general principles which are well settled in this Court—

(i) in class 4 proceedings costs are normally awarded in favour of the successful party by way of compensation;

(ii) in class 1 proceedings, costs are not normally awarded, save for exceptional circumstances;
(iii) in class 4 proceedings that are resolved by the parties without requiring any adjudication by the Court upon the merits of the case, costs are not normally awarded if it is concluded that the parties’ conduct in the litigation was reasonable, unless the Court is clearly of the opinion that one party was almost certain to have succeeded in the litigation; and

(iv) pursuant to Part 15 r 7 of the Rules of Court the Court may order the respondent to pay the costs of the proceedings “when the respondent satisfies or causes to be satisfied the claim of the applicant after the proceedings had been commenced”.

31. In the application of these several principles to the facts of the present litigation the central issue in dispute raised by the competing arguments concerns the question of the recovery of costs incurred by the Council in obtaining the services of many expert witnesses it retained in the litigation, because it is clear that those costs were principally incurred in the preparation of the Council’s case in the class 1 proceedings (where the usual rule is that costs are not awarded) rather than in the class 4 proceedings (where the usual rule is that costs follow the event). Another very important consideration concerns the fact that the proceedings were not only ultimately settled, but throughout the litigation history settlement negotiations were constantly entertained, especially per the medium of the development application and appeal processes, which were factored into the settlement negotiations at a very early stage in the history of the litigation.

32. Ultimately, I have concluded that there should be no order for costs in the class 1 proceedings because the settlement outcome, and the circumstances in which that outcome was achieved, do not qualify as “exceptional circumstances” for purposes of Par 10 of the Court’s Practice Direction which provides:

The practice of the Court is that no order for costs is made in planning and building appeals unless the circumstances are exceptional.

33. In so concluding, I reject the Council’s submission that the Megarry Family were bound to fail in the class 1 proceedings because they had failed to serve and file any expert evidence in the proceedings. This submission overlooks the fact that it was the Council that belatedly initiated action to vacate the May hearing dates (at a time when it, itself, had not served and filed its expert reports in accordance with the Rules of Court and the Court’s Practice Direction). It also overlooks the fact that it was the Council that had belatedly raised the question of law whether development consent could be lawfully granted to the development application by virtue of the fact that it was seeking to regularise the unlawful development already undertaken. Not only did the raising of this question of law entirely negate the fundamental assumption commonly adopted by the parties in the consent orders made on 16 February 2001 for the processing of the Council’s class 4 proceeding but, if sustained it would have rendered entirely unnecessary a hearing on the merits of the class 1 proceedings (so that the absence of the serving and filing of expert reports by the Megarry Family would have had no relevance or significance for the outcome of the class 1 proceedings). But more importantly still, the submission overlooks the fact that the Megarry Family had from the very beginning of the litigation history and throughout that history, retained many expert advisors to advise on the rehabilitation of the subject land and those advisors had participated in the settlement negotiations (including the progressing of the development application).

34. I also reject the Council’s submission that the circumstances in which the class 1 proceedings were concluded, was tantamount to a belated discontinuance of the proceedings by the Megarry Family. This submission does not accurately reflect the fact of the ongoing negotiations between the parties which obviously significantly influenced the settlement outcome in the proceedings. Nor does it reflect the fact that the overall effect of the settlement outcomes in the overall litigation was to sanction the required rehabilitation of the subject land (including the retention thereon of the fill that had been imported to the subject land) without the necessity for obtaining development consent for such works. In other words, despite the settlement outcome of the class 1 proceedings being the dismissal of the appeal, the settlement outcome in the class 4 proceeding was for the rehabilitation of the subject land to be undertaken without the necessity for obtaining the development consent that the development application had sought.

35. The consequence of my conclusion that no exceptional circumstances have been demonstrated justifying a costs order in the class 1 proceedings, is that the incurring of costs by the Council retaining expert advisors (as potential witnesses) in those proceedings is not recoverable, either in those proceedings or, for the reasons hereafter stated, in the class 4 proceedings.

36. As I have earlier noted, the costs of the Council incurred in the class 4 proceedings in filing affidavits by expert witnesses is confined to the costs incurred by the belated translation into affidavit form of the content of the expert’s reports that had been filed in the class 1 proceedings in the circumstances I have earlier narrated.

37. The present case is entirely distinguishable from the facts in Knox v Wingecarribee Shire Council where the related class 4 and class 1 proceedings were heard together and were the subject of an adjudication on the merits by Lloyd J. In that context, it is hardly surprising that Lloyd J rejected an argument advanced by the unsuccessful party (against whom his Honour made costs orders) that because the proceedings were heard together and because a major part of the proceedings involved questions crucially relevant to the class 1 proceedings, there should be no order for costs in either proceedings because of the Court’s usual practice of not awarding costs in planning appeals save for exceptional circumstances.

38. By way of distinction, in the present litigation, there has been no adjudication on the merits of the cases and there has been no concurrent hearing of both proceedings. Indeed, until very belatedly in the litigation history, the parties had deliberately stayed action in the class 4 proceedings (which were commenced in 2000) pending the outcome in the class 1 proceedings (which were commenced more than one year later).

39. Indeed, it is the deliberately created relationship between the two sets of proceedings which in my judgment is a decisive factor in the exercise of the costs discretion in the class 4 proceedings.

40. It is because the crucial feature of that relationship is that from the date when the interlocutory orders were made (16 February 2001) until 14 May 2002 when the Council reactivated the class 4 proceedings and sought the adjudication of those proceedings in priority to (or at least concurrently with) the adjudication of the class 1 proceedings (thereby reversing the priority in the timing of the required adjudications in those proceedings which the parties had deliberately chosen in February 2001 and had maintained throughout most of the litigation history) that no costs should be awarded in respect of that period, particularly when regard is had to the fact that throughout this extended period, the parties were actively negotiating a settlement solution in the litigation.

41. Having regard to the totality of the litigation history and to the ultimate settlement outcomes, I am of the firm opinion that the award of costs in favour of the Council on the basis that it obtained in the settlement outcome substantially all the relief it was seeking against the Megarry Family, should in the interests of fairness and justice exclude costs incurred by the Council in the period immediately following 16 February 2001 (when the interlocutory orders were made) until 14 May 2002 (when Talbot J made orders in response to the Council’s Motion to reactivate the class 4 proceedings changing the hearing arrangements that had long been settled for the two sets of proceedings).

42. In the circumstances, I am of the opinion that a just and reasonable costs award in favour of the Council is that the Megarry Family should pay the Council the costs incurred in the proceedings excluding all costs incurred by the Council from 17 February 2001 to 14 May 2002. Each party should bear its own costs of the hearing on costs.
E. CONCLUSIONS AND ORDERS

43. For all the foregoing reasons, I make the following orders:

1. There be no order for costs in proceedings No 11044 of 2001.

2. In proceedings 40141 of 2000, the Respondents pay the Council’s costs excluding all costs incurred in the period from 17 February 2001 to 14 May 2002 in the sum agreed, or failing agreement, as assessed.

3. Each party bear its own costs in respect of the Council’s application for costs.