Monaghan v Holroyd City Council

[2009] NSWLEC 112

Reported Decision: 167 LGERA 321

Land and Environment Court

of New South Wales

CITATION:

Monaghan v Holroyd City Council; Holroyd City Council v Monaghan [2009] NSWLEC 112

PARTIES:

The Class 1 matters
APPLICANT
Peter Monaghan
RESPONDENT
Holroyd City Council

The Class 4 matter
APPLICANT
Holroyd City Council
FIRST RESPONDENT
Peter Monaghan
SECOND RESPONDENT
MGF Holdings Pty Ltd
THIRD RESPONDENT
Monaghan & Gleeson Funeral Directors Pty Ltd

FILE NUMBER(S):

11315 of 2007; 11316 of 2007; 10574 of 2008; 10575 of 2008; 40122 of 2008

CORAM:

Sheahan J

KEY ISSUES:

COSTS :- related proceedings in classes 1 and 4, alleged illegal use of premises, reasonableness of the conduct of parties and solicitors, "successful" party in litigation, Calderbank principles, indemnity costs

LEGISLATION CITED:

Environmental Planning and Assessment Act 1979
Land & Environment Court Rules 2007
Uniform Civil Procedure Rules 2005
Holroyd Local Environmental Plan 1991

CASES CITED:

Arden Anglican School v Hornsby [2008] NSWLEC 103; (2008) 158 LGERA 224
Australian Securities Commission v Aust-Home Investments Limited (1993) 44 FCR 194
Australiawide Airlines Ltd t/as Regional Express v Aspirion Pty Ltd [2006] NSWCA 365
Brent v Levick [2009] NSWLEC 40
Calderbank v Calderbank [1975] 3 A11 ER 333
Canterbury City Council v Roads and Traffic Authority of New South Wales [2004] NSWLEC 536
Clark & Davis v Wollongong City Council (No.2) [2008] NSWLEC 226
Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No.2) [2000] FCA 602
Elite Protective Personnel Pty Ltd v Salmon [2007] NSWCA 322
Fordyce v Fordham (2006) 67 NSWLR 497
Kiama Council v Grant [2006] NSWLEC 96; (2006) 143 LGERA 441
Latoudis v Casey (1990) 170 CLR 534
Leichhardt Municipal Council v Green [2004] NSWCA 341
McCrohon v P J Gann [2009] NSWLEC 8
Monaghan v Holroyd City Council [2008] NSWLEC 1300
Monaghan v Holroyd City Council [2008] NSWLEC 1353
Newcastle City Council v Wescombe [2008] NSWLEC 301
One.Tel Ltd & Ors v Deputy Commissioner of Taxation [2000] FCA 270; (2000) 101 FCR 548
Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72
Port Stephens Council v Sansom [2007] NSWCA 299; (2007) 156 LGERA 125
Ray Fitzpatrick Pty Limited v Minister for Planning (No.5) [2008] NSWLEC 183
Re the Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622
Residents Against Improper Development Inc v Chase Property Investments Ltd [2006] NSWCA 323; (2006) 149 LGERA 360
Seven Network Limited v News Limited [2007] FCA 1062
South Eastern Sydney Area Health Service v King [2006] NSWCA 2
Universal Childcare Pty Ltd v Leichhardt Municipal Council [2008] NSWLEC 277
White v Baycorp Advantage Business Information Services Ltd [2006] NSWSC 910
Woollahra Municipal Council v Goldberg [2009] NSWLEC 32

DATES OF HEARING:

23 February 2009,
27 February 2009 (written submissions),
19 March 2009 (written submissions).

 
DATE OF JUDGMENT: 

8 July 2009

LEGAL REPRESENTATIVES:

Matters 11315 & 11316 of 2007 and 10574 & 10575 of 2008
APPLICANT
Mr G McKee, Solicitor of
McKees Legal Solutions

RESPONDENT
Mr S Kalfas SC with Mr S Flanigan
SOLICITORS
Mark Turnbull & Co

Matter 40122 of 2008
APPLICANT
Mr S Kalfas SC with Mr S Flanigan
SOLICITORS
Mark Turnbull & Co

FIRST, SECOND & THIRD RESPONDENTS
Mr G McKee, Solicitor of
McKees Legal Solutions

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

Sheahan J

8 July 2009

11315 of 2007) Monaghan v Holroyd City Council
11316 of 2007)
10574 of 2008)
10575 of 2008)

40122 of 2008 Holroyd City Council v Monaghan and Others

JUDGMENT

Introduction

1 His Honour: All five matters now before the court – namely, the class 4 proceedings brought by the Council against Mr Monaghan and two companies of which he is a principal, and the four separate class 1 proceedings brought by Mr Monaghan alone against the Council – have been determined, leaving only the question of costs to be resolved.

2 Mr Monaghan has carried on business as a funeral director in the Penrith area with one Scott Gleeson since 2000, but all five matters concern his activities in the Girraween area, where he (personally or through his private companies) owns five relevant residential properties.

3 For convenience I will refer to the parties simply as “Council” and “Monaghan” (embracing Mr Monaghan and/or the two companies involved in the class 4 proceedings).

4 Council filed a Notice of Motion for costs in each of the four class 1 proceedings on 10 October 2008. The costs of the class 4 proceedings were reserved when consent orders were made on 3 October, and directions were given for the question to be set down with the four class 1 Notices of Motion. All five costs applications were heard together.

5 The chronology of proceedings is crucial to the determination of the costs issues between the parties:

· Monaghan commenced Matters 11315 and 11316 on 21 December 2007.

· Council commenced the class 4 proceedings 40122 on 11 February 2008, and amended them on 20 May 2008.

· Monaghan commenced Matters 10574 and 10575 on 13 June 2008.

· The four class 1 matters were disposed of by orders made by Commissioner Hoffman variously on 24 July and 29 August 2008.

· The class 4 matter was resolved by consent orders made by me on 3 October 2008.

6 I will now shortly describe the various proceedings, and then the history of the litigation in more detail, before considering the costs applications.

The four class 1 proceedings

7 Matters 11315 and 11316 were appeals against orders issued by Council in respect of development at 194 and 192 Girraween Road, Girraween, respectively. The two properties are adjoining but separate Torrens Title lots, and the Council-approved development involved a dwelling on each, and the complementary use of the remaining land across both. Council was also the principal certifying authority for the development on both.

8 The orders appealed were issued on 30 November 2007, under s 121B of the Environmental Planning and Assessment Act 1979 (“the Act”), requiring compliance with the terms of the relevant development consents (2005/562 re No.194, and 2005/561 re No.192), and removal of “all fill retaining and concrete works which are not in accordance with the approved plan”.

9 On 28 May 2008 Monaghan made s 96 modification applications to the Council, as a result of Council’s orders, and both those modification applications were refused on 4 June 2008. Both refusals were appealed on 13 June 2008 – Matter 10574 related to 194 Girraween Road, and Matter 10575 to 192 Girraween Road. Exhibit C4 is a copy of Mr Monaghan’s s 96 application in respect of DC 2005/561 (No.192).

10 The “as built” situation at 192 and 194 Girraween Avenue is clearly depicted in the photographs in Exhibit C3, and Monaghan’s intention was clearly to have the orders dismissed on appeal (in 11315/6), and/or the consents modified (in 10574/5), so that the “as built” development could remain.

11 All four class 1 proceedings were heard together by Hoffman C on 17 July 2008, and the parties agreed that the Commissioner should decide them in two pairs, with the s 96 matters being dealt with first.

12 Commissioner Hoffman published:

(1) his judgment in those two later matters (10574 and 10575) on 24 July 2008 ( Monaghan v Holroyd City Council [2008] NSWLEC 1300),
and later
(2) his judgment in matters 11315 and 11316 on 29 August 2008 ( Monaghan v Holroyd City Council [2008] NSWLEC 1353).

13 In judgment 1300 he noted (at par [10]) the following reasons for Council’s refusal of the s96 applications:

· “The council has concerns about whether there is completion of stormwater drainage in accordance with the consents.

· In terms in [sic] streetscape impact the council says it is unsatisfactory because the proposal has large areas of paved concrete and planter boxes or planter garden areas with raised masonry walls in the front setback.

· The paved areas both in the front and side setbacks mean both developments fail to achieve the minimum landscaped area of 1/3 the total site area.

· Both developments do not achieve the minimum area of soft landscaped private open space exclusive of paved areas.

· The proposed changes to vehicle access to each site are inpractical [sic] and contribute to the unsatisfactory streetscape impact.”

14 Hoffman C considered that the unmodified consent provided a much better outcome in streetscape terms, and much simpler access for drivers wanting to enter or leave the adjoining properties, but he concluded that the two s 96 applications should be refused for non-compliance with a number of specific provisions of the Development Control Plan 2007, as applied in the residential 2(a) zone under Holroyd Local Environmental Plan 1991.

15 In his orders of 24 July 2008 Hoffman C dismissed Monaghan’s appeals against refusal of the modifications (appeals 10575/6), and deferred making orders in Appeals 11315 and 11316 of 2007 for 30 calendar days to allow the parties to “negotiate any conditions to the orders” or “make separate written submissions on any amendments to the orders for my consideration prior to final determination of those appeals.”

16 When agreement was not reached, Hoffman C dealt with the competing submissions of the parties, and concluded in his second judgment (1353), dated 29 August 2008, essentially that the Council’s suggested orders (as amended on the basis of submissions from both parties) were appropriate.

17 The Council was by then not seeking full compliance with the original consent, and put to Monaghan and the court what the Commissioner saw as a “reasonable compromise” – “a good environmental outcome and substantial compliance with the Council’s Controls” (see par [5] of judgment 1353).

18 The Orders made by Hoffman C in that second judgment on 29 August 2008 were comprehensive, and very detailed, in respect of the two properties, and included a timetable. In view of their length I will not set out the orders in full, save to note that on 20 February 2009 the court varied the timetable, resulting in 17 April 2009 becoming the last date for Monaghan’s compliance.

The class 4 proceedings

19 The class 4 proceedings, which had been commenced on 11 February 2008, required amendment on 20 May 2008 to join the third respondent as a party.

20 The class 4 matter (as so amended) involved not only Nos.192 and 194, but also Nos.198, 157 and 159 Girraween Road, and the uses to which all those premises were put by Monaghan. Monaghan himself gives his residential address as No.157, and his business partner Scott Gleeson gives his residential address as No.194.

21 The relationship among all those properties is depicted in the aerial photograph in Exhibit C2. No.159 is approximately opposite No.198, and No.157 is opposite No.196, a property occupied for the last 30 years by Joseph Debrincat. A Mrs Maria Tripolone resides at No.155.

22 As amended on 20 May 2008, the class 4 application sought the following relief:

“ 1. A declaration that in breach of s.76B of the Environmental Planning and Assessment Act 1979 (‘the Act’), the First Respondent and the Third Respondent have carried out development at 157, 192 and 194 Girraween Road Girraween for the purposes of commercial premises, a use which is prohibited under the Holroyd Local Environmental Plan 1991 (‘the LEP’).
1A. A declaration that in breach of s.76B of the Act the Second Respondent has carried out development at 198 Girraween Road Girraween for the purposes of commercial premises, a use which is prohibited under the LEP.
2. A declaration that in breach of s.76A(1)(b) of the Act the First Respondent has carried development [sic] at 192 and 194 Girraween Road which is not in accordance with development consent No. 2005/561 and 2005/562 respectively.
3. An order that the First Respondent and Third Respondent by themselves, their servants, agents and assigns be restrained from carrying out development for the purposes of commercial premises at 157, 192 and 194 Girraween Road Girraween.
3A. An order that the Second Respondent, by itself, its servants, agents and assigns be restrained from carrying out development for the purposes of commercial premises at 198 Girraween Road Girraween.
4. An order compelling the First Respondent to comply with development consent No.2005/561 and 2005/562.
5. A declaration that the First Respondent has occupied 192 and 194 Girraween Rd Girraween without an occupation certificate having been issued, in breach of s.109M(1) of the Act.
6. A declaration that in breach of s.76A(1)(a) of the Act the First Respondent has used or permitted the use of 159 Girraween Road, Girraween for the purpose of a ‘place of public worship’ without development consent being obtained or in force.
7. In the alternative to Order 6, a declaration that in breach of s.76B of the Act the First Respondent has used or permitted the use of 159 Girraween Road, Girraween for the purpose of a ‘place of assembly’ without development consent, a use which is prohibited under the LEP.
8. An order that the First Respondent by themselves, their servants, agents and assigns be restrained from using or permitting the use of 159 Girraween Road, Girraween for the purpose of a ‘place of public worship’ or ‘place of assembly’.
9. An order that the Respondents pay the Applicant’s costs of these proceedings.
10. Such further or other orders as the Court thinks fit.”

23 Following the completion of the court’s consideration of all four class 1 proceedings, the parties negotiated and reached agreement on orders to be made “by consent and without admissions” in the class 4 matter. I made those consent orders on 3 October 2008, and agreed to amend them, as entered, on 7 November 2008, to accurately reflect the agreement, which had been reported to me in open court on 3 October 2008, that they were to be made expressly “without admissions”.

24 The orders made in the class 4 proceedings on 3 October/7 November 2008 (apart from directions for evidence and submissions on costs) provide as follows:

“ By Consent of the Parties and without admissions, the Court orders that:
1. The First, Second and Third Respondents shall by themselves, their servants, agents and assigns refrain from carrying out development for the purposes of commercial premises at 157, 192 and 194 Girraween Road, Girraween.
2. The First Respondent shall by themselves, their servants, agents and assigns refrain from bringing onto the premises at 157, 192 and 194 Girraween Road, Girraween, any coffins (whether functional or ornamental) without the prior permission of the Council.
3. The First Respondent shall terminate the current lease of 159 Girraween Road, Girraween if at the expiry of 12 months of the date of these orders the premises are being used for the purposes of a place of public worship AND a development consent has not been granted for that use.
4. The First Respondent shall within 14 days of the date of these orders amend the lease with the lessee of the premises at 159 Girraween Road, Girraween requiring that:
(a) the lessee must not use the premises as a place of public worship without development consent unless it lodges a development application with Council within 6 months of the date of these orders in order to obtain consent for that use.
(b) Any use of the premises for the purposes of public worship during the period of 12 months from the date of these orders is limited to a maximum of 12 persons at any one time and to one occasion per day.
A copy of the First Respondent’s amended lease in accordance with this order, or if the lease is oral a copy of written advice to the lessee of the requirements of this order, must be provided to Council within 21 days of the date of these orders.
5. The First Respondent may permit the congregation of a maximum of 12 persons at any one time for the purpose of religious worship at 159 Girraween Road, Girraween, once per day during week days for a period of 12 months from the date of these orders.
6. The Second Respondent shall within 14 days of the date of these orders amend the lease with the lessee of the premises at 198 Girraween Road, Girraween requiring that they must not use the premises for the purposes of a commercial premises or bring onto the premises any coffins (whether functional or ornamental) for temporary or permanent storage. A copy of the Second Respondent’s amended lease in accordance with this order, or if the lease is oral a copy of written advice to the lessee of the requirements of this order, must be provided to Council within 21 days of the date of these orders.
7. Costs are reserved.
8. The proceedings are otherwise dismissed.

The litigation history in more detail

25 Because of the complexity of the litigation between these parties it is necessary to go into substantially more detail than the above in recounting the relevant history.

26 The following outline has been drawn from:

(1) the “ Council bundle ” of documents in Exhibit C1 , originally annexed to an affidavit by Council’s solicitor Shaireen Gulnaaz Buksh filed in the class 4 matter on 3 December 2008;
(2) the affidavit evidence before the court on the costs applications, being six further affidavits by Ms Buksh, one filed on 10 October 2008 in each of matters 11315, 11316, 10574 and 10575, together with one further affidavit filed on 8 December 2008 in each of 11315 and 11316;
(3) the court record itself; and
(4) uncontested assertions in the written and oral submissions of the parties.

27 In April 2007, Council’s solicitor retained a private investigator to enquire into concerns that Monaghan was storing dead bodies at No.157, was using No.159 as a funeral chapel, and was using Nos.192, 194 and 198 collectively as a “showroom” for his funeral business. All are uses for non-residential purposes (four “commercial” and one “public worship”), and were not covered by any development consent.

28 On 31 August 2007, Council gave notice under s118C of the Act of its intention to enter all five premises on 5 September 2007. On 4 September 2007 Monaghan’s solicitor complained that Monaghan’s premises had been inspected already four times by Council and nine times by the Department of Health, at the instigation (it was alleged) of a “harassing” neighbour.

29 On 18 September 2007, Council’s solicitor wrote to Monaghan asserting the use of Monaghan’s five premises as “shop” and/or “commercial premises”, both prohibited in the locality, and sought undertakings from Monaghan not to use (or continue to use) any of the premises for “purposes that are prohibited in the Residential 2(a) zone”, or “for any other purpose that requires development consent from Council unless development consent for that purpose has been obtained”. Class 4 proceedings were threatened.

30 On 25 September 2007, Monaghan gave those undertakings in writing, dated 24 September, in respect of all five premises, but without any admission of illegal use.

31 On 30 November 2007, Council issued to Monaghan two orders “15” under s 121B of the Act regarding concrete laid at 192-194, allegedly contrary to Development Consents 2005/561 & 562.

32 On 21 December 2007, class 1 (or class 2) appeals 11315 and 11316 were commenced. Negotiations commenced between the parties and a meeting was scheduled for 13 February 2008.

33 On 11 February 2008, the class 4 proceedings were commenced, the Council contending that there were ongoing breaches by Monaghan of the undertakings he (and at least one of his companies) had given. No interlocutory relief was sought.

34 On 13 February 2008, Monaghan declined to attend the planned settlement meeting, because the class 4 had been commenced, “duplicating” the subject matter of the class 1 proceedings. He suggested the s 121B orders should be withdrawn.

35 On 21 February 2008 Monaghan’s solicitor objected that Council’s Notice to Produce in the class 4 matter was a “fishing” exercise. Those complaints continued over the months that followed.

36 A meeting was held between legal representatives and a Council representative on 5 March 2008, and, apparently at the request of Monaghan, both Council and its solicitor wrote detailed letters on 19 March 2008 setting out what had to be done by Monaghan to resolve the dispute.

37 Correspondence and the filing of affidavits continued in the class 4 proceedings. On 1 April 2008, Council’s costs of those proceedings alone were estimated at $62,575.98 (assuming consent orders would be agreed upon, based on the 19 March proposals).

38 Council’s Points of Claim were filed in the class 4 matter on 30 April 2008, and Council gave notice of its intention to again enter four of the subject premises. Monaghan’s solicitors complained about that notice on 1 (and again on 4) May, and Council served its notice on 2 May – threatening to use reasonable force if required. Further evidence (from Mr Debrincat and Mrs Tripolone) in the class 4 matter was filed and served on 5 May, and still further evidence on 7 May.

39 On 12 May 2008, Council’s solicitors filed a Notice of Motion to join the third respondent as a party to the class 4 proceedings.

40 On 13 May 2008, having forwarded suggested Facts and Contentions to Council, Monaghan again proposed withdrawal of the s 121B orders, and the discontinuation of his class 1 appeals, with each party to pay its own costs.

41 On 14 May 2008, Council responded to the Facts and Contentions and adhered to the position it had outlined on 19 March.

42 On 15 May 2008, Council made what it expressed to be a Calderbank offer (Calderbank v Calderbank [1975] 3 All ER 333), suggesting some consent orders along the lines of the 5 March discussions and the 19 March letters. Council gave ground on the concreting issue, but wanted its costs paid (Council said it would accept 75% of its assessment in the amount of $93,842.93, namely $70,382.20).

43 At a s 34 conference with Commissioner Hussey on 19 May 2008, in the original class 1 appeals (11315/6), Monaghan indicated he would lodge s 96 modification applications to regularise the “as built” configuration of Nos.192 and 194.

44 On 20 May 2008, the class 4 proceedings were amended as noted above. (They had already been before the court on 7 and 28 March, 18 April, and 16 May). On 25 May 2008, Council’s solicitor forwarded to Monaghan’s solicitor further sealed copies of many class 4 documents “by way of service on the third respondent”.

45 The s 96 applications were lodged on 28 May 2008, and refused by Council on 4 June.

46 On 5 June 2008, the Chief Judge facilitated the hearings of the two then current class 1 proceedings, and also of the two then foreshadowed appeals against the 4 June s 96 refusals, being run together before a Commissioner on 17 July 2008.

47 On 13 June 2008, the class 1 appeals 10574 and 10575 against the s 96 refusals were filed, and so were Monaghan’s Points of Defence in the class 4 proceedings.

48 On 11 July 2008 the class 4 proceedings were set down for hearing on 7-10 October 2008. Council continued complaining about breaches by Monaghan of the court timetables. (The class 4 matter was before the court again on 1 August, and on 25 and 30 September).

49 Hoffman C heard all four class 1 matters on 17 July 2008. He gave the first of his two judgments on 24 July 2008 (concerning the s 96 modification applications). As noted above ([15]), he allowed 30 days from 24 July 2008 for the parties to reach agreement on orders he might make, by consent, in the original class 1 appeals against Council’s s 121B orders.

50 On the 30th day (22 August 2008), no agreement having been reached on a draft set of orders provided to Monaghan by Council on 7 August, Council filed its version, plus written submissions in support, and put Monaghan on notice of its intention to seek an order for “costs thrown away” because Council’s version was prepared without the benefit of any response by Monaghan to its draft. Late that same day Monaghan provided Council’s solicitor with a comprehensive response to the draft orders, and that would appear to have reached the court on 28 August (see judgment 1353 at [5]),

51 On 29 August 2008, Hoffman C published his second judgment (1353), and made comprehensive orders in respect of each of lots 192 and 194.

52 On 9 September 2008, Council’s solicitor noted that the alleged commercial use of the premises appeared to have ceased. He put to Monaghan that, if the premises were now used only for residential purposes (and perhaps only private worship), the dispute had been effectively resolved by the court’s orders in the four class 1 proceedings, and he proposed some consent orders, and deferment of the costs issues, in the class 4 proceedings, which were then approaching their allocated hearing dates (7-9 October 2008).

53 Monaghan was slow to respond, and Council continued to prepare for the class 4 hearing.

54 On 16 September 2008, Monaghan suggested some amendments to the proposed orders. The orders were ultimately settled between counsel for the parties, executed by Monaghan on 29 September, and executed by Council on 30 September.

55 The consent orders were made by me on 3 October. The question of costs was formally reserved, and directions were given for its determination (see [4] above).

56 Negotiations then commenced on costs in all five matters, but no agreement was reached.

A summary chronology

57 The chronology of relevant key events recounted above may be summarised as follows (see also the chronology of proceedings in [5] above):

§ April 2007 – investigations of Monaghan’s use of premises

§ September 2007 – undertakings sought and given

§ November 2007 – orders issued

§ December 2007 – orders challenged in first pair of class 1 (or 2) appeals

§ February 2008 – class 4 proceedings commenced

§ March 2008 – “settlement” discussions lead to Council giving details of what is required of Monaghan

§ April-May 2008 – proceedings pursued

§ June 2008 – modifications refused, and the second pair of class 1 appeals commenced

§ July 2008 – four class 1 matters heard together. Orders made in second pair

· August 2008 – Orders made in first pair of class 1 appeals

· September 2008 – negotiations to settle the class 4 proceedings

· October 2008 – Consent Orders made in the class 4 matter approximately one week before its scheduled hearing.

· October-December 2008 – directions given for all costs issued to be determined. Negotiations on costs pursued without success. Costs hearings fixed for 23 February 2009

The claims and counter-claims for costs
The Class 1 matters

58 Council claims to have been successful in all four of the class 1 matters.

59 Appeals 10574 and 10575 were dismissed, and, in general terms, the orders made by the court in appeals 11315 and 11316 were largely (but not completely) those sought by Council.

60 Council’s Notices of Motion in both 10574 and 10575 seek an order that Monaghan pay the Council’s costs for the period 27 May to 24 July 2008, plus the costs of the Notices of Motion. The grounds are that such an order is fair and reasonable because:

(1) Monaghan acted unreasonably in the conduct of the proceedings, including by way of delay in providing information and/or responding to offers made by the Council that were necessary for the Council to gain a proper understanding of, and give proper consideration to, the relevant application made to the Council; and
(2) Monaghan commenced those proceedings without reasonable prospects of success, and continued to progress the s 96 application in unreasonable circumstances.

61 Council’s Notices of Motion in both 11315 and 11316 seek an order for costs for the period 16 January to 15 May 2008, and then on an indemnity basis from 15 May 2008 to 1 September 2008, plus costs on an indemnity basis for the Notice of Motion. The grounds are that it is fair and reasonable because:

Monaghan acted unreasonably in the conduct of the proceedings, and unreasonably delayed providing information and/or responding to offers made by the Council that were necessary for the Council to gain a proper understanding of, and give proper consideration to, the relevant application made to Council.

62 Monaghan submits there should be no order for costs in favour of either side in any of the four class 1 matters.

The Class 4 matter

63 Council argues that the consent orders achieved the overwhelming majority, if not all, of the relief it sought (in its final form) in class 4, making it the “successful” party, and so entitled to:

(1) a general costs order in its favour, including for “ costs in the cause ” on relisting the case on timetable issues on 13 and 23 June 2008, and
(2) an order that those costs be paid on an indemnity basis after 1 April 2008, including the costs of the hearing of the costs claims.

64 Monaghan seeks an order that Council pay the costs of all respondents in the class 4 matter, as the class 4 proceedings duplicated the subject matter of the various class 1 proceedings, and so should not attract any order for costs, unless in Monaghan’s favour in all the circumstances of the litigation as a whole. Alternatively, Monaghan seeks an order that each party pay its own costs of the class 4 proceedings.

The evidence and submissions on costs

65 Competing sets of written submissions were before the court at the costs hearing on 23 February 2009. Council had filed its written costs submissions in the class 4 matter on 5 December 2008, including (at par 158) a schedule comparing the relief sought in the class 4 application (as amended) with the relief “achieved” in the consent orders, but at the costs hearing it provided a further schedule, purporting to compare the relief proposed on 15 May 2008 with the relief granted by consent at the end of the class 4 proceedings.

66 Late reference was also made at the costs hearing to Elite Protective Personnel Pty Ltd v Salmon (“Elite”) [2007] NSWCA 322, and leave was granted to both parties to file supplementary written submissions on the import of that case and on the schedule.

67 All Council’s evidence on the costs question was admitted without any objection from counsel for Monaghan, but Senior Counsel for Monaghan (Mr Kalfas SC) urged the court to beware of assertions of fact contained in Exhibit C1, in the Buksh affidavits, and in Council’s written submissions, unsupported by evidence, and to bear in mind (1) that Council’s evidence in all five proceedings was contested by Monaghan, and (2) that the settlement of the class 4 matter was specifically entered “without admissions”.

68 Council’s submissions are replete with references to untested evidence filed in the substantive proceedings but not read in the costs proceedings, and has tried to satisfy the court on the costs applications that Monaghan was guilty of the illegal use alleged. However, it is well accepted law that the court cannot conduct a hypothetical trial on the merits in order to decide the question of costs. Re the Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622; Australian Securities Commission v Aust-Home Investments Limited (1993) 44 FCR 194.

The Calderbank principles

69 In its written class 4 costs submissions dated 3 February 2009 (at pars 162-164), Council suggests that it sent to Monaghan’s solicitors three Calderbank letters, dated respectively 1 April, 15 May, and 23 October 2008. All three of these letters are in evidence (in Exhibit C1 at tabs 29, 49, and 97 respectively). In its various class 1 costs submissions, Council refers to the 15 May letter as the “first” and the 23 October letter as the “third” of the Calderbank letters relevant to the court’s consideration of costs, without identifying a “second” one.

70 The four page letter of 1 April (Exhibit C1, tab 29) is clearly not a Calderbank letter at all, albeit that it is headed “without prejudice save as to costs”, gives copious detail of how extensive Council’s costs in the class 4 matter alone had become ($62,575.98), and offers some compromise on that amount (a 10% discount) if accepted by 15 April. The letter makes no proposal at all regarding the substantive disputes between the parties.

71 The other two letters are both headed “Calderbank offer”, and should be set out in full.

72 The letter of 15 May 2008 is in the following terms (Exhibit C1, tab 49):

“ WITHOUT PREJUDICE SAVE AS TO COSTS
Calderbank Offer
Dear David,
Holroyd City Council v Peter Monaghan
Properties: 157, 159, 192, 194 and 198 Girraween Road, Girraween
Land and Environment Court Proceedings No.40122 of 2008 and 11315 and 11316 of 2007
We refer to the ‘without prejudice’ meeting on 5 March 2008 at Council chambers where you and your Counsel attended.
Purpose of this letter
The purpose of this letter is to put to you and your client a set of proposed consent orders to resolve the proceedings between the parties and, as a separate matter, an offer of costs.
Background
At the ‘without prejudice’ meeting we discussed various options for resolving these Class 2 orders matters and the Class 4 matter without proceeding to hearing. It was agreed that Consent Orders would be drafted. We prepared at your request a detailed letter of actions required as a basis for Consent Orders, and requested that you confirm in writing your client’s instructions. The Council also sent two letters on 19 March 2008 regarding the outstanding matters required to be addressed in order for an Occupation Certificate to be issued for 192 and 194 Girraween Road, Girraween which relate to both the Class 2 and Class 4 proceedings before the Court.

We made numerous attempts to contact you to progress resolution of the matter. We enclose copy of letter dated 9 April 2008.

Unfortunately, you have chosen not to respond to this correspondence, and as stated in our letter dated 15 April 2008, we were left with no alternative but to seek a timetable for progress of the matters at the Land and Environment Court on 18 April 2008. As you are aware, a timetable has been set for the exchange of evidence in these matters, and for the Class 2 orders matters a section 34 Conference has been set down for 19 May 2008. We are concerned about the incurring of unnecessary costs in these matters, particularly when the parties were close to reaching an agreement.

We are instructed to propose the attached Consent Orders as a compromise solution in accordance with the principles enunciated in the decision of Calderbank v Calderbank [1975] 2 A11 ER 333 [sic]. These Consent Orders are in accordance with the ‘without prejudice’ discussions on 5 March 2008. As shown on the coloured plans for 192 and 198 Girraween Road, Girraween attached to Council’s letters dated 19 March 2008, Council has compromised on the concreting and fill to be removed (although the concreting did not comply with the respective development consents).

The Consent Orders represent a genuine offer of compromise which in our opinion is likely to be awarded by the Court. We advise this compromise solution must also include an order for costs in favour of the Council at an agreed amount. We are instructed that at this stage prior to the incurring of further costs in preparation of evidence, we are prepared to negotiate on the quantum of costs sought.

We believe we are entitled to recover all our costs, however, Council is prepared to accept 75% of costs as assessed or agreed between the parties or 75% of our costs incurred to 15 May 2008 in the amount of $93,842.93 discounted to $70,382.20.

This compromise offer is open for acceptance for seven (7) days from the date of this letter, and our costs are also open for negotiation for seven (7) days, being close of business 21 May 2008. As stated above, this offer is made in reliance upon the principles in Calderbank v Calderbank.

We await your response”.

73 The letter of 23 October 2008 is in the following terms (Exhibit C1, tab 97):

“ WITHOUT PREJUDICE SAVE AS TO COSTS
Calderbank Offer
Dear David,
Holroyd City Council v Peter Monaghan
Properties: 157, 159, 192, 194 and 198 Girraween Road, Girraween
Land and Environment Court Proceedings No.40122 of 2008, 11315 of 2007, 11316 of 2007, 10574 of 2008 & 10575 of 2008
We refer to Order 7 of the Consent Orders reserving the issue of costs.
Purpose of this letter
The purpose of this letter is to put to you and your client an offer to settle the issue costs [sic] without the need to resort to a hearing and to put your client on notice that if the offer set out is not accepted, an application for indemnity costs will be pursued from the date of expiry of this offer.
Offer to settle costs issue
Our costs calculated to 14 October 2008 amount to $146,479.27 in the Class 4 proceedings and $33,017.13 in the Class 1 proceedings.
In an effort to genuinely settle the issue of costs between the parties, we are prepared to accept an offer of the Respondent agreeing to pay:
1. 60% of costs in the Class 4 proceedings amounting to $87,887.56;
2. 50% of costs in the Class 1 proceedings amounting to $16,508.57.
We are prepared to accept your agreement on either or both of the offers.
This compromise offer is open for acceptance for twenty eight (28) days from the date of this letter, being close of business 20 November 2008 .
The above offer is made in accordance with the principles set out in Calderbank v Calderbank [1975] 2 ALL ER 333 [sic].
We look forward to receiving your response.

...”

74 It is trite to observe that mere use of the word “Calderbank” is not sufficient to bring a communication within the ambit of the Calderbank principles, but clearly Council put Monaghan on notice in both the 15 May and 23 October 2008 letters that it would seek to rely on those principles in arguing costs at the conclusion of all the proceedings.

75 To ground any order for indemnity costs, the letter relied upon to invoke the Calderbank principles must constitute “a genuine offer of compromise which it was unreasonable for the [offeree] not to accept”. See Leichhardt Municipal Council v Green (“Green”) [2004] NSWCA 341, at [46] per Santow JA, and Elite, at [99] per McColl JA.

76 In Elite (at [141]), Basten JA, referring to cases such as White v Baycorp Advantage Business Information Services Ltd [2006] NSWSC 910 (Campbell J) and Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No.2) [2000] FCA 602 (Goldberg J), pointed out that Calderbank “offers of compromise may well not involve money judgments at all, but undertakings as to future conduct, which may be accompanied by a proffered sum on account of costs, whether or not so described”.

Relevant Rules

77 In so far as the class 4 proceedings were “otherwise dismissed” (par [24] order 8), UCPR 42.20 relevantly provides:

“(1) If the court makes an order for the dismissal of proceedings, either generally or in relation to a particular cause of action or in relation to the whole or part of any claim, then, unless the court orders otherwise, the plaintiff must pay the defendant’s costs of the proceedings to the extent to which they have been dismissed.
(2) If the court makes an order striking out a defence, either generally or in relation to a particular cause of action or in relation to the whole or part of any claim, then, unless the court orders otherwise, the defendant must pay the plaintiff’s costs of the proceedings in relation to those matters in respect of which the defence has been struck out.”

78 In so far as the Land & Environment Court Rules 2007 provide guidance on determination of costs issues in relation to class 1 proceedings, Rule 3.7 relevantly provides:

“(2) The Court is not to make an order for the payment of costs unless the Court considers that the making of an order as to the whole or any part of the costs is fair and reasonable in the circumstances.
(3) Circumstances in which the Court might consider the making of a costs order to be fair and reasonable include (without limitation) the following:

(a) that the proceedings involve, as a central issue, a question of law, a question of fact or a question of mixed fact and law, and the determination of such question:
(i) in one way was, or was potentially, determinative of the proceedings, and
(ii) was preliminary to, or otherwise has not involved, an evaluation of the merits of any application the subject of the proceedings,
(b) that a party has failed to provide, or has unreasonably delayed in providing, information or documents:
(i) that are required by law to be provided in relation to any application the subject of the proceedings, or
(ii) that are necessary to enable a consent authority to gain a proper understanding of, and give proper consideration to, the application,
(c) that a party has acted unreasonably in circumstances leading up to the commencement of the proceedings,
(d) that a party has acted unreasonably in the conduct of the proceedings,
(e) that a party has commenced or defended the proceedings for an improper purpose,
(f) that a party has commenced or continued a claim in the proceedings, or maintained a defence to the proceedings, where:
(i) the claim or defence (as appropriate) did not have reasonable prospects of success, or
(ii) to commence or continue the claim, or to maintain the defence, was otherwise unreasonable.”

Relevant authorities

79 This is the first occasion I have been referred to Elite. Its particular relevance on costs is its consideration of offers “inclusive of costs” in the context of the Calderbank principles, but it contains useful restatements of relevant issues to be considered in the exercise of judicial discretion on costs.

80 During 2008-09 I have been called upon to exercise that judicial discretion in many cases, and I have been required to distill the relevant principles from a review of many relevant authorities and to apply those principles to the facts of the case at hand.

81 I will not restate in full all the analyses I have undertaken, but I draw attention to the following decisions and to the authorities I reviewed in them:

· Brent v Levick [2009] NSWLEC 40 – a class 4 matter involving both undertakings and s 96 modifications. See the general principles discussed at [57]-[66].

· Ray Fitzpatrick Pty Limited v Minister for Planning (No.5) (“Fitzpatrick No.5”) [2008] NSWLEC 183 – a complex class 3 compensation matter in which “abandonment” of proceedings, litigant conduct, and indemnity costs were major issues. See the general principles discussed at [31]-[39], [42]-[43], [48]-[51], and [79].

· Clark & Davis v Wollongong City Council (No.2) [2008] NSWLEC 226 – a class 4 judicial review case where indemnity costs were sought. See the general principles discussed at [35]-[37], and [40].

· Universal Childcare Pty Ltd v Leichhardt Municipal Council (“Universal”) [2008] NSWLEC 277 – an unsuccessful class 1 appeal in which I made a partial order for costs in favour of the Council. See the general principles discussed at [5]-[14], and [59]-[70]. (Mr McKee relies in this case on my decision in Universal, but I find it quite unhelpful to his submissions, as in this case it is his client that behaved in the way for which I criticised the applicant in that case).

· McCrohon v P J Gann (“McCrohon”) [2009] NSWLEC 8 – a class 4 matter which lost its utility when a s 96 modification application and a related class 1 appeal were resolved. See the general principles discussed at [22]-[39].

· Woollahra Municipal Council v Goldberg (“Goldberg”) [2009] NSWLEC 32 – a class 4 civil enforcement matter, following up non-compliance with Council orders which had not been challenged, in which I held that the Council achieved “better compliance” by bringing the proceedings and obtaining an undertaking from the respondent, and was entitled to its costs.

82 While the formulations of the key principles, and of any “presumptions” for or against orders in different types/classes of proceedings have varied over time, the exercise of the judicial discretion requires the making of orders that are just, equitable, fair, and reasonable in all the circumstances of the case. The principal relevant authorities, including the Chief Judge’s landmark judgment in Kiama Council v Grant [2006] NSWLEC 96; (2006) 143 LGERA 441, list relevant factors to be weighed in that balancing act – “success” in the proceedings (however measured), reasonableness of actions taken or positions adopted by the parties, including as to settlement and costs, and so on.

83 Some of the key principles should be collected before I proceed to explain how I have reached my decision(s) in these costs applications:

(a) Costs are compensatory, not punitive: Latoudis v Casey (1990) 170 CLR 534, at 566-7.
(b) The power to award them is “ purely discretionary ”: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72.
(c) The discretion must be exercised “ judicially ”: Port Stephens Council v Sansom (“Sansom”) [2007] NSWCA 299; (2007) 156 LGERA 125. On its exercise in classes 1 and 2 matters, see Arden Anglican School v Hornsby [2008] NSWLEC 103; (2008) 158 LGERA 224, and my discussion in Universal at [5]-[14].
(d) The court needs to find “ some positive ground or good reason for departing from the ordinary course ”: Australiawide Airlines Ltd t/as Regional Express v Aspirion Pty Ltd [2006] NSWCA 365, at [54] per Bryson JA. See also Residents Against Improper Development Inc v Chase Property Investments Pty Ltd [2006] NSWCA 323; (2006) 149 LGERA 360 at [219]-[251].
(e) There is no absolute rule that, in the absence of “ disentitling ” conduct, the party seen as “ successful” will achieve a compensatory costs order: Fordyce v Fordham (2006) 67 NSWLR 497.
(f) “ Effective surrender ” by one party may indicate “ success ” on the part of the other, but does not necessarily dictate a costs order: One.Tel Ltd & Ors v Deputy Commissioner of Taxation [2000] FCA 270; (2000) 101 FCR 548.
(g) The court must look at all the circumstances pertaining to each particular stage of the litigation: South Eastern Sydney Area Health Service v King [2006] NSWCA 2, per Hunt AJA; and Green per Santow JA.
(h) “ Precipitately ” commencing proceedings may become a relevant factor: Newcastle City Council v Wescombe [2008] NSWLEC 301, at [16].
(i) On whether an order should be for “ indemnity costs ” see my decision in Fitzpatrick No.5 at [10]-[79], especially [79] viz:
“ To result in an order for indemnity costs the behaviour of the party concerned, whether generally or in regard to its rejection of an offer of compromise, must be found to be “imprudent”, “unreasonable”, or tainted by fraud, misconduct, an ulterior motive, wilful disregard for known facts or settled law, groundless contentions, “disentitling conduct”, “plainly unreasonable conduct”, or “relevant delinquency” (see Santow JA in Green, summarising various cases. See also Oshlack, Ritchie 8752, and Canterbury City Council v Roads and Traffic Authority of New South Wales [2004] NSWLEC 536). Even so, as Lloyd J concluded in Canterbury, the rejection of a reasonable offer is but “one among many” factors to be considered.”

Consideration

84 Costs foisted on parties by their opponents, or by the work practices adopted by the lawyers involved, must be “proportionate to what is truly at stake” (per Sackville J in Seven Network Limited v News Limited [2007] FCA 1062, at [18]), and the community is increasingly looking to the courts to ensure such proportionality.

85 All five separate matters involved in this case have their origins in allegations by Council of wrongdoing on Monaghan’s part. The history recounted above highlights important steps along the way: Serious investigations were carried out, and Council’s powers deployed; Monaghan was asked for written undertakings, and they were given; Monaghan has strenuously denied all wrongdoing throughout; Statutory orders were issued by Council, and Monaghan challenged them in this court; Class 4 proceedings were commenced because Council alleged Monaghan was in breach of the undertakings given; demands were particularised by Council on 19 March; Monaghan sought to modify relevant consents, and appealed against Council’s refusal to approve those modifications; Monaghan largely failed in all the class 1 proceedings, and then settled the class 4 proceedings.

86 The Council contends that it has been entirely successful in its class 4 proceedings and in all four of Monaghan’s class 1 proceedings.

87 It argues that in the class 4 matter Monaghan “effectively surrendered” on the eve of a hearing where Monaghan was doomed to lose. In support of that argument the court is asked to examine the two schedules provided by way of submission on behalf of Council (see par [65] above). The second may become relevant if the 15 May letter takes effect as a Calderbank letter. However, in terms of assessing the question of “success” in the proceedings, the more useful comparison is that made (in submissions, par 158) between the amended class 4 application and the consent orders. In any event, counsel for Monaghan hotly contests the accuracy of that analysis, and submits, in my view correctly, that once the s 121B appeals were dismissed the class 4 proceedings lost their utility (McCrohon).

88 In the two pairs of class 1 proceedings it is simply not correct for Council to assert that it was completely successful. The evidence before me, and Commissioner Hoffman’s two judgments, make clear that Council made concessions in the s 96 appeals, and that its position on the s 121B appeals was not entirely implemented by the court.

89 Further, it cannot be suggested that Monaghan was guilty of any “unreasonable” or “disentitling” conduct in the conduct of any of those four matters, although Monaghan could be criticised for not having its planner at the s 34 conference on 19 May 2008 to advance its argument.

90 Council submits that the first pair of class 1 appeals were brought to determine if the s 121B orders were reasonable, and that the class 4 proceedings were brought to enforce them. However, the enforcement proceedings were commenced, and were progressed at an astonishing and hugely expensive rate, while the class 1 challenges to the Council’s orders were still very much on foot.

91 The class 4 proceedings were actually filed on the eve of a conference organised at the first callover of the s 121B appeals, to discuss the settlement of the whole dispute between the parties.

92 If it were so imperative that class 4 proceedings had to be urgently commenced at that early stage of negotiations between the parties, it seems extraordinary to me that more care was not taken to join all necessary parties, and properly particularise the relief sought in respect of all appropriate respondents, and that no interlocutory relief was sought. (When the amendment was sought three months later, Monaghan was entirely cooperative, and was content for costs to be reserved, even though clearly entitled to an order in its favour in the circumstances).

93 I cannot accept that it was reasonable to commence class 4 proceedings, as so inadequately formulated, at that time, so many months after the serious investigation of Monaghan had commenced, and when Council had opted for the s 121B process to enforce its duties (c.f. Goldberg).

94 Council’s solicitors continued to escalate the class 4 proceedings at an extraordinary pace, and in a very adversarial (almost belligerent) manner, accumulating huge amounts of claimed costs, while the subject matter was comprehensively before the court in two, and later four, class 1 proceedings, and Monaghan was complaining about “duplication” of proceedings (as a result of the commencement of the class 4 proceedings), and seeking to “streamline” the litigation between the parties (see Exhibit C1, fols 56 and 117).

95 The conduct of the class 4 proceedings by the Council, or at least in Council’s name by its solicitors, was, I believe, also quite unreasonable.

96 I deprecate the amount of costs allegedly incurred in prosecuting the class 4 proceedings. I find it hard to accept them as “proportionate”, and am troubled by the unseemly focus on costs in so much of the often unnecessary, even self-serving, correspondence contained in Exhibit C1.

97 On the other hand, Monaghan had every right to defend himself against Council’s allegations of wrongdoing, to challenge Council’s s 121B orders, to make applications to modify Council’s consents, and to then appeal Council’s peremptory refusals. Citizens take the opportunity to access this court for such purposes every day, and part of the court’s costs regime is designed so that they are not discouraged from exercising their rights in class 1, even though clearly responsible in almost every case for all their own costs. See Sansom at [54], [76], [92], [93], and [97].

98 It is very unfair for Council to describe, without supporting evidence, Monagahan’s s 96 applications as a “sham designed to delay proceedings”, and it is not a valid submission on costs, to label proceedings as improperly commenced and/or “lacking merit”, simply because, in the end, they did not succeed.

99 In this case Monaghan had to exercise its class 1 or 2 rights of appeal under the shadow of class 4 proceedings, the enormous costs of which, according to Council’s solicitors’ correspondence, was almost certain to fall on Monaghan. Certainly, in the ordinary course, a costs order against Monaghan could be expected to be more likely in class 4 than class 1, but it is never beyond doubt.

100 Any timetable slippage on Monaghan’s part – and there certainly was some – came largely at the cost of delaying his own proceedings, and has to be viewed against the background of Council’s provocative approach to what is supposed to be a cost-effective dispute resolution regime designed to avoid escalating hostility. In any event such slippages as did occur do not appear to have unduly delayed or prolonged the proceedings, and Monaghan accepted the eventual and unfavourable decisions made by Hoffman C, without further challenge.

101 The Calderbank principles require that the reasonableness of the offeree’s response to a relevant settlement proposal must be assessed by the court when costs are being determined.

102 If Monaghan had agreed to the consent orders suggested in the 15 May 2008 letter, its position could have been seen to be more favourable than it is under the eventual orders, because, for one thing, as a result of sheer incompetence on the part of Council’s solicitors, one of the Monaghan companies would not have been caught by them.

103 The 23 October 2008 letter simply presumed that Council would get an order for costs against Monaghan, and gave Monaghan no basis upon which to evaluate whether acceptance of the proposal would prove to be a better outcome than resisting a costs application, and/or insisting on a costs assessment.

104 Monaghan’s failure to respond to the costs proposals put by the Council throughout this matter was, in my view, entirely reasonable. Two of them (1 April and 15 May) were made before the class 4 proceedings had been properly formulated. Given the decision I have now reached, Monaghan’s stand on all of them has been fully vindicated.

105 Monaghan gave the undertakings sought by Council in September 2007, freely and quickly, and has consistently denied that he conducted a funeral business (rather than collected/stored a few coffins as a hobby), or did anything else contrary to the law. No such allegations have ever been proven or admitted. It was entirely reasonable for Monaghan to defend itself against them. Monaghan took its chances in class 1 and accepted the outcome when the appeals did not succeed, at least on the major issues in contention.

106 The overhanging class 4 enforcement litigation was then settled by entering consent orders which, Mr Kalfas submits, were less comprehensive in their burden than the undertakings which had been freely given, and Monaghan even agreed to an order – Order 2 (no coffins on the premises without consent) – beyond the relief sought in the application.

107 The outcome of the class 4 proceedings certainly did not advance the Council’s position much (if at all, given the undertakings) beyond what would have pertained had they not been brought. I, therefore, cannot accept that I should conclude that the Council was genuinely the “successful” party in the litigation.

Conclusion

108 Monaghan is entitled to an order for costs in its favour in the class 4 proceedings, and to a “no order as to costs” decision in respect of each of the class 1 proceedings.

109 The Council having been entirely unsuccessful in its applications for costs, it should also pay Monaghan’s costs on all five of those applications.

110 The orders of the court will be:

A. In each of the four class 1 matters:
1. The respondent’s Notice of Motion dated 10 October 2008 is dismissed.
2. The respondent is ordered to pay the applicant’s costs of the Notice of Motion dated 10 October 2008, as agreed or as assessed according to law.
B. In the class 4 matter:
3. The applicant is ordered to pay the costs of all three respondents, including the costs of the hearing on costs, on a party-party basis, as agreed or as assessed according to law.
C. All the exhibits are returned.