Ryde City Council v Echt & Anor - [2000] NSWCA 108

NEW SOUTH WALES COURT OF APPEAL

CITATION: RYDE CITY COUNCIL v ECHT & ANOR [2000] NSWCA 108

FILE NUMBER(S):
40695/98

HEARING DATE(S): 11 April 2000

JUDGMENT DATE: 11/04/2000

PARTIES:
Ryde City Council (Appellant)
Alexander and Iris Teresa Echt (1st Respondents)
T.I. and D.M. Shallita (2nd Respondents)

JUDGMENT OF: Spigelman CJ Powell JA Heydon JA

LOWER COURT JURISDICTION: Land & Environment Court

LOWER COURT FILE NUMBER(S): LEC 40074/98

LOWER COURT JUDICIAL OFFICER: Cowdroy AJ

COUNSEL:
M Tobias QC / Ms S Duggan (Appellant)
T F Robertson (1st Respondents)
B M Antcliffe (2nd Respondents)

SOLICITORS:
Hill Thomson & Sullivan (Appellant)
Blake Dawson Waldron (1st Respondents)
D'Angelo, Solicitors (2nd Respondents)

CATCHWORDS:
ADMINISTRATIVE LAW
Council decisions
jurisdiction of the Land and Environment Court to review
legal not merits review
Land and Environment Court Act 1979, s20(2)
Local Government Act 1993, s676(1)
ADMINISTRATIVE LAW
duties of Council
"responsibility"
"unreasonableness"
Local Government Act 1993, s7(d), s124, s674
Environmental Planning and Assessment Act 1979, s123
Constitution Act 1902, s51(1)
ADMINISTRATIVE LAW
Council discretions
"may"
Local Government Act 1993, s124, s172(2), s673
Interpretation Act 1987, s9

LEGISLATION CITED:
Constitution Act 1902
Environmental Planning and Assessment Act 1979
Interpretation Act 1987
Land and Environment Court Act 1979
Local Government Act 1993
Suitors’ Fund Act 1951

DECISION:
(1) Appeal allowed
(2) Vacate orders 1 and 4 of Cowdroy AJ's orders of 21 August 1998
(3) Order that the First Respondents pay 75 per cent of the Appellant's costs and the Second Respondent pay 25 per cent of the Appellant's costs of the appeal. If entitled, each of the Respondents to be granted a certificate under the Suitors' Fund Act
(4) Order that the application be dismissed as against the Council in the court below

JUDGMENT:

THE SUPREME COURT

OF NEW SOUTH WALES
COURT OF APPEAL
40695/98

SPIGELMAN CJ
POWELL JA
HEYDON JA
Tuesday 11 April 2000

RYDE CITY COUNCIL v ALEXANDER ECHT
AND IRIS TERESA ECHT AND ANOR
The second respondents (“owners”) owned premises at 36A Melville Street, West Ryde; the first respondents (“neighbours”) owned an adjoining property. Work on the premises of the owners was conducted pursuant to a building approval. Subsequently, an amended building application was granted subject to certain conditions.
Conditions 2 and 3 gave rise to these proceedings. These conditions were as follows:
"2. Provide a 1.5 metre high permanently fixed trellis and climbing plants along the southern elevation of the rear deck.

3. Provide a 900 mm high lattice screen above the fence height along the southern elevations to prevent loss of privacy from the tool store area and raised area outside the rumpus room rear door."

Though building continued, and the premises were occupied, the works identified in conditions 2 and 3 were not completed.
Through a series of letters, the neighbours complained to the appellant, the relevant local Council arguing, inter alia, that it had failed to ensure that the conditions in the building approval were carried out. Following the series of letters, action was brought by the neighbours against the Council in the Land and Environment Court. By the time of the trial, the parties were agreed as to how to remedy the neighbours’ privacy concerns, but the parties disagreed as to costs.
At trial Cowdroy AJ discussed the conduct of the Council and concluded that the neighbours were entitled to their costs. He also ordered the Council pay the owners’ costs. The Council appealed.
Held
(per Spigelman CJ, Powell and Heydon JJA agreeing)
1         The jurisdiction of the Land and Environment Court is a jurisdiction concerned with legal error and the enforcement of rights, duties and obligations which arise under “a planning or environmental law”. The Local Government Act is such a law. It is not a merits review jurisdiction.
2         Cowdroy AJ’s reasons appear to be more appropriate for a merits review than a review restricted to legal error. His Honour did not approach the matter in a form appropriate to the jurisdiction that his Honour was exercising; rather his Honour gave reasons for a merits review.
3         His Honour held that the Council has a “responsibility” to enforce the law. However, in this context the word “responsibility” has an allusive sense. It does not support anything in the nature of a legal obligation to act on statutory power which is enforceable at the insistence of a third party. Attorney-General v Harris [1961] 1 QB 74, Peek v New South Wales Egg Corporation (1986) 6 NSWLR 1 and Warringah Shire Council v Sedevcic (1987) 10 NSWLR 335 discussed.
4         The Council did turn its mind to the exercise of its relevant powers and committed no legal error in exercising the discretion in the way in which it did.
5         Order for costs at trial varied.
Orders
1         Appeal allowed.
2         Vacate orders 1 and 4 of Cowdroy AJ’s orders of 21 August 1998.
3         Order that the first respondents pay 75 per cent of the appellant’s costs and the second respondent pay 25 per cent of the appellant’s costs of the appeal. If entitled, each of the respondents to be granted a certificate under the Suitors’ Fund Act.
4         Order that the application be dismissed as against the Council in the court below.

- 25 -

THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL
40695/98

SPIGELMAN CJ
POWELL JA
HEYDON JA
Tuesday 11 April 2000

RYDE CITY COUNCIL v ALEXANDER ECHT
AND IRIS TERESA ECHT AND ANOR
JUDGMENT

SPIGELMAN CJ: The second respondents, T I and D M Shallita, to whom I will refer as "the owners", owned premises at 36A Melville Street, West Ryde; the first respondents, Alexander Echt and Iris Teresa Echt, to whom I will refer as "the neighbours", owned an adjoining property. Work on the premises of the owners was conducted pursuant to a building approval. It appears that the work was not in accordance with that approval and an amended building application was granted subject to certain conditions pursuant to the provisions of s106 of the Local Government Act 1993.
It is the amended conditions which have given rise to these proceedings. The conditions were advised to the neighbours by a letter from the council of 22 April 1997. The neighbours had made submissions as to the conduct of the building works and the proposed amendment of the building approval on the land of the owners.
The letter of 22 April 1997 indicated that the following conditions had been imposed. It was conditions numbered 2 and 3 which were the source of later discussions. These conditions were as follows:
"2. Provide a 1.5 metre high permanently fixed trellis and climbing plants along the southern elevation of the rear deck.
3. Provide a 900 mm high lattice screen above the fence height along the southern elevations to prevent loss of privacy from the tool store area and raised area outside the rumpus room rear door."
It appears that building works continued, however the works identified in conditions 2 and 3 had not been completed. The owners occupied the extensions which were the subject of the amended plans, notwithstanding the fact that the work in the conditions to which I have referred had not been carried out.
By letters of 16 February addressed to the mayor and of 26 February addressed to the general manager of the appellant Council, the neighbours complained of the failure of the owners to carry into effect the conditions which they indicated were of considerable importance to their own privacy and to the amenity of their occupation of their own premises.
By letter of 6 March 1998 the manager of building approvals of the appellant Council referred to the earlier correspondence to the mayor of the Council and made certain observations concerning the conduct of the building works including the following:
"The owner of number 36A Melville Street has not requested a final inspection as there are still outstanding works to be completed prior to the application being finalised.
Under the provisions of the Local Government Act, 1993 (as amended), Council has no power to enforce the owners to complete the works within a set period of time.
The owners of number 36A have not given Council a time frame for the completion of the work."
The letter went on to note that there were certain outstanding matters, including the privacy screens, and concluded "The owner has indicated that these works will be completed as soon as sufficient funds are available".
By letter of 3 March 1998 Dr Dianne Werden, which is the maiden name of D M Shallita, wrote to the council in the following terms:
"I wish to inform you that one of the Council's Officers, Mr Ken Nagle, visited the premises of 36A Melville Street on 2 March 1998. An inspection of the dwelling was made and the amendments were found to be in compliance with the approved Council Plans. Further external work, including screens, will be expected to be completed pending financial viability, within the next six months."
A handwritten note on the Council’s copy of this letter indicates: "this confirms the last paragraph of my letter dated 6 March 1998". That letter, which had apparently been sent following the conversation between the council officer and the owners, was forwarded prior to the receipt, it appears, of the confirmatory letter dated 3 March 1998 and which was the letter to which I have earlier referred and which concluded with the reference that the owner has indicated that these works will be concluded as soon as funds were available.
In response to that letter of 6 March, Blake Dawson Waldron, solicitors acting on behalf of the neighbours, wrote on 13 March 1998 in which, inter alia, they said as follows:
"Whilst it may be that Council has no power to enforce the owners to complete the works within a particular time Council clearly has a power, and we would say an obligation, to prevent the use and occupation of the building until all of the conditions have been observed. The relevant conditions are clearly designed to protect our client's privacy.
Your proposition that Council will allow the occupation and use of these areas without the privacy measures being implemented is startling. If this is correct then the owners could simply continue to use the area as they intend without ever implementing the conditions of consent. This is clearly wrong.
The owners of the premises are in breach of the conditions of approval and Council could, and in our opinion should, immediately take steps to enforce those conditions.
Furthermore the use and occupation of the building prior to its completion in accordance with the plans and specifications (including compliance with conditions) would be a matter requiring a separate approval under section 68 of the Local Government Act (refer the table Part A Item no 6).
Furthermore Council could take action to make an order under Item 30 of section 124 of the Local Government Act. Your understanding that Council can do nothing to enforce the conditions of consent is legally wrong. We strongly urge you to reconsider this."
The letter required a response within fourteen days and asked the Council to indicate what steps it intended to take. It said that their clients would commence proceedings pursuant to s674 of the Local Government Act and concluded: "In those proceedings council will be named as a respondent and costs will be sought against it."
Subsequent to the receipt of that letter, Council dispatched a letter to the solicitors for the neighbours, on 25 March. It appears that this letter did not arrive at the offices of Blake Dawson Waldron according to factual findings made by his Honour. His Honour did not make a factual finding as to when it was received, although there was some evidence in the affidavit of the Council officer that a document had been received prior to the institution of proceedings. There was no finding of fact and it is not necessary to resolve.
The letter of 25 March was, however, in the possession of the solicitors for the neighbours at least at some stage shortly after the institution of the proceedings. That letter was in the following terms:
"Thank you for your letter dated 13 March 1998 in relation to the above property.
Since Council's reply to Mr and Mrs Echt, the owner of number 36A Melville Street has submitted correspondence for Council to consider in relation to the approval.
Therefore, in view of the above correspondence, Council will take no action in relation to orders until July 1998."
The proceedings were instituted on 31 March 1998. There were a number of call-overs and negotiations for settlement and, but for the question of costs, it appeared that the parties were agreed as to the substantive orders. By reason of the failure to agree on costs, the Land and Environment Court had to devote its limited resources to the conduct of the proceedings before it and so has this Court. The hearing before Cowdroy AJ, then an acting judge in the Land and Environment Court, proceeded on 18 August 1998 and judgment was delivered by his Honour on 21 August 1998.
The jurisdiction of the Land and Environment Court is to be found in s20(2) of the Land and Environment Court Act. It is not necessary to set out the terms of that section. By para 20(2)(c) the Court has jurisdiction to make a declaration with respect to the matters referred to earlier in the section. The standing of the neighbour to take proceedings is clearly set out in s674(1) of the Local Government Act which provides:
"Any person may bring proceedings in the Land and Environment Court for an order to remedy or restrain a breach of this Act."
Pursuant to s676(1) of that Act the Land and Environment Court is given a function in the following terms:
"If the Land and Environment Court is satisfied that a breach of this Act has been committed or that a breach of this Act will, unless restrained by order of the Court, be committed, it may make such order as it thinks fit to remedy or restrain the breach".
The jurisdiction of the Land and Environment Court is a jurisdiction concerned with legal error and the enforcement of rights, duties and obligations which arise under "a planning or environmental law". The Local Government Act is such a law. It is not a merits review jurisdiction. This is an important distinction that is sometimes lost but it is of considerable significance when it comes to the assessment of whether or not his Honour committed a legal error in the course of his Honour's judgment.
By the time the matter came before his Honour the parties were agreed as to the nature of the amendments that were required to be made to the building works in the sense that certain steps would be taken which both parties agreed would satisfy the neighbours in terms of their privacy concerns. An order to that effect was made by his Honour.
His Honour's reasons for judgment sets out the factual background and the circumstances of the institution of the proceedings. His Honour also described the then state of the premises, what he saw and the apparent inadequacy of the works in terms of protection of the privacy of the neighbours. His Honour concluded in that section:
The proposed terms of settlement make it clear that the applicants will be content to have a shade cloth which is more dense, that is to say, with an obfuscation factor of greater than fifty percent to cover the 1.5 metre trellis along the southern elevation of the rear deck to the floor of the rear deck. So far as Council is concerned, the works have been completed in accordance with the approval.”
His Honour set out the correspondence that had occurred between the Council and the neighbours, to which I have referred above.
In particular his Honour referred to the correspondence from the Council to the neighbours of 6 March to which I have referred and the letter of the Council to Blake Dawson Waldron for the neighbours dated 25 March.
His Honour concluded as follows:
"The Council elected to treat such letter as a satisfactory explanation and informed the applicants that it would take no action until July 1998. Such a response was unsatisfactory taking into consideration the fact that a condition remained outstanding which had been specifically imposed for the benefit of an adjoining household. The Council must have shared the applicants' concern since it imposed the very condition which was unfulfilled. Council had a responsibility to ensure that its approvals were carried into execution within a reasonable period where no specific time limit had been imposed. To this extent the building approval was deficient. However, this circumstance did not prevent the Council from requiring the second respondents to fulfil the conditions. The Council was on notice that the provision of a screen was of critical importance to the applicants. The appropriate course was for Council to issue an order under Item 30 of s124 of the Local Government Act, as had been suggested in the applicants' solicitor's letter dated 13 March 1998.
The lack of action by the Council obviously inflamed a situation which was causing great consternation to the applicants, who regarded the Council as failing in its duty. There is no doubt that the Council, as the approving authority, has the responsibility to ensure that the requirements of the Environmental Planning and Assessment Act 1979, and of any approval granted thereto, are fulfilled (see Peek v New South Wales EggCorporation [1985-1986] 6 NSWLR 1; Attorney General v Harris [1961] 1 QB 74 at p 94; Warringah Shire Council v Sedevcic (1987) 63 LGRA 361). In the circumstances I consider that the applicants were entitled to approach this Court for relief pursuant to s123 of the Environmental Planning and Assessment Act."
The statutory references by his Honour are in error. The appropriate legislation is the Local Government Act and the equivalent of s123 of the Environmental Planning and Assessment Act is s674, invoked by the neighbours in the present proceedings.
When one reads the whole of his Honour's reasons they appear to me to be more appropriate for a merits review than a review restricted to some form of legal error. The only references which are capable of suggesting a form of legal error are the two references that his Honour made to the council having "a responsibility to ensure" that its approvals were carried into execution and that the requirements of the Local Government Act are met. Nevertheless it does not appear to me that his Honour approached the matter in a form appropriate to the jurisdiction that his Honour was exercising; rather his Honour gave reasons for a merits review.
His Honour relied on three authorities to establish the “responsibility” to which he referred. In my opinion those authorities do not support the existence of a responsibility which sounds in the form of a legal duty. The word "responsibility" itself is a word of somewhat allusive and, perhaps, sentimental meaning in this context. It does not necessarily carry any form of obligation enforceable by orders in the nature of mandamus or equitable orders. The three authorities do not support the existence of a responsibility of a character that can be enforced in the manner his Honour purported to do.
The first case is Peek v New South Wales Egg Corporation (1986) 6 NSWLR 1. It appears that the passage in the judgment to which his Honour was referring is that in the judgment of the then President of this Court, Kirby P, who said at pp5-6:
"I consider that, where the legislature has created a statutory corporation, with particular responsibilities designed to protect the legislature’s conception of the public interest, such corporation will now share with the Attorney-General the requisite standing in the courts, for the purpose of furthering or defending its statutory function. There is little doubt that Parliament and the public would expect a statutory corporation, such as the respondent, to take all lawful steps necessary to secure the objects for which the corporation has been created. This is so, both to uphold the reasons for which Parliament created the body and to protect those who conduct their operations compliant with the law in the administration of which the corporation is concerned.”

Whilst this reasoning may support the existence of some form of responsibility in an allusive sense it does not support anything in the nature of a legal obligation to act on statutory power which is enforceable at the instance of a third party.
The second case to which his Honour referred, namely Attorney General v Harris, is also a case involving whether it was appropriate to grant an injunction to restrain acts otherwise subject to the scheme. The passage at p94 to which I believe Cowdroy AJ was referring may have been the following:
"… it is, on the other hand, highly undesirable that some member of the public should with impunity flout the law and deliberately continue acts forbidden by Parliament.”
Again I do not see anything in this authority in support of a an obligation that can be enforced in the manner in which his Honour enforced it.
The third case is Warringah Shire Council v Sedevcic (1987) 10 NSWLR 335. In that case the Court of Appeal was considering whether a judge of the Land and Environment Court had made an error in exercising his discretion to refuse an injunction under s124 of the Environmental Planning and Assessment Act. The relevant portion of the judgment may be found at p339 of the judgment of Kirby P and also at 342. In the latter passage his Honour said:
"It is important to conclude by pointing out that that discretion is itself part of the statutory scheme. In this sense, the exercise of the discretion should not be seen as an illegitimate interference by judges in the even-handed application of planning law which local government authority have the responsibility of enforcing."
Again the word “responsibility” is used in the allusive sense to which I have referred.
In that case at p346 Mahoney JA was paraphrasing an argument put by counsel to the following effect:
“He submitted that, if no injunction went, the present case would be seen as warranting refusal in other cases and that there would be administrative difficulties for officers of local councils whose duty is to assess whether the court would grant an injunction against particular contraventions of the planning law and so to decide whether to pursue in the courts breaches of it. And, he submitted correctly, those concerned with predicting what courts will do are apt to make their predictions from what courts have done in particular factual situations.
I am conscious of the duties which a planning regime imposes upon a local council. I made reference to this in Blacktown Municipal Council v Friend (1974) 29 LGRA 192.”
In that case, at 200, his Honour had referred to duties of the Council to enforce legislation. However, his Honour did so in a context where the issue was whether or not the Court should exercise its discretion to grant an injunction at the behest of a Council which had been guilty of delay and acquiescence in the non-conforming uses. His Honour made similar observations in another case, South Sydney Municipal Council v Hadzinickitas (1977) 35 LGRA 159 at 163. In all of these cases his Honour was using, the word "duty" in the same allusive sense as I have referred the word "responsibility" being used. He was not using it in the sense of an obligation which can be enforced against the repository of a statutory power.
In this appeal his Honour's judgment was sought to be upheld on the basis of three legal errors which it was submitted to this Court the Council had committed and which would justify the grant of the relief which his Honour gave.
The first was that the Council had misconstrued its Act and had in fact had the opinion that it had no power to take any relevant steps. This was based on the passage in the letter of 6 March 1998 which I have already set out and which I repeat:
"Under the provisions of the Local Government Act, 1993 (as amended), Council has no power to enforce the owners to complete the works within a set period of time."
Whatever the Council may have meant by the words "set period of time", it did not appear at the relevant time to have been operating under any misapprehension in this regard.
The letter from the solicitors for the neighbours dated 13 March 1998 pointed out the Council did have power and, it submitted, an obligation to take steps. It specifically drew attention to the power of the council to make an order under s124 of the Local Government Act, specifically Item 30 of the table to that section.
The letter from the Council of 25 March, which represented the relevant state of mind of the Council at the time appropriate for determination of this issue, does not reiterate the assertion contained in the letter of 6 March 1998. Indeed, it is contrary to that assertion. It says:
"Council will take no action in relation to orders until July 1998."
In the context of this correspondence the reference to "orders" is a reference to the suggestions made by the neighbours' solicitor in their letter of 13 March 1998. Far from continuing a misconception as to a statutory power, if it ever had such a misconception, Council by its letter of 25 March was plainly stating that it accepted it had relevant powers but was deciding not to exercise them at that time.
The second basis on which it was argued that the Council committed a relevant error was that of unreasonableness in the Wednesbury sense. It was submitted that at the time that it came to write the letter of 25 March 1998 the violation of its conditions was flagrant and that the only reasonable option available to the Council was to take steps to enforce the conditions of its approval.
It is plain that the Council had turned its mind to the issue. The letter of 3 March 1998 from the owners to the Council indicated that the further external work would be expected to be completed "within the next six months." In its letter of 25 March 1998 the Council did not accept the period of six months which the owner had sought, rather it indicated that it would review the position in three months. Plainly it had turned its mind to the issue. I am not prepared to say that the Council was not justified in taking this course. As I will show in a moment, the steps that are required for an order under s124 are quite laborious and involve the Council in considerable time and expense on a timetable which would probably take three months or longer.
The submission was put that the Council did not give evidence as to its particular state of mind and what it took into account in making the decision reflected in the letter of 25 March 1998. Council had no onus of proof in this respect. It called the relevant officer. He was not cross-examined in a relevant respect. Insofar as the neighbours had a duty to show that the Council was acting unreasonably, it failed to pursue the relevant factual disputation, notwithstanding the fact that it had available for cross-examination a representative of the Council. There is no proper basis in my opinion for a finding that the Council acted so unreasonably in deciding not to enforce the conditions in the manner for which the neighbours then contended and now contend.
I will come to the structure of the powers under which the Council could exercise presently with respect to the third manner in which the neighbours put their case in this Court. However, the Wednesbury unreasonableness ground is not made out.
The third basis that was put was that the Council was under a duty to act to enforce the law and, relevantly, its own conditions. In the written submissions for the neighbours the duty to enforce the law was put in very wide ranging terms. It was submitted that the High Court's decision in Bateman’s Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247 did in some respects "presages a new course in public law". It was submitted that although the case was concerned with standing, it recognised a public interest in the observance by statutory authorities of the law. It was said that underlying this principle was the duty to enforce the law, whether by the police in relation to the ordinary criminal law, or by regulators in relation to permits, approvals, orders and certificates and the like, extending to the powers being exercised by the Council in this case.
In these submissions, no particular provision of the legislative scheme was pointed to as grounding any such wide ranging duty, nor do I believe there is any such wide ranging duty known to the law. In my opinion the observations of McHugh J in Bateman’s Bay, particularly at pars 83 to 86, are accurate and pertinent. His Honour there sets out a number of reasons why statutory bodies and those exercising the prerogatives of the Crown, which have responsibility for the administration of justice and the enforcement of the law, may choose not to enforce the law in particular circumstances or at all. In my opinion his Honour's reasoning is correct and it tells against any wide-ranging duty of the character for which counsel for the neighbours contended in this Court.
Counsel also referred to two other provisions, first s51 of the Constitution Act 1902 which relevantly uses the terminology of "responsibility" when it provides in 51(1):
"There shall continue to be a system of local government for the State under which duly elected or duly appointed local government bodies are constituted with responsibilities for acting for the better government of those parts of the State that are from time to time subject to that system of local government."
Counsel also drew attention to s7(d) of the Local Government Act which outlines the purposes of that Act to include as follows:
"The purposes of this Act are as follows
...
(d) to give councils:
...
• the responsibility for administering some regulatory systems under this Act."
In my opinion neither the reference to responsibility in s51 nor that in s7(d) set out above impose obligations of the character for which the neighbours contend in this case. The word "responsibility" is in each respect used in that allusive and general sense to which I have referred. It is no doubt of significance in construing other provisions of the Act, but it is not a proper foundation for the imposition of obligations which can be enforced by third parties against the repository of a statutory power.
In this regard the Court's attention has been drawn to the reference by the Chief Judge of the Land and Environment Court, Pearlman J, to the judgment of Cowdroy AJ in the present proceedings which her Honour made in Payne v Mosman Municipal Council [2000] NSWLEC 25. Her Honour made reference to the passages of the judgment of Cowdroy AJ to which I have referred. With respect to a submission that the case from which this is an appeal, was authority for the proposition that a Council had a duty to ensure that development consent and building approval were complied with, her Honour said at par 21:
"I take it then that Cowdroy AJ in Echt v Ryde City Council was going no further than saying that a local council's duty to uphold and enforce the planning legislation is a relevant consideration for the exercise of the Court's discretion, and that he was not going so far as to say that the duty fetters the discretion of a council in deciding whether or not to take any particular action in relation to a breach of the planning legislation."
I agree with her Honour that, whatever Cowdroy AJ may have intended, the case ought not be accepted as authority for the proposition that fetters discretion of the Council. In so far as his Honour was intending to suggest any such proposition then, in my opinion, his Honour was wrong.
The relevant powers to which attention has been directed in the present proceedings are s124 of the Local Government Act and also s673 of that Act.
The first section is in the following terms:
"A council may order a person to do or to refrain from doing a thing specified in Column 1 of the following Table if the circumstances specified opposite it in Column 2 of the Table exist and the person comes within the description opposite it in Column 3 of the Table."
Relevant for present purposes is item 30 in which Column 1 is "To comply with an approval", Column 2 is "Approval is not being complied with" and Column 3 is "Person entitled to act on the approval or person acting otherwise than in compliance with the approval". The circumstances in which this power can be exercised are regulated by Ch 7 Pt 2 Div 2 which sets out a range of procedures for the giving of notice, the making of representations, the hearing and consideration of representations and the making of orders after consideration of those representations. Division 3 goes on to provide for the giving of reasons, for specification of a period of compliance, notice of right to appeal. In all, an elaborate scheme for the exercise of this power.
The other provision to which attention was directed was s673, which is a companion to 674 to which I have already referred and which the neighbours invoked before his Honour. Section 673 empowers the council to bring proceedings in the Land and Environment Court for the purpose of an order to remedy or restrain a breach. That section is in the following terms:
"The Minister, the Director-General or a council may bring proceedings in the Land and Environment Court or such other court as may be specified in this Act for the purpose of the proceedings for an order to remedy or restrain a breach of this Act."
Each of ss124 and 673 convey a power using the word "may". Section 9 of the Interpretation Act 1987 states:
"In any Act or instrument the word ‘may’, if used to confer a power, indicates that the power may be exercised or not, at discretion."
I am unable to discern in either s124 or s673 any contrary indication to that effect. The word "may" is, in my opinion, in each section used in the sense of conferring a discretion.
The existence of the discretion is, in my opinion, confirmed by the provision in s172(2) to a general effect that has long existed in the local government law of this State, enabling a Council to give certificates of compliance. Section 172(2) states:
"The council must issue a building certificate if it appears that:
(a) there is no matter discernible by the exercise of reasonable care and skill that would entitle the council:
(i) to make order No 1, 3, 5(g) or 26 in the Table to section 124 in relation to the building or part; or
(ii) to take proceedings for an order or injunction requiring the demolition, alteration, addition or rebuilding of or to the building or part; or
(iii) to take proceedings in relation to any encroachment by the building or part onto land vested in or under the control of the council; or,
(b) there is such a matter, but in the circumstances, the council does not propose to do any of the things referred to in paragraph (a)."
The fact that pursuant to par (b) the Council may, notwithstanding non-compliance in a building structure, decide not to take steps to make orders or institute proceedings, highlights the discretionary nature of the Council's powers in the relevant respect.
In oral submissions counsel for the neighbours put the duty in a somewhat different way from that which appeared in the written submissions. He identified a duty to act before the point arrived of exercising a statutory discretion. As I understood the submission, it was in general terms that there was a duty to consider the exercise of the respective powers. For present purposes I am content to accept that such a duty exists and, indeed, there can be no doubt that a repository of a statutory power may commit a relevant legal error by failing to turn his or her mind to the exercise of that power.
The Court's attention was directed particularly to the judgment of Mason J, as his Honour then was, in Sutherland Shire Council vHeyman (1984-1985) 157 CLR 424, particularly at 457. His Honour was there dealing with a civil cause of action for damages, but nevertheless made some observations which conclude, after considering the purpose of giving powers to statutory bodies, that:
"…statutory powers are not in general mere powers which the authority has an option to exercise or not according to its unfettered choice. They are powers conferred for the purpose of attaining the statutory objects, sometimes generating a public expectation having regard to the purpose which they are granted that they will be exercised."
I am content to act on the basis that s124 and s673 are powers of that general character, the issue being whether or not the Council committed some form of legal error in failing to turn its mind to the exercise of those powers. In my view the correspondence to which I have referred, and in particular the contents of the letter of 25 March 1998 that the Council "will take no action in relation to orders until July 1998", satisfy me that the council did turn its mind to the exercise of its relevant powers and committed no legal error in exercising the discretion in the way in which it did.
Mr Robertson of counsel also submitted that there was a duty to act because there was no legitimate basis for a failure to exercise the powers. In the event, however, he accepted that this proposition was indistinguishable from his submissions as to Wednesbury unreasonableness which I have already rejected.
In my opinion, for these reasons his Honour erred in finding any relevant failure on the part of the Council in the exercise of its powers and the appeal in that respect should be allowed.
I come to the question of costs. The issue of costs in the correspondence which is before the Court, is what led to the proceedings being continued and, of course, to the proceedings on appeal. At one stage, the parties having agreed on the nature of the construction which would satisfy the neighbours, the neighbours put forward a proposition that the whole matter be settled on the basis of the payment to them of costs of $1,000 and a $497 filing fee. Neither the Council nor the owner would agree to a settlement of the matter on that basis and accordingly the proceedings before his Honour Cowdroy AJ and in this Court have continued with the incurring of costs of many multiples of that amount.
This Court was requested by all parties to decide the issue of costs below as well as in this Court, rather than to remit the matter of costs. His Honour said this in the course of his reasons on the question of costs:
"The Court has a wide discretion in relation to costs. Having considered the matter, I am of the view that had the Council taken more positive action to ensure that the conditions of its building approval were fulfilled, the proceedings would have been unnecessary. In the circumstances, the Court makes an order that the Council bear the cost of the applicants and also of the second respondents. In making such determination, the Court is mindful of the pivotal role that Council should play in disputes of this type. Councils have an obligation to ensure that, so far as is possible, active steps are taken to settle such a dispute. I reject the submission of Council that this was a dispute between two neighbours, in respect of which the Council had no role to play."
In my opinion, his Honour erred in the exercise of his discretion, particularly by ordering that the Council pay not only the costs of the neighbours who had instituted the proceedings, but also to pay the costs of the owners.
At the stage at which the offer was made on behalf of the neighbours that they would settle for an amount of $1,000 and filing fees the neighbours had, in the light of my reasons above, no cause of action against the Council. At that time, they had instituted proceedings against the owners without notice to the owners. A substantial proportion of the costs, including the whole of the filing fees and no doubt some proportion of the $1,000, if not all of the $1,000, could not at that point of time have been recovered from the owners. Thereafter no-one was prepared to move from the position they had taken. In my opinion the appropriate order at that moment would have been no order as to costs, notwithstanding the request by the neighbour that the amount I have identified be paid at that point. Thereafter the parties proceeded to incur considerably greater costs than those that they had refused to pay in the first instance.

In my opinion the appropriate order with respect to the order below is to vacate his Honour's orders but to make no order as to costs for the proceedings before Cowdroy AJ.
In this Court the position is different. The Council has had orders for costs made against it for the whole of the proceedings, not only with respect to the neighbour, but also against the owner. Mr Robertson submitted that matters of public interest were involved in the Council's appeal and in some respects this should be regarded as a test case because of the use, in the Land and Environment Court, to which his Honour's judgment was being put in the way I have identified by reference to the judgment of Pearlman J in Payne v Mosman Council.
Notwithstanding a broader aspect to these proceedings, that aspect arises in a context in which the Council was not, in my opinion, liable to the declaration that was made against it for the reasons I have set out. It was ordered to pay the whole of the costs below. It was appropriate for the Council to bring this appeal. Accordingly, in my opinion the Council is entitled to its costs.
The Court has to apportion them in some way between the neighbour and the owner. The Council has had to appeal against the order for costs which was made against the second respondents. In my opinion the second respondents should pay 25 per cent of the Council's costs of this appeal and the first respondent should pay 75 per cent. Accordingly the orders I propose are:
1         The appeal allowed.
2         Vacate orders 1 and 4 of his Honour's orders of 21 August 1998.
3         Order that the first respondents pay 75 per cent of the appellant's costs and the second respondent pay 25 per cent of the appellant's costs of the appeal. If entitled, each of the respondents to be granted a certificate under the Suitors' Fund Act.
4         That the application be dismissed as against the Council in the           court below.
POWELL JA: I agree.
HEYDON JA: I agree with the Chief Justice

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LAST UPDATED: 10/05/2000