Sanchez v Randwick City Council

[2003] NSWLEC 276

>

Land and Environment Court

of New South Wales

CITATION:

Sanchez v Randwick City Council & Ors [2003] NSWLEC 276

PARTIES:

Michael Angel Sanchez (Appl)
Randwick City Council (1R)
Peter Rosier (2R)
Geoform Design Pty Ltd (3R)

FILE NUMBER(S):

40448 of 2003

CORAM:

McClellan CJ

KEY ISSUES:

Costs - Practice and Procedure :- Identity of person against whom costs order made
Whether costs order made against named respondent or its director

LEGISLATION CITED:

Land and Environment Court Act 1979 s 69(8)
Legal Profession Act 1987 s 208L

CASES CITED:

DATES OF HEARING:

19 September 2003

EX TEMPORE
JUDGMENT DATE :

09/19/2003

LEGAL REPRESENTATIVES:

M A Bradford (Barrister - Appl)
Snelgrove Boyle Neilson (Solicitors - Appl)

A J Thompson (Barrister - 1R)
Bowen & Gerathy (Solicitors - 1R)

Submitting appearance (2R)

P Clay (Barrister - 3R)
Wordsworth Lawyers (Solicitors - 3R)

JUDGMENT:

IN THE LAND AND

ENVIRONMENT COURT

OF NEW SOUTH WALES

40448/03

McCLELLAN J

FRIDAY 19 SEPTEMBER 2003

SANCHEZ

Applicant
v

RANDWICK CITY COUNCIL

Respondent

Judgment

1 HIS HONOUR: This is an application in class 4 of the court’s jurisdiction in which the applicant Michael Angel Sanchez seeks a declaration and other relief. The declaration which is sought is in the following terms:

“A declaration that by her orders made on 19 May 1995, the Hon Justice M L Pearlman AM of this honourable court intended that the applicant on the record in the proceedings pay the first respondent’s costs rather than Michael Angel Sanchez, personally.”

2 The order sought is:

“An order restraining Peter Rosier of Rosier Partners, the Assessor appointed by the Supreme Court of New South Wales from proceeding to assess the costs payable in matter no CL91148/01 upon the premise that Michael Angel Sanchez is personally liable for such costs.”

3 It is necessary to explain the background to these proceedings in order for the issues to emerge.

4 A firm of architects known as Geoform Design Pty Limited prepared and lodged a development application with Randwick City Council. The application was lodged on behalf of a company which was the owner of the proposed development site. The name of that company is Benchmark Developments (NSW) Pty Ltd.

5 The applicant in the proceedings before me, Sanchez, is the Managing Director of that company and the evidence discloses that he has at all relevant times owned or controlled at least 65 per cent of the share holding of the company.

6 The development application ultimately came to be considered by a Commissioner of this Court. A number of residents of the locality sought to intervene in the proceedings. Mr Eric Strauss on behalf of Mason Street Residents was granted leave to appear and be represented in those proceedings.

7 The proceedings were determined by the Senior Commissioner of the Court (at that time he was in fact referred to as the Senior Assessor) and an order for costs was made. However by reason of s 69(8) of the Land andEnvironment Court Act 1979 a costs order could only be made by a judge of the Court. The Senior Assessor’s statement that a costs order had been made was accordingly of no force or effect.

8 The matter came before Pearlman CJ, the Chief Judge of the court, who was asked to make an order for costs both in favour of the council and in favour of the resident objectors who were allowed to intervene through Mr Strauss. Her Honour considered competing submissions and ultimately said:

“I think the just and reasonable order in the circumstances is that the applicant (which was Geoform Design Pty Limited) pay the costs of both the council and the resident objectors.”

9 Her Honour then, in a separate section of her reasons for judgment, formally provided for the orders which she made saying:

“My formal orders are as follows:
1 The applicant’s notice of motion is dismissed.
2 The notices of motion of the respondent and the resident objectors are upheld
3. The applicant must pay the costs of the respondent and of the resident objectors:
(a) Of the hearing on 3 and 4 November 1994 and costs thrown away as a result of the applicant’s reliance on amended plans AO1 to AO12 dated 14 September 1994; and
(b) Of each of the notices of motion.”

10 In the early part of her reasons her Honour discussed the background to the dispute. In so doing she has identified the relationship between Geoform, Benchmark and Sanchez in a way which appears to have caused confusion and to have inspired litigation including the proceedings before me today.

11 Her Honour said:

“It is important to note that Geoform Design Pty Ltd Architects is a firm of architects who were acting on behalf of the owner of the site, Benchmark Developments (NSW) Pty Ltd, of which Mr M A Sanchez is the managing director. The proceedings before me were conducted on the basis that the true applicant for development consent was Benchmark Developments (NSW) Pty Ltd and that Mr Sanchez, who controls that company, was the person whom the burden of costs, if they were to be awarded, would truly lie. Accordingly, when I refer to the applicant in this judgment it is to be understood that I refer to Mr Sanchez.”

12 These remarks by her Honour correctly identified the ultimate source from which the money to meet any costs order would have to come. However, Geoform, had by lodging the appeal with the court in relation to the development application become the applicant in the proceedings. Accordingly if an order for costs was ultimately made by the court against the applicant, it would be Geoform who would carry the legal liability to meet that order. However, as they were apparently the agent for Benchmark Developments no doubt, depending upon the arrangements between the two companies, Geoform would look to its principal to indemnify it in relation to any costs liability which it incurred. Because Mr Sanchez was the controlling interest in Benchmark Developments, and presumably the primary source of the funds, her Honour was able to state, as a practical matter, that in the event that an order for costs was made against Geoform, Mr Sanchez would be the person who would ultimately carry the responsibility for the payment in a practical sense.

13 Her Honour’s remarks could not be interpreted as in any way affecting the rights which would flow against Geoform at the suit of the council or the intervener in the event that an order for costs was made against Geoform. Only Geoform was a party to the proceedings; Benchmark Developments and Mr Sanchez were not. Accordingly there was no capacity for her Honour to make an order for costs against either the owner of the land or Mr Sanchez. Her Honour’s jurisdiction was confined to making an order against Geoform.

14 Irrespective of the background discussion which her Honour embarked upon her orders are absolutely clear. In the formal orders her Honour has imposed a liability for costs upon the applicant. The applicant in the proceedings before her was Geoform Design and accordingly there could be no question but that if either of the other parties sought to enforce an order for costs it could only be enforced by them against Geoform Design. Of course, as I have indicated, Geoform may seek indemnity from either or both of Benchmark or Mr Sanchez.

15 Unfortunately the clarity with which the orders were framed has not been appreciated by those who have been responsible for advising some of the parties in these proceedings. They have also not been appreciated by the Costs Assessors; there are two who have looked at the matter.

16 There was an earlier dispute between Geoform and the interveners in relation to the costs of the interveners. That dispute resulted in proceedings before Master McLaughlin in the Supreme Court. The Master was in no doubt as to the proper construction of Pearlman CJ’s order, and said when delivering judgment:

“It is all very well for the plaintiff (being Geoform Design Pty Limited, Architects) to say that Pearlman CJ because of references in her reasons for judgment pointed to the fact that the party with the interest in the outcome of the proceedings and the party which would ultimately have to bear the burden of any order for costs and upon whom that burden of costs would truly lie would be someone other than the applicant in the proceedings before her Honour, but that does not mean that proceedings formally and properly constituted before her Honour in which there were three named parties should be treated (when it came to having an order made concerning costs) as if one of those named parties had suddenly been transmogrified into its principal Benchmark Developments (NSW) Pty Limited, or the managing director of that principal, Mr Sanchez.
I am not satisfied that there is genuine dispute as to the identity of the person liable to pay the costs ordered by Pearlman J in the Land and Environment Court. Indeed, I am entirely satisfied that the person whom her Honour ordered to pay those costs was Geoform Design Pty Limited, the applicant in the proceedings before her Honour.”

17 I respectfully agree with the conclusion expressed by Master McLaughlin.

18 Notwithstanding the clarity with which Pearlman CJ spoke in her orders, and the clarity of the conclusion expressed by Master McLaughlin I understand that concerns have continued in relation to the entity against which an order for costs might be enforced.

19 Those concerns have been aired before the Assessor who is currently considering the quantum of those costs and it is feared by the applicant before me that the Assessor will determine that he is liable for those costs. In that event the appropriate course for Sanchez to adopt would be to appeal the decision of the Assessor. An appeal is provided for by s 208L of the Legal ProfessionAct 1987, which forms part of the regime for the assessment of professional costs in proceedings in New South Wales.

20 The scheme of the Legal Profession Act provides for the making of an order by a Court or tribunal, and for a costs Assessor to be appointed to determine the quantum of such an order. The liability for the payment of the costs as assessed falls upon the person who has been ordered by the relevant court or tribunal to make that payment. Accordingly, if as appears to be the case here, the Assessor is proceeding to determine an assessment for costs without the appropriate party being involved in that determination, the assessment is unlikely to carry with it any capacity for its enforcement. Accordingly, if as I understand the position in the present case the council has pursued an assessment of costs before the Assessor, but Geoform is not a party to that assessment, it is likely that the assessment process will ultimately prove to be a waste of time. Because an order for costs was not made against Mr Sanchez there will be no capacity to recover any costs, as assessed, from him.

21 With that background the proceedings before me can now be understood. It was submitted by counsel for Sanchez that although the order made by Pearlman CJ was clear and his client was not bound by it, nevertheless because of confusion which had apparently existed at the assessment and in the mind of the assessor who has been joined as a party in these proceedings I should made the declaration sought in order 1 of the application. Counsel was not able to point me to any foundation for jurisdiction to make such an order beyond Pt 15 r 9 of the rules of this Court.

22 The order made by Pearlman CJ was apparently perfected on the same day upon which it was made which was 19 May 1995. I note in passing that an application for leave to appeal from Pearlman CJ’s orders was dismissed by the Court of Appeal a short time thereafter. Pt 15 r 9 provides for the Court to set aside or vary an order in limited circumstances. Counsel submitted that power was available in the Court pursuant to r 9E to make the declaration sought in the application because I should be satisfied that the order which Pearlman CJ made did not reflect the intention of the Court. In my opinion this is a submission entirely without foundation and is inconsistent with the other submission which counsel made, which was to the effect that the order of Pearlman CJ was entirely clear. In any event as I am satisfied that the order which her Honour made was clear and was the only order available to her there is simply no possibility that the order which she made did not reflect the intention of the Court. Accordingly, no occasion to consider whether or not there is power in these circumstances in Pt 15 r 9 arises.

23 It was further suggested by counsel that rather than make the declaration which was sought I should exercise my powers to vary the order of Pearlman CJ to add to it an explanation which reinforced the object of the order as being to require Geoform to pay the costs. This submission suffers from the same difficulties as the submission in relation to the declaration sought in the application.

24 As I have indicated, an order was also sought restraining Mr Rosier, the Assessor, from proceeding to assess the costs which might be payable. Counsel was not able to point me to any basis for jurisdiction in a judge of this Court to supervise the activities of an Assessor appointed by the Supreme Court and I know of no basis upon which this could be undertaken. However, as I have indicated it would seem that the current proceedings before the Assessor are misconceived and something should be done at an early date to ensure that the appropriate party is joined in that assessment so that the ultimate position can be regularised.

25 The party responsible for the problems before the Assessor is not plain to me. However after consideration of the matter this morning I urged the parties to consider whether or not they might be able to reach a satisfactory compromise of the whole proceedings. My understanding is that there may be a sum slightly less than $30,000 presently in issue. Having regard to the many proceedings which have now been undertaken in relation to this matter it would seem an extraordinary waste of both private funds and public monies for these proceedings to have come to their present state.

26 My concerns in relation to the expenditure of those monies are reinforced by the fact that the council through its counsel, and counsel for the other parties, have indicated to me today that they have reached an agreement which is expressed in the following terms:

“The applicant referred to in the orders of Pearlman CJ dated 19 May 1995 in proceedings Number 10564/94 between Geoform Design Pty Limited Architects v Randwick City Council is the applicant in those proceedings ie Geoform Design Pty Limited Architects and no other person or corporation.”

27 That agreement as I have indicated in my opinion plainly reflects the order which her Honour made and is also of course consistent with the judgment of Master McLaughlin. The fact that it would seem, although I might not be aware of the whole of the facts, that the assessment has been allowed to continue on some other basis until today would suggest that the parties and their advisers have not adequately addressed the true nature of these proceedings and expended their efforts in resolving them in a timely and efficient way. I say no more about that aspect of the matter. However, it follows from my conclusions in relation to the form of the order which Pearlman CJ made and the failure to identify any basis upon which this Court could intervene, that the proceedings brought by the present applicant must be dismissed with costs.

28 Geoform brought a cross-claim in these proceedings. In that cross-claim it sought an order that Sanchez “indemnify” the cross-claimant in respect of any liability of the cross-claimant for costs pursuant to the order of the Court made on 19 May 1995 in proceedings 10564/94. In my opinion this Court has no jurisdiction to entertain such a claim. The claim must be in contract and would require determination in the appropriate forum. Accordingly, the cross-claim is without substance and must be dismissed with costs.

29 The applicant submits that as against the council and the third respondent there should be no orders for costs. The council accepts that there should be no order, but the third respondent seeks an order for costs against the applicant. The third respondent submits that because it has succeeded in resisting the applicant’s claim it is entitled to an order for costs.

30 In my opinion the justice of the present situation requires that an order for costs be made in favour of the third respondent in relation to the application, but that the applicant should have the benefit of an order in relation to the third respondent’s cross-claim.

31 As I have found the application was one which could not succeed, in my opinion it is appropriate that an order in favour of the third respondent be made. Submissions have been made from the bar table which reflect argument in relation to how it has happened that this matter has come to this Court without anyone taking an effective step to resolve it. As I have previously indicated the evidence before me does not enable me to determine the reasonableness of the position which has previously been adopted by any party, although it is clear that long before the matter reached this Court the advisers to each of the parties should have intervened to ensure that monies were not wasted on unnecessary proceedings. However that not having happened and the applicant having brought these proceedings, in my opinion it is just that the third respondent have an order in relation to the application. However, I am also satisfied that the cross-claim had absolutely no prospects of success and should not have been brought. Accordingly, the applicant is entitled to a costs order in relation to the cross-claim.

32 The formal orders I make are:

1. The claim is dismissed.
2. The cross-claim is dismissed.
3. The applicant is ordered to pay the costs of the third respondent in relation to the claim.
4. The third respondent is ordered to pay the applicant’s costs of the cross-claim.
5. Apart from orders 3 and 4 there is no order as to costs.

**********