The Owners - Strata Plan No 20226 v North Sydney Council
[2012] NSWLEC 148
•25 June 2012
Land and Environment Court
New South Wales
Medium Neutral Citation: The Owners - Strata Plan No 20226 v North Sydney Council [2012] NSWLEC 148 Hearing dates: 21 June 2012, 25 June 2012 Decision date: 25 June 2012 Before: Craig J Decision: (1)The applicant's notice of motion is dismissed
(2)The respondent's notice of motion is dismissed
(3)The applicant is to pay the respondent's costs of the applicant's notice of motion
(4)The exhibits may be returned
Catchwords: COSTS: - Class 1 appeal - appeal against order under s 121B of the Environmental Planning and Assessment Act 1979 - boundary retaining wall in danger of collapse - further order under s 124 of the Local Government Act 1993 - dispute between landowners as to responsibility to comply with orders - remedial action agreed following conciliation conference - presumption against costs order in Class 1 and Class 2 proceedings - Pt 3 r 3.7 of the Land and Environment Court Rules 2007 - not fair and reasonable to order costs Legislation Cited: Environmental Planning and Assessment Act 1979
Local Government Act 1993
Land and Environment Court Act 1979
Land and Environment Court Rules 2007Cases Cited: Arden Anglican School v Hornsby Shire Council [2008] NSWLEC 103; (2008) 158 LGERA 224
Re Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin [1997] HCA 6; (1977) 186 CLR 622
Port Stephens Council v Sansom [2007] NSWCA 299; (2007) 156 LGERA 125
ROI Properties Pty Ltd v Council of the City of Sydney [2010] NSWLEC 22Category: Costs Parties: The Owners - Strata Plan No 20226 (Applicant)
North Sydney Council (Respondent)Representation: P J Bambagiotti (Applicant)
A M Pickles (Respondent)
Mills Oakley Lawyers (Applicant)
Sparke Helmore Lawyers (Respondent)
File Number(s): 10941 of 2011and 20049 of 2012
ex tempore Judgment
The subject matter of these appeals is a retaining wall, straddling the boundary between two properties, which is acknowledged by the applicant to have been in danger of collapse. That state of the wall prompted the Council to issue a statutory notice requiring that measures be taken to address the danger.
Ultimately, the Court was not required to adjudicate upon the requirements imposed by the notice. The measures necessary to address the danger presented by the wall were agreed between the parties without the necessity for a hearing.
Regrettably, the accord reached upon the need to stabilise this dangerous wall did not extend to an accord upon the costs of the proceedings. What might seem to be a disproportionate use of curial resources and the incurring of costs by the parties, the parties have embarked upon a hearing , exceeding one day, which has involved the reading of five affidavits and the tender of a substantial number of documents. The purpose of the exercise was to determine whether an order for costs should be made.
The appeals
The first appeal was filed in Class 1 of the Court's jurisdiction pursuant to s 121ZK of the Environmental Planning and Assessment Act 1979 (the EPAAct). It arose from an order issued by North Sydney Council on 1 September 2011 (the First Order). It was an order issued under s 121B(1) of the EPA Act purportedly making orders in accordance with Items 2 and 4 of the Table to that subsection. In substance, the order required removal of the wall under the supervision of a qualified practising structural engineer; the immediate installation of barricades and safety tape to prevent access adjacent to and below the wall and reconstruction of the wall in accordance with nominated engineering drawings.
The appeal in respect of the First Order was filed on 17 October 2011. On the return date of the application, the matter was referred to a conciliation conference on 15 December 2011 before a Commissioner of the Court. That conference was appointed to take place pursuant to s 34 of the Land and Environment Court Act 1979 (the CourtAct). The conference commenced on 15 December and was adjourned until 31 January 2012. On the latter date, the conference was terminated (s 34(4) of the Court Act).
On 22 December 2011, the Council issued a further notice in relation to the retaining wall. This notice was issued under s 124 of the Local Government Act 1993 (the LG Act) and identified the order given as being in accordance with Item 21 of the Table to that section (the Second Order). It required compliance within seven days. The Order was also expressed to be given as an emergency order under s 129(2)(b) of the LG Act. In a letter from the Council accompanying that Order, it was stated that the Second Order replaced the First Order.
The appeal to the Court in respect of the Second Order was commenced in Class 2 of the Court's jurisdiction. The first return date of those proceedings was 24 February 2012 when, once again, an order was made referring the proceedings to a conciliation conference under s 34 of the Court Act. That conference was appointed to take place on 12 April 2012.
Agreement was reached between the parties at that conference, following which proposed orders were drafted and agreed by them. Their agreed orders were provided to the Commissioner who had presided at the s 34 conference. Orders of the Court were then made conformably with that agreement (s 34(3) of the Court Act). Those orders, made on 17 April, were relevantly as follows:
"1.The parties have reached agreement as to terms of a decision in the proceedings that would be acceptable to the parties (being a decision that the Court could have made in the proper exercise of its functions).
2.The terms of the decision are as follows:
(a)Pursuant to section 180(4)(d) of the Local Government Act 1993, the Court finds that the Order dated 22 December 2011 (the subject of these proceedings) has been sufficiently complied with the provision on 10 April 2012 of Engineering Certificate dated 5 April 2012 by Goral Pty Limited.
3.Pursuant to Section 34(3)(a) and (b), the parties request the Commissioner to dispose of these proceedings in accordance with the terms of the decision set out in paragraph 2 above.
Notation: The Applicant asserts (which is not admitted by the Respondent) that its conduct in this matter and consent to these orders is entirely the result of a commercial decision made by it. The Applicant's consent to these orders is without prejudice or concession to the merits of the Applicant's arguments (which are not admitted by the Respondent) in respect of the subject matter of these proceedings."
Background
The property owned by the applicant is known as 66 Bent Street, Neutral Bay. It is convenient to refer to that property as "No. 66". The property adjoining to the west is in the ownership of The Owners - Strata Plan 20922. That land is known as 17 Wyagdon Street, Neutral Bay. It is convenient to refer both to the owners corporation of that land and, where relevant, to the land itself as "No. 17".
Erected on No. 17 is a residential flat building, the slab for the basement carpark of which is close to the boundary with No. 66. Between the carpark slab and the boundary is a narrow garden containing trees and shrubs. The soil for this garden is retained by the retaining wall in question.
A survey prepared in June 2011 shows the toe of the retaining wall to be substantially located within No. 66. It is described as a wall of about 1.5m in height constructed of timber railway sleepers which have a cross-sectional width of about 200mm by a depth of about 100mm. At its northern corner, the base of the wall is located within No. 66 by about 30mm while further south the base is located about 230mm within the boundary of No. 66, that is by a width which exceeds the width of the sleepers from which the wall is constructed. The state of the wall was described in 2011 as being "white ant eaten" and of "rotten timber construction", having become laterally displaced, with the consequence that it is "structurally unsound and likely to collapse."
The ground level of No. 66, upon which a residential flat building is also constructed, was generally at the level of the base of the retaining wall. Adjacent to the base of that wall was a path that provided access from the street for the residents of No. 66.
The state of the retaining wall came to the attention of the Council in April 2011. It was first inspected by a Council officer on 6 April and again on 19 April. The Council asserted in a later letter to the applicant that "substantial movement of the wall" was observed to have occurred between those two dates. As a consequence, an emergency order under s 124 of the LG Act was issued to the owner of No. 17. The order required that a qualified engineer be engaged to report upon the structural condition of the retaining wall and the works necessary to be undertaken to make the wall safe. The report, when obtained, was required to be submitted to the Council. Fourteen days was the period of time given for compliance with the order.
It would appear that as the result of representations to the Council by No. 17, an order under s 124 was given to the applicant on 19 May 2011. That order sought to impose the same requirements upon the applicant as those contained in the order directed to No. 17.
Thereafter, there seems to have been a debate between the applicants and No. 17 as to who owned and was responsible for the wall. Neither proprietor knew by whom the wall had been constructed. Based upon old construction drawings, it was claimed by No. 17 that the applicant was responsible for the wall and therefore required to comply with the order. In a detailed response dated 26 July 2011, the applicant wrote to No. 17, claiming that the land at No. 17 adjacent to the common boundary between the two properties had been filled. The applicant asserted in that letter that the retaining wall was constructed to retain the fill, supporting both the boundary garden and the fill beneath the carpark slab immediately to the west of that garden. A copy of that letter was sent by the applicant to a named officer of the Council without comment. This letter, so it would seem, was the only response by the applicant to the Council's order of 19 May 2011.
The impasse between No. 17 and the applicant remained unresolved without any action being taken in respect of the retaining wall. This was the position that pertained when, on 1 September 2011, the First Order was given. It was expressed to be given as an emergency order conformably with s 121D(b) of the EPA Act. The order relevantly provided:
"Terms of Emergency Order No. 2:
1. Under the supervision of a suitably qualified practicing [sic] Structural Engineer, remove the timber sleeper retaining wall located on the western boundary of 66 Bent Street, adjacent to 17 Wyadgon Street, Neutral Bay.
Terms of Emergency Order No. 4:
1.Install barricades and/or safety tape immediately to prevent access to persons in the areas adjacent to and below the timber sleeper retaining wall, located on the western boundary of 66 Bent Street, adjacent to 17 Wyagdon Street, Neutral Bay.
2. Under the supervision of a suitably qualified practising Structural Engineer reconstruct the timber sleeper retaining wall located on the western boundary of 66 Bent Street, adjacent to 17 Wyagdon Street, Neutral Bay in accordance with Drawing No's. S01 and S02 or S03, prepared by Northern Beaches Consulting Engineers, dated June 2011.
Note:All works must comply with all relevant Building Codes and Australian Standards."
The Order further stated that a period of seven days would be allowed "within which time the Emergency Order No. 2 and No. 4 must be complied with when issued."
By a letter dated 15 September 2011, solicitors acting for the applicant wrote to the Council in terms that raised the following matters:
(i) that the applicant had installed safety tape and signage around the retaining wall "to prevent pedestrian access to the area, pursuant to the purported Order No. 4(1)";
(ii) requesting both a survey report that had been referred to in a covering letter served with the First Order as well as the engineering report referred to in the Order; and
(iii) asserting that the Order should be revoked as being invalid both because it had failed to state reasons and also because it had failed to attach the engineering report to which the Order referred.
As to the last of these three grounds, while it seems that the Order served on 1 September did not attach the engineering plans to which it referred, the reasons for giving the Order were stated under a heading identifying reasons for the Order.
The Council responded to that letter on 20 September 2011. It enclosed the reports which the applicant's solicitors had sought; indicated that barriers had not been constructed in accordance with the notice and stated that legal action would be taken unless the terms of the Order were complied with within seven days. The applicant's solicitors were invited to advise whether their client was able to achieve compliance within the time given.
A further submission was made to the Council by the applicant's solicitors on 26 September 2011. Reference was made to plans that were apparently the subject of the development consent granted in 1980 for the development of No. 17. On the basis of the applicant's interpretation of those plans, it was contended that the wall was the property of No. 17. In the result, so it was submitted, the applicant could not be required to undertake work in respect of the wall. Revocation of the First Order was sought pursuant to s 121ZG(2) of the EPA Act.
The Council responded on 30 September 2011, indicating that as the wall was located on the applicant's property, the terms of its Order were required to be met. It was stated on behalf of the Council that it would "enforce" the terms of that Order. As I have earlier recorded, the applicant appealed against the First Order on 17 October 2011.
Prior to filing its appeal, it is apparent that the applicant had retained the services of Mr Nicholas Joannides, a consulting structural engineer, to advise in relation to the wall. A report obtained by the applicant from Mr Joannides indicates that he inspected the property on 11 October 2011. His report is dated 1 November 2011. Based on his assessment of building plans for both No. 17 and for No. 66, together with his inspection of the retaining wall, he expressed the opinion that the retaining wall had been constructed along the common boundary with No. 66 before that property was developed for the purpose of the present residential flat building. Mr Joannides also thought it likely that the level at No. 66 in 1980 was generally that which presently exists and that the retaining wall is likely to have been built in order to retain fill on No. 17.
The state of the retaining wall in 2011, as I have earlier described it, is taken from the report prepared by Mr Joannides. His report also records the observation that the basement carparking slab on No. 17 had dropped as a consequence of loss of fill material beneath it. He expressed the opinion that the slab would require demolition, backfilling, compaction and recasting "during the retaining wall reconstruction." For reasons unexplained, the report prepared by Mr Joannides for the applicant was not made available to the Council until the conciliation conference conducted onsite on 15 December 2011.
The discussion as to what occurred at the conciliation conference is not the subject of evidence (s 34(11) of the Court Act). Although No 17 did not appeal from the identical Order given to it on 1 September 2011, representatives of No. 17 did attend the conciliation conference.
Following the conference on 15 December, the Council was provided by the applicant with a further letter from Mr Joannides. That letter, dated 19 December 2011, indicates that the carpark slab on No. 17 was causing lateral pressure on the retaining wall and that live loads from vehicles using the carpark were adding to that load. He recommended that areas within the carpark be barricaded to prevent car and pedestrian access in those areas that were proximate to what he called the "failed retaining wall".
It was following the conciliation conference and the receipt of the further letter from Mr Joannides, that the Council issued the Second Order, dated 22 December 2011. The terms of that Order were:
"1. Engage a supervising engineer to recommend an interim bracing or temporary shoring (or other lateral support) system for the Wall. Upon receipt of that recommendation, the Owners are to submit to the Council, certification from that supervising engineer indicating that the proposed interim bracing or temporary shoring of the Wall is able to perform its intended use;
2. Engage a builder to install such system to mitigate any health and safety risks presented by the dilapidated condition of that Wall;
3. The works described above in paragraphs 1 and 2, and which are to be undertaken as a matter of urgency, will occur only to that section of the wall where there is an outwards bowing."
Accompanying the Second Order was the letter indicating that it replaced the First Order. Also accompanying the Second Order was a notice of intention to issue a further order under Item 21 of the Table to s 124 of the LG Act. The proposed order referred to in that notice required that a structural engineer report upon:
(i) the likely cause of the structural failure of the wall;
(ii) whether the movement or settlement of the slab of the carpark had contributed to the structural failure of the wall and whether the carpark use should cease while the wall was braced; and
(iii) the nature of works required to be carried out in order to stabilise the wall in the long term and make it structurally safe.
As I have said, the Second Order was served on or about 22 December 2011. On 5 January 2012 solicitors acting for the applicant again wrote to the Council. They contended that the time allowed by the Second Order had already expired by the time that the notice had been received by the applicant. In turn, they requested that an extension of time be granted in order to engage an engineer and have the bracing required by the Council installed.
The Council, through its solicitor, responded by indicating that time for compliance was extended until 18 January 2012. However, that work, according to the Council, was not carried out in the extended time allowed. On 20 January 2012, it wrote again to the solicitors for the applicant, indicating that no further extension of time would be granted and noting that upon inspection of the wall on 18 January, its condition seemed to have deteriorated further from that observed earlier in 2011.
On that same day, namely 20 January 2012, a further report was obtained by the applicant from Mr Joannides. The report was made available to the Council. It is a report which, in terms, seems to be framed in a way that is responsive to the proposed order, notice of which the Council had given to the applicant on 22 December. The report from Mr Joannides effectively supplied the information sought in the proposed order.
First, he observed that the wall was structurally inadequate to support the loads applied to it and that it was further weakened by white ant attack and rotten timber. Second, he expressed the opinion that there should be no liveloads imposed upon the carpark slab at No. 17. Third, he repeated that the wall was likely to collapse and that it could only be made safe by lateral bracing. He further observed that the wall could not be repaired or even stabilised from within No. 17, the necessary inference being that the only place from which work could be undertaken, even to brace the wall as a temporary measure, was from No. 66. Fourth, he said that the wall required demolition and at the same time the carpark slab would require demolition before reconstruction of a retaining wall was undertaken.
The next relevant event to occur was on 25 January 2012. It was on that date that the temporary bracing of the wall was undertaken, as the applicant had indicated would be done. The evidence indicates that the cost of this work was about $500.
That then was the situation that pertained when the applicant filed its appeal against the Second Order. As I have earlier recorded, the fixing of a conciliation conference was the order made when the application was first returned before the Court. It was at that conference, or rather as a consequence of that conference, that Court orders determining the substantive issue were made by consent.
Costs: the principles
That is the context in which the present notices of motion are to be considered. For its part, the applicant seeks an order that the costs of the Class 1 proceedings be paid by the Council. The primary position taken by the Council is that each party should pay its own costs of both appeals. Its fallback position is that if the applicants are entitled to costs in the Class 1 proceedings, then the Council should be entitled to an order for costs in the Class 2 proceedings.
Costs in proceedings in Classes 1 and 2 of the Court's jurisdiction are governed by special rules. Although the award of costs is discretionary, as s 98(1) of the Civil Procedure Act 2005 provides, the operation of that section is expressed to be subject to rules of court. Part 3, r 3.7 of the Land and Environment Court Rules 2007 (LECR) contains such a rule. That rule expressly relates to all proceedings in Classes 1 and 2 of the Court's jurisdiction. Subrule (2) of that rule is in these terms:
"(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."
Subrule (3) of the same rule identifies circumstances in which the Court might consider the making of a costs order where so to do would be fair and reasonable. That subrule does not purport to be exhaustive in its statement of circumstances.
Subrule (2) of r 3.7 creates a presumption that in proceedings of the present kind no order for costs should be made. That presumption is only displaced if, in all the circumstances, it can reasonably be concluded that it is fair and reasonable to make an order in favour of any one party. As Biscoe J observed in Arden Anglican School v Hornsby Shire Council [2008] NSWLEC 103; (2008) 158 LGERA 224 at [10]:
"One of the purposes of the costs follow the event rule in ordinary civil litigation is to encourage the parties to settle their disputes. [citation of authorities omitted]. In contrast, a no discouragement principle underlies the no costs rule in planning appeals, that is, persons generally should not be discouraged from exercising their right to appeal via the prospects of an adverse costs order. [citation omitted]. This may be rationalised on the bases that a significant purpose of planning appeals is to improve the decision-making process and that those involved are not adversaries in the same sense as adversaries in conventional civil litigation."
His Honour then cites observations from Spigelman CJ in Port Stephens Council v Sansom [2007] NSWCA 299; (2007) 156 LGERA 125 where at [71] - [74] the Chief Justice made observations as to costs orders in matters of the present kind.
I recognise that the references in those cases are to planning appeals. However, it seems to me that similar observations are appropriate to be made in respect of all appeals brought in Classes 1 and 2 of the Court's jurisdiction, whether they be planning appeals or appeals from statutory notices. Clearly, there will be circumstances which will require different considerations in different kinds of appeals, but essentially the principles remain the same. So much follows from the fact that r 3.7 applies to all proceedings falling within Classes 1 and 2.
In addition to those principles, it must also be born in mind that there has been no hearing on the merits of the appeals that the applicant has brought. This is not a case that has been run, with one party's position shown to be so devoid of rational support that it would be fair and reasonable in the circumstances to make an order in favour of the other party. The position that here pertains is more akin to that identified by McHugh J in Re Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622. There, as here, the essential dispute was resolved by agreement. In such circumstances, his Honour observed that the exercise of discretion would normally result in there being no costs order made.
In the present case it is to be kept at the forefront of consideration that, in exercising its legislative remit, the Council was acting to secure public safety. As I have already observed, it is uncontentious that the wall in question was unsafe and susceptible to failure at any time. Concern for safety arose for the occupants of both of No. 17 and for the occupants of No. 66. Action was required. The need for action could not be delayed while the applicant and the proprietors of No. 17 debated ownership of the wall in question and responsibility for its immediate repair and replacement.
Wherever the wall might originally have been located in relation to the boundary between the two properties, remedial action to secure its safety clearly involved the need for No. 17 and the applicant to cooperate in its repair and replacement. Each required access to the property of the other in order to achieve this result. It was not for the Council to adjudicate upon the rights of those owners, one against the other.
In the case of an appeal brought pursuant to s 121ZK of the EPA Act, it is also important to keep in mind the broad powers of the Court when determining such an appeal. The appeal involves a hearing de novo. The Court has power pursuant to s 121ZK(4) to make any one of a number of orders. The orders that it is authorised to make, conformably with the subsection, are to revoke the order made in respect to which the appeal is brought; to modify that order; to substitute for the order any other order that the Council could have made; to find that the order is sufficiently complied with, as happened in the case of the Second Order; to make such orders with respect to compliance with the orders that the Court sees fit or to make any other order in respect of the order as the Court thinks fit. Those are powers which are expressed in the broadest possible terms. They provide ample power for the Court to address particular concerns that an appellant may have as to the requirements of an order, either when the matter comes for final determination or before a Commissioner of the Court conducting a conference under s 34 of the Court Act.
An order for costs is not fair and reasonable
Without intending disservice to the very detailed submissions made on behalf of the applicant, there are essentially four bases upon which the applicant claims to be entitled to an order for costs arising from the actions of the Council. It submits that the giving of the Order was unreasonable in three respects. First as to the time it imposed for compliance, second as to the fact that the wall was not the wall of the applicant and third that it required work on land not owned by it. It is true that the First Order sought to limit the time within which the work required to be undertaken to a period of seven days. That having been said, a circumstance that is relevant to be noticed is that notwithstanding the time limitation, the Council, by the exchange of correspondence to which I have earlier referred, had indicated that it was not insistent upon the seven day period. Indeed the time for compliance was properly the subject of consideration in the context of the appeal.
I accept that under the provisions of the legislation, the lodging of the appeal did not, itself, constitute a stay but left open the time for compliance to be determined by the Court. However, the fact remains that at no time did the Council indicate that it intended to rely upon the time stated in the Order either for the purpose of arguing the appeal or for the purpose of taking some other proceeding. Its concern was to have the unsafe wall addressed in a timely manner.
The survey revealed that the subject wall was located within No. 66 to the extent that I have already described. That survey was provided to the Council by the proprietors of No. 17. Its correctness was not challenged by the applicant. Once the Council became aware that there was disagreement between the applicant and No. 17, the orders that it gave, so the evidence reveals, were given to both landowners and to each of them in the same terms. Being aware of the dispute, one asks rhetorically, was the Council required to ignore the unsafe condition of the wall while the dispute between owners took its stately course, either by negotiation or perhaps ultimately through litigation? The answer must surely be no.
The Council required that action be taken, no doubt contemplating by the giving of orders to both that there would be some reciprocal accommodation reached between the respective landowners in order to achieve the result that was in their mutual interests to achieve. Indeed, on hearing the appeal, had that been necessary, it would have been open to the Court to make appropriate orders in accordance with the broad powers earlier described, requiring that each take action, including the accommodation of entry to one upon the property of the other, in order to undertake the works required.
It is also noteworthy for this and other grounds advanced by the applicant that the extent of danger occasioned by this wall was most graphically described in the reports prepared by Mr Joannides. The initial report, as I have said, was not disclosed to the Council when it first came to hand but rather held back by the applicant until the conference that was appointed by the Court to take place in December. Had that report come to hand sooner, it may well have led to a more speedy resolution of the dispute that existed between the present parties. Indeed, the inference is that the report probably did have an impact on the ultimate course that was taken by the Council.
The second broad basis upon which the applicant claims that it was fair and reasonable that an order for costs should be made in its favour was the perceived need to engage an engineer. However it must be remembered that Mr Joannides was engaged before an appeal was filed. The engagement of Mr Joannides to express a view upon the condition of the wall was something which was clearly intended by the action that the Council proceeded to take in order to secure the safety of this dangerous wall. Why the report was held back until the conference on 15 December 2011 was not adequately explained. I do not regard the fact that an engineer was required to be engaged as a matter which weighs in favour of the discretion which the applicant seeks to have exercised in its favour.
The need to engage such an engineer seems to me to be the inevitable consequence of the identification of a dangerous wall likely to collapse and which would have a direct impact upon the applicant's property. Whether it could seek to recover the cost of that engineer's services or who was liable to pay for the wall to be stabilised, demolished and reconstructed was a matter to be determined as between the two landholders and not by the Council.
The third matter that was raised on behalf of the applicant was that in the Class 1 proceedings the Council's position amounted to a surrender. That is to say, there was a surrender by the Council of the applicant's primary claim in the appeal, namely that the appeal should be upheld and that the first Order should be dismissed.
There is no doubt, as the cases decided in this Court make clear, that if in fact conduct by one party to proceedings does constitute a surrender, that is, conduct which ultimately acknowledges, without significant qualification, the claim which the successful party makes, then in such circumstances an order for costs may be justified. That does not seem to me to describe the events that occurred prior to or following the conciliation conference of 19 December 2011. It is true that when the Second Order came to be served the Council indicated in an accompanying letter that the First Order was, in effect, redundant and that the Second Order replaced the First. I cannot ignore the circumstance that service of the Second Order followed closely upon the conciliation conference which was not terminated but rather adjourned. An inference to be drawn from the fact that it was adjourned is that the position of the parties in seeking to conciliate upon the issues which existed between them was a process that was ongoing. If the position was otherwise, the Commissioner would have been required to terminate the conference. That did not occur until 31 January 2012.
I acknowledge that s 34(11) of the Court Act has the potential to create difficulties when determining questions of costs where there has not been any final determination at a conciliation conference and the conference has not been terminated. As was observed by Pain J in ROI Properties Pty Ltd v Council of the City of Sydney [2010] NSWLEC 22, determining questions of costs where the events that occurred at or as an immediate consequence of a conciliation conference require the question of costs to be determined in a partial vacuum. That circumstance cannot avoid the possibility of inferences being drawn from the fact that there was a conciliation conference and that it was not terminated as would be required if, in fact, the parties had nothing further to discuss.
In the present case it is relevant to notice that subsequent to the conference Mr Joannides' report of 19 December 2011 was received from the applicant. Following receipt of that report the Second Order issued. This occurred in circumstances in which some, but not all, of the steps necessary to secure the safety of people from the collapse of the wall had been taken by the applicant. The ultimate resolution of wall safety seems to follow from the steps taken during January 2012 in which bracing of the wall was undertaken conformably with one of the requirements of the Order which is the subject of the Class 2 proceedings. Ultimately, as I have recorded, those proceedings were resolved by agreement.
The Council accepted that the giving of the Second Order rendered the Class 1 proceedings futile. However, the circumstance in which that occurred cannot be ignored. Those circumstances fall way short of a suggestion that they amounted to a surrender.
The fourth matter upon which the applicant sought to rely to sustain their application for costs is an assertion that its Class 1 appeal was "compelled", to use the word used in submissions. So it was, but in circumstances where work was incomplete to meet any of the requirements of the Order. It seems to me that the failure to communicate with the Council about those steps to be taken and the provision of the engineering evidence that ultimately came from the applicant's engineer are factors that need to be considered in response to the submission of "compulsion".
For all these reasons I have reached the view that the evidence adduced and the arguments advanced on behalf of the applicant in order to seek to rebut the presumption created by subrule (2) of r 3.7 of the LECR have not been sufficiently made out to justify the exercise of the exceptional discretion that is afforded by that rule. That leaves then the question of what should occur in relation to the Class 2 proceedings.
First to be noticed is that the Council pressed its claim for costs in relation to the Class 2 proceedings only in the event that the applicant's claim for costs in the Class 1 was successful. Second, it should be recorded that in the context of the arguments presented to me, the focus of both the evidence and the submissions was almost wholly upon what should occur in respect of the Class 1 proceedings. In the totality of the argument, little time was directed to the Class 2 proceedings and why the applicant should not be ordered to pay the costs of the latter. Indeed, for much of the submissions made by the applicant in that regard, it seemed almost to be advancing an argument that the applicant should also have its costs of the Class 2 proceedings paid by the Council. Ultimately, when my impression of the argument was put to the applicant's counsel, it was acknowledged that no order for costs was sought by the applicant in the latter proceedings.
However, I take into account that the Council did seek costs in the Class 2 proceedings, albeit as an alternative. That fact has a consequence for the order that I am about to make in respect of the costs in that matter.
For the reasons that I have indicated the orders that I make are these:
1. The applicant's notice of motion is dismissed.
2. The respondent's notice of motion is dismissed.
3. The applicant is to pay the respondent's costs of the applicant's notice of motion.
The exhibits may be returned.
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Decision last updated: 18 July 2012
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