Land and Environment Court of New South Wales CITATION: Warringah Council v John Hallas [1999] NSWLEC 262 PARTIES APPLICANT Warringah Council RESPONDENT John Hallas NUMBER: 40175 of 1999 CORAM: Cowdroy J KEY ISSUES: Costs :- council seeking to enforce conditions of development - respondent delaying compliance - respondent entering contract for sale - institution of proceedings - completion of sale - discontinuance of proceedings - respondents claim for costs dismissed LEGISLATION CITED: Environmental Planning and Assessment Act 1979 s 124 DATES OF HEARING: 11/29/1999; 11/30/1999 DATE OF JUDGMENT DELIVERY: 12/10/1999 APPLICANT Mr K Webber (Solicitor) SOLICITORS Wilshire Webb LEGAL REPRESENTATIVES: RESPONDENT Mr D Parry (Barrister) SOLICITORS Swaab Attorneys JUDGMENT: IN THE LAND AND MATTER No. 40175 of 1999 ENVIRONMENT COURT CORAM: Cowdroy J OF NEW SOUTH WALES DECISION DATE: 10/12/99 Warringah Council Applicant v John Hallas Respondent JUDGMENT Background 1. This is an application by the respondent for costs, including costs on an indemnity basis against the applicant ("the council"). 2. The respondent was the owner of land known as 101 Booralie Rd, Terry Hills ("the land") upon which an equestrian centre was located. Such use had been approved by the council pursuant to consent dated 29 October 1981 which was granted to a predecessor in title to the respondent. On 12 March 1992 and on the 15 April 1992 two other consents were given which essentially related to the erection of further facilities. 3. As a consequence of certain complaints the council wrote to the respondent on 2 December 1998 concerning alleged breaches of the development consent, one of which related to drainage. The respondent was asked to supply the council within 14 days of the date of the letter, an undertaking in writing that they would comply with the requirements and a form of undertaking was provided. A warning was given that if the undertaking was not provided or not complied with, class four proceedings would be instituted without further notice. 4. In response a letter was received from the respondent's solicitors. It requested an extension of time so that the matter could be investigated until 28 January 1998. The undertaking was not returned and there was no further communication between the parties until 17 February 1999 when the council again sought information from the respondent's solicitors. There is no evidence of any communication from 17 February 1999 until 15 April 1999 when a 'without prejudice' conference was held on site. The meeting was followed by a letter dated 10 May 1999 from the respondent's solicitors. The letter dealt with the various issues raised and in relation to drainage and stormwater run-off, the respondent offered to obtain an expert report. The letter stated:- Our client's timetable for this expert report is three months and it is hoped that this timetable is adequate for Council's purposes. 5. On 28 May 1999 the respondent's solicitors inquired of the council's solicitors whether they had received instructions to respond to the proposal of the 10 May 1999. On 2 June 1999 the council's solicitors advised that they were awaiting instructions. 6. By letter dated 28 July 1999 the council's solicitors informed the respondent's solicitors that council was not prepared to wait for the three month period requested for an expert report and foreshadowed the issuing of an order. Another form of undertaking to be signed by the respondent was enclosed. 7. The undertaking enclosed with the council's letter of 28 July 1999 was not returned. On 23 August 1999 council issued an order pursuant to s 124 of the Environmental Planning and Assessment Act ("the EP&A Act") requiring compliance with a development condition concerning drainage with the flow of surface water from the land. It was posted to the respondent's solicitors by letter dated 25 August 1999. 8. By letter dated 6 September 1999 the respondent's solicitor informed the council's solicitor that contracts for the land had been exchanged on 18 August 1999. The letter advised that a copy of the order had been forwarded to the conveyancers acting on behalf of the purchasers. The relevant portion of the letter continued:- The purchasers, under the terms of the contract, are responsible for all matters raised by the Order. We have requested that Austates Conveyances seek instructions as to the manner by which the order is to be dealt with by the purchasers. To date we have not had a response. We will continue to monitor the matters and keep you fully informed. Would you kindly seek instructions from your client to extend the time for compliance with the Order thats say 28 days to enable the purchaser to formulate a satisfactory action plan. 9. On 21 September 1999 these proceedings were instituted by council. As appears from the application, the council sought a declaration that development had been carried out without consent, an order that work be undertaken to collect stormwater drainage and an order that the respondent be restrained from completing the contract for sale of the land until the work referred to in the application had been performed. An interlocutory order was also sought restraining completion of the sale. 10. By letter dated 29 September 1999 the respondent's solicitors provided portions of the contract for sale dated 18 August 1999 to the council's solicitors. The accompanying letter contains the following paragraph:- You will see from the first document that full disclosure of outstanding orders and Council's requirements have been disclosed to the purchaser. In addition the purchaser has taken responsibility to meet all Council's requirements. In the circumstances we ask you to seek urgent instructions to withdraw the application for interlocutory relief in the Application filed on 27 September 1999 so that our client can proceed to an early settlement of the sale and so that the purchaser can take the necessary steps to satisfy Council. The letter foreshadowed that upon the return day namely 1 October 1999 the respondent would be seeking an extension of time ' to obtain instructions' but also ' to permit our client to proceed with the orderly completion of this most important sale without interference on the basis that another party has taken responsibility to meet council's requirements' . 11. Clause 8 of the contract contains the following condition:- The vendor discloses notices received from the Council as referred to in the annexure marked "C". The purchaser has familiarised herself with the terms and conditions of the development consent and the notices issued by the Council. The vendor will not undertake any further work in respect of those notices and the purchaser will indemnify the vendor against all claims demands and proceedings issued by the Council in respect of the requirements contained in the council notice or any matter arising from that notice and the purchaser will raise no requisitions, objections, claim for compensation nor delay completion by reason of any matters disclosed in the special condition. 12. On 1 October 1999 the council did not seek to restrain the sale which was concluded on 11 November 1999. On 15 November 1999 the respondent requested that the proceedings be discontinued at the next mention day namely 16 November 1999. At the request of the respondent the council agreed to discontinue and did so by notice dated 15 November 1999. Respondent's Submissions 13. The respondent's submit that the institution of these proceedings was an exercise in futility in view of the exchange of contracts. The respondent relies upon the decision in Joanaou v Randwick City Council and Anor (NSWLEC unreported no 40053 of 1998, Bignold J) wherein a costs order was made against a council where the grant of development consent rendered certain proceedings futile. The respondent submits that the Court would exercise its discretion pursuant to s 69 of the Land and Environment Court Act 1979 in favour of its application for indemnity costs or at least costs in view of the discontinuance made pursuant to Pt 11 r 5 of the Land and Environment Court Rules 1996. Such rule provides in subparagraph 1:- If a party to end proceedings discontinues them in whole or in part, the Court may, on the application of another party, order the discontinuing party to pay the costs of any party against whom the discontinued claim was brought and who does not consent to the discontinuance. Council's response 14. Council submits that it has acted responsibly from the outset and that at the date of the institution of the proceedings it could not be said that the proceedings were hopeless or misconceived. It did not seek the interlocutory relief and agreed to discontinue at the request of the respondent. It submits that the proceedings were necessary in consequence of an apparent breach of development consent. It says that pursuant to s 124 of the EP&A Act it was proper that proceedings be instituted in view of the state of uncertainty that surrounded the purported sale of the land. According to the contract supplied to it the sale was due to have been settled by 3 September 1999 yet it had not taken place as at the date of the institution of the proceedings. It submits that the appropriate order in the circumstances is for each party to pay its own costs. Institution of the proceedings 15. Taking into consideration the requests by council for the co-operation of the respondent since 2 December 1998 it was unfortunate that the matter became protracted until the issue of the proceedings almost nine months later. Such delay however is for the most part explained. It is obvious that council was hoping to gain the co-operation of the respondent. The undertaking sought in December was not provided nor was any undertaking provided as requested in council's letter of 10 May 1999. The inference to be drawn from the evidence is that the respondent was prevaricating. Such an inference is reinforced by the request for a three month delay to obtain an expert's report from May 1999. On the respondent's timetable, the report would be received in the very same month that contracts for sale were exchanged. Whilst there is no evidence that the land was offered for sale in the months preceding such exchange, the inescapable conclusion is that at least some steps were being taken to market the land. 16. The council only became aware of the exchange of contracts following the service of its order. The inference can be drawn that had the order not been served, the sale would have been completed without council being informed. The impending sale had not been brought to council's attention, nor had the fact of the exchange of contracts. There was an assertion contained in the respondent's solicitors letter that the purchaser would be responsible for matters raised by the order but simultaneously they advised that no response had been received from them acknowledging that they would comply with the order. 17. Council had before it complaints and other evidence to suggest breaches of the development conditions and it had been effectively deviated from its course of prompt enforcement in the belief that the respondent would co-operate to rectify the breaches. Against this background, council acted responsibly in instituting the proceedings. The continuance of the proceedings 18. Contrary to the assertion that ' the purchaser has taken responsibility to meet all council's requirements' as stated in the letter of the respondent's solicitor of 29 September 1999, special condition no 8 of the contract simply acknowledges that the purchaser has received the notices and would indemnify the vendor. There was obviously a period of uncertainty concerning the transaction since, although the contract called for completion on 3 September 1999 it was not effected until the 11 November 1999. At that date council obviously recognised that the continuation of the proceedings would be futile and acceded to the request to discontinue. 19. There is no evidence that the purchaser was willing to undertake any of the work required by council, nor was there any communication from the purchaser or from its agents to confirm that the council's requirements would be satisfied. In these circumstances the continuation of the proceedings until 15 November 1999 was justified. 20. Various authorities have been provided to the Court concerning the principles to guide in the determination of costs such as Re the Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia and Anor; Ex parte Lai Qin (1997) 186 CLR 62. Other authorities relate to the provisions of Pt 15 r 7 of the Court Act which deal with circumstances in which a respondent satisfies the applicant's claim. Ultimately the facts of each case are to be considered. In this case council was led to believe that the respondent would take appropriate steps to rectify the breach and I am satisfied that but for such representation, the council would have commenced proceedings forthwith. 21. The respondent's application for costs is denied. The order proposed by council namely that each party bear its own costs is the appropriate order. Orders:- 22. Accordingly the court orders:- 1. No order be made as to costs of the proceedings. 2. The exhibit be returned. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.