Reported Decision : 116 LGERA 312 Land and Environment Court of New South Wales CITATION : Marrickville Council v Admark Investments Pty Ltd & Anor [2001] NSWLEC 233 APPLICANT Marrickville Council FIRST RESPONDENT PARTIES : Admark Investments Pty Ltd SECOND RESPONDENT Portuguese Marble & Granite Pty Limited t/a Euro Abrasives FILE NUMBER(S) : 40193 of 2000 CORAM: Talbot J KEY ISSUES: Costs :- apportionment between owner and lessee following discontinuance after premises vacated. LEGISLATION CITED: Land and Environment Court Rules 1996 Pt 15 r 7 Ashfield Municipal Council v Rex Keys Andrews and Others (1986) 60 LGRA 248; CASES CITED: Cumberland County Council v Corben and Pember (1960) 6 LGRA 66; Holroyd City Council v Murdoch (1994) 82 LGERA 197 DATES OF HEARING: 19/09/2001 DATE OF JUDGMENT: 10/04/2001 APPLICANT Ms M.L. Hawley (Solicitor) SOLICITORS Phillips Fox FIRST RESPONDENT LEGAL REPRESENTATIVES: Mr P.C. Tomasetti (Barrister) with Mr J.S. Whyte (Barrister) SOLICITORS J.S. Pinto & Co SECOND RESPONDENT N/A JUDGMENT: IN THE LAND AND Matter No. 40193 of 2000 ENVIRONMENT COURT Coram: Talbot J OF NEW SOUTH WALES Decision Date: 4 October 2001 Marrickville Council Applicant v Admark Investments Pty Ltd First Respondent Portuguese Marble & Granite Pty Limited t/a Euro Abrasives Second Respondent REASONS FOR JUDGMENT 1. In the application class 4 filed by the applicant, Marrickville Council ("the council") claimed relief by way of a declaration and orders in respect of the alleged carrying out of development upon Lot 1 DP 605932 known as 82 New Canterbury Road, Petersham ("the premises") contrary to conditions contained in Development Consent No 14783 granted on 4 February 1993. 2. Points of claim and points of defence were filed. 3. The allegations made against the first respondent were that, as owner, it used the premises in breach of seven conditions of the consent and permitted the second respondent, as lessee, to use the premises in contravention of four other conditions of consent. 4. The claim against the second respondent was that it had used the premises in breach of the same conditions referred to in the claim against the first respondent as well as four other conditions of consent. 5. Following the vacation of the premises by the second respondent, the proceedings were discontinued, with the consent of all parties, on 5 July 2001, save as to costs. 6. By notice of motion dated 5 July 2001 the applicant seeks an order that the first respondent and the second respondent pay its costs. By notice of motion dated 18 September 2001 the first respondent seeks an order that the applicant pay its costs or, alternatively, that the second respondent pay the first respondent's costs. 7. The applicant relies on Pt 15 r 7 of the Land and Environment Court Rules 1996 ("the LEC Rules") which entitles the Court to order a respondent to pay the costs of the proceedings where it satisfies or causes to be satisfied the claim of the applicant after the proceedings have been commenced. The applicant's case 8. Ms Hawley, on behalf of the council, relies on the evidence of a development consent granted on 4 February 1993, a subsequent building approval and various notices and correspondence in respect of the alleged use of the premises contrary to the conditions of the development consent prior to the commencement of the proceedings on 14 December 2000. 9. Records of the Australian Securities and Investments Commission produced by Ms Hawley show that the first respondent, Admark Investments Pty Ltd ("the company"), has its registered office and principal place of business at Unit 1 82-86 New Canterbury Road, Petersham and that the only directors and shareholders of the company are Joseph Pinto and Narelle Pinto. 10. The proceedings relate solely to the use of the ground floor of the premises. 11. The second respondent became the lessee of the ground floor shop, "excluding area for entrance foyer and stairs giving access to first floor offices", for a term of five years commencing 20 February 1998, pursuant to a registered lease dated 26 June 1998 ("the lease"). 12. On 11 November 1999 Natasha Harras, a monitoring town planner employed by the applicant, observed the following use of the premises:- (a) loading and unloading of goods outside the Premises; (b) materials stored external to the building; (c) no loading dock or carparking spaces; (d) that there was a fence across the laneway; and (e) the ground floor had not been divided into two shops and the hardware business occupied the entire ground floor of the Premises. 13. Ms Harras again inspected the premises on 18 February 2000 and observed that the premises:- (a) was operating at 7am; (b) that there were no carparking spaces; and (c) trucks parked outside of the premises on the footpath and on the street. 14. On 30 May 2001 Ms Harras inspected the premises and observed that:- (a) the ground floor of the premises was vacant; (b) the fence across the dedicated lane at Audley Street had been removed; and (c) there were off-street parking spaces at the rear of the Premises. 15. The following conditions of the development consent granted on 4 February 1993 are particularly relevant:- (2) A loading dock being provided to serve both ground floor shops being accessible only from the laneway at the rear of the property in accordance with details to be submitted as part of the building application such dock having minimum dimensions of 7.5m x 3m and having internal access to both shops. (3) Five (5) off-street car parking spaces being provided, paved, linemarked and maintained at all times to Council's satisfaction and in accordance with Council's standards prior to commencement of the use. (4) All parking spaces and turning area thereto being provided in accordance with the design requirements set out in Council's Off-Street Parking Code and being used exclusively for parking and not for storage or any other purpose. (8) All loading and unloading in connection with the use being carried out wholly within the property. (9) The hours of operation being restricted to between the hours of 8.00 a.m. to 6.00 p.m., Mondays to Wednesdays, Fridays and Saturdays, and 8.00 a.m. to 9.00 p.m. Thursdays, with no work being carried out on Sundays or Public Holidays. (10) A separate development application being submitted to, and approved by, Council for the use [of] shop two (2) prior to the occupation of that shop. (13) The storage bins, gate and fence across the dedicated road (lane) at Audley Street frontage should be removed within one month of the date of this consent. (14) The dedicated road (lane) shall not be used for storage of materials associated with this development. 16. Photographs have been produced to confirm the observations made by Ms Harass. 17. The council's case is that the lessee carried out business generally otherwise than in accordance with the conditions of consent in respect of those parts of the premises it was entitled to occupy as lessee and other parts of the land which were not incorporated in the lease. 18. It is alleged that the first respondent, as owner of the premises, failed to take action available to it under the terms of the lease, as lessor, following complaints raised by the council and further, allowed the second respondent to occupy parts of the land outside the lease such as the laneway, parking spaces and the rear yard contrary to the conditions of the development consent. 19. Ms Hawley sought to raise the inference that as one of the directors of the company appeared to be a principal of a firm of solicitors occupying at least part of the first floor, the company was thereby implicated in the actual use. Furthermore, as they were not included in areas to which the lessee was entitled to have exclusive occupation under the lease, the rear yard, parking spaces and the area of the dedicated road were by implication being used to serve the whole of the property owned by the first respondent. 20. Distinguishing cases, such as Ashfield Municipal Council v Rex Keys Andrews and Others (1986) 60 LGRA 248, where the whole of the land was leased for the purpose complained of, Ms Hawley relies upon the use and occupation of those parts of the land not the subject of the lease and which are not shown to be under the control of any third party in order to implicate the first respondent. The nomination of Unit 1 of the premises as the registered office and principal place of business of the first respondent, she says, further reinforces the council's justification for taking action against the company as owner and occupier of at least part of the premises. 21. In Cumberland County Council v Corben and Pember (1960) 6 LGRA 66 Myers J declined to find that an owner could be responsible for the unlawful use of premises when the whole of the land upon which the business was carried on unlawfully passed out of the owner's possession when the lease was granted. As the use was strictly in accordance with the lease and was only unlawful because the tenant had been unable to obtain the council's consent, Myers J did not think that the owner could forfeit the lease, but if he could and did not do so that would not involve the conclusion that he was permitting the business to be carried on. Again, Ms Hawley distinguishes the circumstances in Corben from the present case where the alleged unlawful use is outside the area the subject of the lease. 22. Finally, Ms Hawley relies on the inspection of the premises by Ms Harras on 30 May 2001 to show that the council's claim was satisfied by the cessation of the use of the ground floor, the removal of the fence across the dedicated lane and the availability of the off-street car parking spaces. It also meant that the vacation of shop two remedied the breach of condition 10 at least in respect of the previous use for part of the hardware business. The first respondent's defence 23. The first point made by Mr Tomasetti, on behalf of the first respondent, is that the points of claim raise no issue against his client except as owner of the land. This submission overlooks par 7 of the points of claim which specifically refers to the use of the property by the first respondent in breach of conditions 1, 2, 3, 4, 10, 12 and 13 of the development consent. At least condition 2, 3, 4, 12 and 13 relate to parts of the land not the subject of the lease. Furthermore, par 9 of the points of claim alleges that the first respondent permitted the second respondent to use and continue to use the property in breach of conditions 8, 9, 14 and 16 of the consent. Again, at least conditions 8 and 14 relate to lands which were not in exclusive possession of the second respondent pursuant to the lease. 24. Mr Tomasetti also relies on the fact that the first respondent promptly advised the council that the premises were the subject of a lease to the second respondent and that any remedy properly lay against the second respondent. 25. Mr Tomasetti seeks to explain the operation of the lease by reference to a letter written by his instructing solicitors to the council on 24 February 2000, which stated that the second respondent leases and exclusively occupies "the entire ground floor and rear yard" . In the Court's view that construction of the lease is in doubt. 26. Mr Tomasetti also points out that his instructing solicitors advised the council that correspondence received by way of complaint was forwarded to the lessee for attention presumably to support the argument that the first respondent, as owner and lessor, had taken the requisite and only action available to it. 27. The first respondent also relies on cl 6.1 of the lease to exempt it from responsibility. Clause 6.1 provides as follows:- 6.1 The tenant must – 6.1.1 use the property for the purpose stated in item 16 in the schedule and not for any other purpose; 6.1.2 open for business at times usual for a business of the kind conducted by the tenant; 6.1.3 keep the property clean and dispose of waste properly; and 6.1.4 comply with all laws regulating how the property is used, obtain any consents or licences needed, comply with any conditions of consent, and keep current any licences or registrations needed for the use of the property or for the conduct of the tenant's business there. 28. Item 16 in the schedule to the lease refers to "Hardware Store" as the permitted use. The Court agrees that there is some substance in the argument that the responsibility for using the premises the subject of the lease in a lawful way belonged to the second respondent. However, this provision cannot absolve the first respondent from responsibility for breach of the conditions of development consent on other parts of the property even if it is claimed that the direct actions which gave rise to the breach were by the second respondent. Furthermore, cl 7.5 of the lease provides that if the tenant failed to do any work that the tenant must do the landlord could do the work itself at the tenants expense after the issue of a notice. Conclusion 29. Both parties rely on the following statement made by Stein J in Holroyd City Council v Murdoch (1994) 82 LGERA 197 at 203 as follows:- In my opinion an owner of land may be liable under planning law to be restrained from leaving his land in such a condition so as to be an open invitation to illegal dumpers. Furthermore, an owner may be required to remove fill unlawfully dumped on his land without his authority, so long as he knows or is made aware of the situation and takes no steps to prevent its recurrence. 30. Although the facts Stein J was dealing with in Murdoch related to dumping of fill, nevertheless, the circumstances are not unlike the present as in both cases the owner knew or was made aware of the situation that gave rise to the breach of the law. In Murdoch, Stein J was satisfied that it was open for the owner of the land to take steps to prevent recurrence and that he did not do so. 31. It is not open for the Court to reach a firm conclusion to determine the costs question as between the second respondent and the first respondent. The Court has not been provided with any explanation as to how the second respondent came to vacate the premises or who removed the offending materials and obstructions. It is, nevertheless, clear that once the premises were vacated the council became satisfied that the breaches had been remedied. In other words, the claim of the applicant was satisfied. 32. Although the case against the first respondent may not have been a strong one and the council might not necessarily have been successful in all respects against the first respondent, nevertheless, there was clearly an arguable case against it. 33. The second respondent has not appeared in response to either notice of motion. 34. The council was justified in commencing the proceedings against both respondents. In the Court's view the liability of the two respondents was not a joint one in all respects. Their responsibility for complying with the terms and conditions of the development consent is arguably severable in respect of the different parts of the land. It would not be reasonable on the basis of the facts before the Court, for the first respondent to bear the burden of paying the whole of the council's costs. It is fair that the costs be apportioned between the two respondents. In that respect the decision must be an arbitrary exercise of the Court's discretion. Doing the best that it can and in an attempt to do justice between the parties the Court will make orders whereby each of the respondents pay one half of the applicant's costs. It does not follow, however, that the second respondent should bear liability for any part of the first respondent's costs. These would have been incurred in any event. 35 The Court makes the following formal orders:- (1) The first respondent is ordered to pay one half of the applicant's costs including the notices of motion. (2) The second respondent is ordered to pay one half of the applicant's costs including the notices of motion. (3) The first respondent's notice of motion dated 18 September 2001 is dismissed. (4) The exhibits may 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.