Reported Decision : 122 LGERA 74 Land and Environment Court of New South Wales CITATION : Over Our Dead Body Society Inc. v Byron Bay Community Association Inc. [2002] NSWLEC 99 APPLICANT: Over Our Dead Body Society Inc. PARTIES : RESPONDENT: Byron Bay Community Association Inc. FILE NUMBER(S) : 40088 of 2001 CORAM: Bignold J KEY ISSUES: Costs :- Class 4 application where declaratory relief only obtained-exercise of Court's costs discretion. LEGISLATION CITED: Environmental Planning and Assessment Act 1979, s 81A(2) Land and Environment Court Act, s 69 Armstrong v Landmark Corporation Ltd (1966) 85 W N (NSW) (Pt 1) 238; Donald Campbell and Co v Pollak (1927) AC 732; CASES CITED: Latoudis v Casey (1990) 170 CLR 534; Ohn v Walton (1995) 36 NSWLR 77; Oshlack v Richmond River Council (1998) 193 CLR 72 DATES OF HEARING: 22 March 2002 DATE OF JUDGMENT: 06/24/2002 APPLICANT: Mr T Hale SC SOLICITORS Beesley and Hughes LEGAL REPRESENTATIVES: RESPONDENT: Mr J Webster, Barrister SOLICITORS Stone and Partners JUDGMENT: IN THE LAND AND Matter No. 40088 of 2001 ENVIRONMENT COURT OF Coram: Bignold J. NEW SOUTH WALES 24 June 2002 OVER OUR DEAD BODY SOCIETY INCORPORATED Applicant v BYRON BAY COMMUNITY ASSOCIATION INCORPORATED Respondent JUDGMENT Bignold J: A. INTRODUCTION 1. The parties are in dispute as to the appropriate costs order to be made in these class 4 proceedings which, save for the question of costs which was reserved, were concluded by the Court's Orders made on 31 August 2001, as varied by the Court's Orders made on 21 December 2001. Ultimately, the only permanent relief obtained by the Applicant was a declaration that certain demolition work undertaken on an existing building in respect of which development consent for its substantial redevelopment had been granted had been carried out in breach of the Environmental Planning and Assessment Act 1979, s 81A(2) by virtue of the fact that when that work was undertaken no "construction certificate" had been granted. 2. A copy of the Court's Orders made on those two occasions is annexed hereto and marked "A" and "B" respectively. 3. The Applicant's case is that it is entitled to an order for its costs in the whole of the proceedings because it was the successful party in the litigation. 4. The Respondent disputes the Applicant's claimed entitlement to costs. Instead, it submits that in the exercise of its broad statutory costs discretion conferred by the Land and Environment Court Act 1979, s 69, the Court should make the following costs orders— (1) The Respondent be granted its costs thrown away by the amendment to the Application on 5 June 2001, including the costs of preparing for the said hearing. (2) The Applicant be paid its costs of the day on the hearing of the amended application of 5 June 2001. (3) The Respondent be granted its costs from 5 June 2001 to 21 December 2001. (4) Otherwise, no order as to costs. 5. In the alternative, the Respondent submits that the Court should order each party to pay its own costs. 6. In order to adjudicate upon these competing claims, it is first necessary to examine the course and outcome of the litigation and thereafter to consider the nature and scope of the Court's costs discretion before finally exercising that discretion in the present case. B. THE COURSE AND OUTCOME OF LITIGATION 7. The proceedings were commenced on 18 May 2001 when the Applicant filed a class 4 application seeking a declaration that the "Respondent's demolition of the existing Byron Bay Community Centre is being undertaken in breach of Development Consent No 00/0641" and an injunction that the Respondent "be restrained from undertaking any demolition or building work whatsoever". (The reference to that Development Consent is a reference to the development consent granted by the Byron Shire Council for the substantial redevelopment of an existing building.) 8. On the same day that the proceedings were filed, the Applicant obtained an ex parte injunction from Sheahan J restraining the Respondent "from carrying out any demolition or building work whatsoever pending further order. In obtaining that ex parte injunction, the Applicant gave the usual undertaking as to damages. Thereafter, Sheahan J adjourned the proceedings to the Duty Judge's list on 22 May 2001. 9. On 22 May 2001 when the matter again came before Sheahan J, his Honour was informed by Counsel for the Respondent that the only issue in the case was a question of statutory construction, namely whether a "construction certificate" (issued pursuant to the Environmental Planning and Assessment Act 1979) was necessary for the demolition work, upon which question the Respondent would be submitting that the view expressed by the Byron Shire Council that the construction certificate was not necessary for the demolition work was correct. The Applicant's argument was that a construction certificate was required before the demolition works could be undertaken on the building. 10. After discussion with Counsel for both parties in which it was made perfectly clear that the sole issue for adjudication was that question of construction, it was agreed by Sheahan J that the final hearing be expedited and that both the Applicant's undertaking and the ex parte injunction be continued until further order. 11. On 5 June 2002 upon the final hearing of the application, a single issue was tendered for adjudication, namely "whether the demolition carried out by or on behalf of the respondent of parts of the existing building….was carried out in breach of s 81A(2) of the EP&A Act": see (2001) 116 LGERA 158 at 161 and at par 59 of my judgment delivered on 8 June 2002, I concluded that there had been a relevant infringement of s 81A(2). 12. After so concluding, I stated the following at pars 60 and 61: That holding is sufficient to uphold the Applicant's claim to declaratory relief in its amended form . Consequently there is no need to consider the original claim to relief other than to say that no attempt was made to establish a relevant breach of the development consent and there is no basis for making any such finding. A breach of the EP&A Act , s 81A(2) is relevantly discrete from any finding of any breach of the development consent. The question of the final form of relief is reserved as is the question of costs with liberty to restore on five days' notice. 13. My reference to "the amended form" of the Applicant's claim was a reference back to what I had said at par 5, namely: In the course of the hearing, the Applicant sought and obtained leave to amend its class 4 application by inserting at the end of par 1 the following words " and/or in breach of s 81A(2) of the Environmental Planning and Assessment Act 1979 ". That leave was granted over the opposition of the Respondent but was granted subject to reserving the Respondent's claim to costs caused by the amendment (costs being the only item of prejudice caused by the amendment alleged by the Respondent). This particular question of costs was in my judgment, a subset of the overall question of costs in the proceedings, which question I also reserved. 14. Following delivery on 8 June 2001 of my judgment, the Respondent applied by Notice of Motion filed 25 July 2001 for the dissolution of the interlocutory injunction granted by Sheahan J which had continued in force because my judgment had expressly reserved the question of the final form of relief. That Motion came before me on 20 August 2001 when it was adjourned part heard until 31 August 2001 so that it could be dealt with on the same occasion that the Court dealt with the outstanding reserved questions of (i) the final form of relief to be granted; and (ii) costs in the proceedings. 15. My reasons for adjourning the Respondent's Motion and for giving the appropriate directions for the completion of the reserved question of the final form of relief appear in the following passages in my judgment given on 20 August 2001 and reported in (2001) 117 LGERA 233— 11. In any event, on the hearing of the Motion today, the Applicant has urged that the Court not deal with the issue of the final form of relief to be granted in the proceedings and that it not entertain the relief claimed in the Notice of Motion until it deals finally with the proceedings. 12. The Respondent's Counsel has proffered a draft form of order in the proceedings which provides for the granting of appropriate declaratory relief but no substantive relief other than the declarations, and it has been submitted on behalf of the Respondent that in the circumstances, there should be no order as to costs. 13. Senior Counsel for the Applicant, in opposing the relief sought as being essentially premature (inasmuch as the Court has not yet been called upon to adjudicate upon the reserved question of the final form of relief) has drawn attention to a number of matters arising on the face of the Respondent's affidavits. 14. In particular, Senior Counsel for the Applicant has submitted that the Court would not, independently of finally determining the proceedings, discharge the interim injunction in circumstances where it is far from clear that the Respondent has a present ability and capacity to undertake the approved alterations and additions to the existing building. 15. The thrust of this submission is that unless the Court were so satisfied of the Respondent's capacity to set about the carrying out of the approved project, the Applicant's case for substantive relief in respect of the found breach of the planning law would provide, coupled with that fact, a sound or plausible basis for the seeking of substantive relief, for example, the restoration or reinstatement of some of the partly demolished building. 16. In that respect, I note that when the matter was last before Sheahan J on 22 May 2001, it appears to have been the fact that the materials demolished were being stored by the Respondent's builder so that on the face of it, there would be some capacity for restoration or reinstatement, if such be required in any final relief granted in the proceedings. 17. However, Senior Counsel for the Applicant fairly contemplated a different outcome to the question of final relief if the Court were ultimately satisfied of the Respondent's present capacity and willingness to proceed with the approved development but added the rider that the Applicant should be given the opportunity to examine the question of the validity of the construction certificate (which has been issued since my earlier judgment in the proceedings) and more particularly, to form a view as to how, in fact and in law, the issue of that certificate impacts (if at all) upon the issues raised in the present case. 18. Counsel for the Respondent has opposed the suggestion that fell from the Applicant's Senior Counsel, that the matter should be stood over for a week or two to enable all outstanding issues in the case to be resolved. 19. I note in one of the certificates issued by the Council as a concomitant of the construction certificate, that it is anticipated that the Respondent will be desirous of commencing to build the project on 30 September 2001. 20. In the circumstances, I am satisfied that it would be overall, a fair and reasonable approach, to give the parties an opportunity to consider their respective positions so that I can deal finally with the case. 16. Thereafter, by consent, I made orders on 31 August 2001 finally disposing of the proceeding (see Annexure A) and after three further mentions, on 21 December 2001 I released the Respondent from its undertakings (see Annexure "B"). C. WHO SUCCEEDED IN THE LITIGATION? 17. In the light of the foregoing summary of the course and outcome of the litigation, can it be held that the Applicant was the successful party, as it asserts, in support of its claim to all of its costs in the proceedings? 18. If the question be examined according only to the ultimate outcome of the litigation (being the relevant "event" for the purpose of the usual costs order that "costs follow the event"), it is clear that the only relief that the Applicant obtained was its claim to the declaration. Although the Applicant obtained no permanent injunctive relief because it ultimately did not claim a mandatory injunction for the reinstatement of the partially demolished building, it nonetheless obtained in the litigation the ex parte injunction granted by Sheahan J at the commencement of the proceedings on 18 May 2001 which continued until it was discharged on 31 August 2001 when the Court made Orders by consent on the undertaking proffered by the Respondent. Moreover, the Applicant had the benefit of that undertaking until the Respondent was released from it by orders made by the Court on 21 December 2001. It was only on that occasion that the Applicant finally abandoned any claim to injunctive relief in furtherance of, or in consequence of, the declaration that it had obtained on 31 August 2001. 19. An overall analysis of the litigation yields the following summary. 20. The Applicant's class 4 application claimed declaratory and injunctive relief against the Respondent. It immediately obtained an interlocutory injunction—initially it was granted ex parte but soon thereafter was continued without opposition from the Respondent until the Respondent moved for its dissolution, initially unsuccessfully, and ultimately successfully by substituting an undertaking from which it was finally released on 21 December 2001. 21. The only issue tendered by the parties on the final hearing of the proceeding on 5 June 2001 was the question whether demolition work had been carried out by the Respondent in breach of the EP&A Act, s 81A(2). My judgment of 8 June 2001 upheld the Applicant's case, and provided the legal foundation for granting the declaratory relief ultimately granted on 31 August 2001. Moreover, my judgment had expressly left open the form of final relief to be granted in the proceedings, and hence the possibility of the Applicant obtaining more than the bare declaration. 22. Although the Court's Orders on 31 August 2001 disposed of the proceedings, the Applicant reserved its position (as noted in the Court's Orders) in respect of other substantive relief, upon the basis that unless the Respondent satisfied the Court that it had the available financial resources to undertake the approved redevelopment of the Community Centre, the Applicant might seek a mandatory order for the reinstatement of the partly demolished building. This potential claim was never finally litigated and was formally abandoned on 21 December 2001 when the Respondent was released from its undertaking given to the Court on 31 August 2001 in lieu of the then continuing interlocutory injunction. 23. In the light of the foregoing analysis, I think that I must inevitably conclude that the Applicant was entirely successful in the litigation up until 31 August 2001 but that thereafter and in particular when the Respondent was discharged from its undertaking on 21 December 2001 it was not successful, in the sense that it did not oppose the release of the Respondent from its undertaking and it did not seek any injunctive relief in furtherance or consequence of the declaratory relief it was granted on 31 August 2001. 24. Conversely the Respondent, ultimately being released from its undertaking, obtained that release by establishing that it had available to it the financial resources (some $2.4 million) required to fully implement the approved redevelopment of the Community Centre building. Proof of that fact also properly dissuaded the Applicant from entertaining any reasonable expectation of obtaining any further substantive relief in the proceedings. D. THE SCOPE OF THE COURT'S COSTS POWER 25. It is not in dispute that the Land and Environment Court Act, s 69 (LEC Act) vests the Court with a very broad judicial discretion in relation to costs. The real issue in the present case is how that discretion should be exercised. 26. In Latoudis v Casey (1990) 170 CLR 534, McHugh J recited the following oft cited extract from the speech of Viscount Cave LC in Donald Campbell and Co v Pollak (1927) AC 732 at pp 811-812: A successful defendant in a non-jury case has no doubt, in the absence of special circumstances, a reasonable expectation of obtaining an order for the payment of his costs by the plaintiff; but he has no right to costs unless and until the Court awards them to him, and the Court has an absolute and unfettered discretion to award or not to award them. This discretion, like any other discretion, must of course be exercised judicially, and the judge ought not to exercise it against the successful party except for some reason connected with the case. 27. Earlier in the same case, McHugh J had said at 568: In civil proceedings, the relevant statute or rule often provides that costs follow the event unless the court thinks that some other order should be made. But even when the discretion is uncontrolled, civil courts act on the basis that a successful party has a reasonable expectation of obtaining an order for costs and that the discretion to refuse to award costs should not be exercised against the successful party except for a reason connected with the case. Thus, if a plaintiff sues on two causes of action and succeeds on one, he or she will obtain the general costs of the action and the costs of the cause of action on which he or she succeeded, but the defendant will receive the costs of the cause of action on which he or she was successful: Greeves v Freshwater (1938) 55 WN (NSW) 113. 28. Following Latoudis Gleeson CJ when presiding in the Court of Appeal in Ohn v Walton (1995) 36 NSWLR 77 expressed a similar opinion when he said at 79: The point of Latoudis v Casey is that the purpose of an order for costs is to indemnify or compensate the person in whose favour it is made, not to punish the person against whom it is made. When legislation confers a power to order costs it is, in the absence of any contrary indication, to be understood as conferring a power to be exercised for that purpose. Two things follow: 1. The usual rationale of making a costs order is that it is just and reasonable that the successful party should be reimbursed for costs incurred, in the absence of grounds connected with the charge or the conduct of the proceedings which make it unjust or unreasonable that there should be such reimbursement. 2. The test of whether an order for costs should be made against an unsuccessful plaintiff or complainant is not whether he or she has done anything to warrant punishment. It is whether, in the circumstances, the defendant or respondent should be compensated. 29. More recently, the High Court has examined the scope of the costs power conferred by s 69 of the LEC Act in Oshlack v Richmond River Council (1998) 193 CLR 72 in the context of an appeal in respect of the decision of the trial judge (Stein J when a judge of this Court) not to make a costs order in favour of the successful defendant on account of "public interest" considerations held to be present in the case. 30. Although the joint majority judgment of Gaudron and Gummow JJ declared at p 58 that— (T)here is no absolute rule with respect to the exercise of the power conferred by a power such as s 69 of the Court Act that, in the absence of disentitling conduct, a successful party is to be compensated by the unsuccessful party. this statement, though powerfully vindicating the plenary nature of the discretion conferred by s 69 cannot be taken as denying the existence of relevant established principles for the exercise of that judicial discretion such as those enunciated by McHugh J in Latoudis in the passages that I have earlier quoted. That this is the case is expressly stated in the judgment of Kirby J (the other majority judge in Oshlack) in the extended passage at pp 120-122 which includes the following statement at 122 The compensatory principle is adequately reflected by the adoption of a general practice by which, ordinarily (including in a case brought by a party under the open standing rule and purportedly in the public interest) costs are ordered in favour of the successful party. 31. In my respectful opinion, the dissenting judgment of McHugh J in Oshlack includes at pp 97 and 98 an illuminating exposition of the "usual order as to costs" made in favour of a successful party to litigation which applies to the exercise of judicial discretion required in the present case, particularly in the light of my earlier assessment of the measure of the Applicant's success in the proceedings. E. THE EXERCISE OF THE COSTS DISCRETION IN THE PRESENT CASE 32. The Respondent's submissions to the effect that the Applicant should be denied all or most of its costs (despite the measure of success that it attained in the litigation) must, if they are to prevail, I think, be accommodated within the established exceptions to the "usual costs order" made in favour of the successful litigant, namely that the Applicant should be denied its costs because of some relevant 'misconduct in the litigation". In Oshlack, McHugh J refers to these as "traditional exceptions" in the following passage at 97 and 98: The traditional exceptions to the usual order as to costs focus on the conduct of the successful party which disentitles it to the beneficial exercise of the discretion. In Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd (105) Devlin J formulated the relevant principle as follows: No doubt, the ordinary rule is that, where a plaintiff has been successful, he ought not to be deprived of his costs, or, at any rate, made to pay the costs of the other side, unless he has been guilty of some sort of misconduct. Misconduct in this context means misconduct relating to the litigation (106), or in the circumstances leading up to the litigation (107). Thus, the court may properly depart from the usual order as to costs when the successful party by its lax conduct effectively invites the litigation (108); unnecessarily protracts the proceedings (109); succeeds on a point not argued before a lower court (110); prosecutes the matter solely for the purpose of increasing the costs recoverable (111); or obtains relief which the unsuccessful party had already offered in settlement of the dispute (112). (105) [1951] 1 All ER 873 at 874 (106 ) King & Co v Gillard & Co [1905] 2 Ch 7; Donald Campbell & Co Ltd v Pollak [1927] AC 732 at 812. (107) Bostock v Ramsey Urban District Council [1900] 2 QB 616. (108) Jones v McKie [1964] 1 WLR 960; [1964] 2 All ER 842; Bostock [1900] 2 QB 616 at 622, 625, 627 (109) Forbes v Samuel [1913] 3 KB 706 (110) Armstrong v Boulton [1990] VR 215 at 223. (111) Hobbs v Marlowe [1978] AC 16. (112) Jenkings v Hope [1896] 1 Ch 278 33. The Respondent alleges a number of discrete matters of relevant misconduct by the Applicant in the proceedings— (i) the fact that the ex parte interlocutory injunction was obtained without prior notice of intention to sue; (ii) the fact that when the question of continuing the interlocutory injunction came before Sheahan J on 22 May 2001, the Respondent was ready to argue the single question of statutory discretion; (iii) the fact that on the expedited final hearing, the Applicant obtained leave to amend its class 4 application to specifically allege breach of the EP&A Act, s 81A(2); (iv) the fact that the Applicant never pressed a claim to mandatory injunctive relief following its success at the final hearing on 5 June 2001 but instead chose to leave the question of any further relief (beyond the declaration made on 31 August 2001 when final orders were made in the proceedings) hanging over the Respondent's head; and (v) the fact that the Respondent was required to establish that it had the financial resources to carry out the approved redevelopment before the Applicant abandoned its claim to further substantive relief in the proceedings. 34. Each of these allegations is vigorously denied by the Applicant. 35. Upon closer scrutiny, I do not think that any of these allegations is sustainable or if sustainable, constitutes relevant misconduct disentitling the Applicant as the successful litigant from the benefit of the usual costs order. 36. The first three allegations can be considered in tandem. The fact that Sheahan J granted the ex parte injunction and almost immediately thereafter continued it without opposition from the Respondent, eliminates even the possibility of the epithet of misconduct being applied to the Applicant in the obtaining of the interlocutory injunction. Moreover, within a matter of just a few days after the proceedings had commenced, it was common ground between the parties that the Applicant's claim required adjudication on only one issue, namely the disputed question of statutory interpretation, and the amendment that was allowed on the final hearing merely formalized the position with the Applicant's claim which was already perfectly understood by the Respondent. 37. Accordingly, there is nothing in the manner in which the Applicant conducted the proceedings up to the obtaining of my judgment on the final hearing that even remotely could be described as "misconduct". 38. The position with the litigation following the delivery of my judgment on 8 June 2001 has already been extensively rehearsed and analysed in these reasons, and no relevant misconduct has been revealed up to the date of the making of final orders on 31 August 2001. 39. Up to that time, when the final form of relief was still under consideration, there was nothing inappropriate in the continuation of the interlocutory injunction because it remained possible that the Applicant might claim substantive injunctive relief. The relevant analysis of this stage of the proceedings is provided by my judgment of 20 August 2001 (117 LGERA 233). 40. Once final orders had been made in the proceedings on 31 August 2001, what thereafter occurred was principally directed to the ultimate release of the Respondent from the undertaking that it had given to the Court on 31 August 2001 upon the discharge of the interlocutory injunction, although that process (which ultimately established an entitlement of the Respondent to be released from its undertaking) was also employed by the Applicant to keep alive the possibility of its making a claim to further substantive relief in the event that the Respondent could not establish that it had available financial resources to fund the approved redevelopment. 41. Since I have earlier held that what occurred in the proceedings subsequently to the Order made on 31 August 2001 did not yield further success to the Applicant, it is appropriate that any costs order made in favour of the Applicant, on the basis of its success in the litigation, exclude the costs incurred in the proceedings after 31 August 2001 cf Armstrong v Landmark Corporation Ltd (1966) 85 W N (NSW) (Pt 1) 238. 42. However, the exclusion of those costs does not justify it being translated into a costs order in favour of the Respondent because the costs so incurred were as much directed to obtaining its release from its undertaking, as to eliminating, as a practical consideration, any realistic possibility that the Applicant might claim further substantive relief, eg a mandatory injunction for the reinstatement of the partially demolished Community Centre building. 43. For all the foregoing reasons, I make the following orders: The Respondent shall pay the Applicant's costs in the proceedings up to and including 31 August 2001 when the Court made its final orders in the proceedings together with the costs of this Motion in the sum agreed, or failing agreement, as assessed. 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.