> Reported Decision : (2002) 123 LGERA 333 Land and Environment Court of New South Wales CITATION : Di Napoli v Woollahra Municipal Council [2003] NSWLEC 26 APPLICANT Maria Liliana Di Napoli PARTIES : RESPONDENT Woollahra Municipal Council FILE NUMBER(S) : 10711 of 2001 CORAM: Talbot J KEY ISSUES: Costs :- appeal from council orders - errors by council Environmental Planning and Assessment Act 1979 s 121B, s 121ZK(4), s 121ZK(4)(f) LEGISLATION CITED: Land and Environment Court Act 1979 s 34, s 69 Land and Environment Court Rules 1996 Pt 11 r 5(1) Local Government Act 1993 s 124, s 180(4)(f) Altomonte v Hunters Hill Council (2002) 120 LGERA 286; CASES CITED: J & J O'Brien Pty Ltd v South Sydney City Council (2002) 121 LGERA 223; Minister for Urban Affairs and Planning v Rosemount Estate Pty Ltd (1996) 91 LGERA 31 DATES OF HEARING: 06/02/2003 DATE OF JUDGMENT: 02/14/2003 APPLICANT Mr M C Fraser (Barrister) SOLICITORS Bowen & Gerathy Lawyers LEGAL REPRESENTATIVES: RESPONDENT Mr C W McEwen (Barrister) SOLICITORS Michell Sillar JUDGMENT: - 10 - IN THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES 10711 of 2001 Talbot J 14 February 2003 Maria Liliana Di Napoli Applicant v Woollahra Municipal Council Respondent Judgment Introduction 1 These proceedings were commenced as an appeal against an order issued by Woollahra Municipal Council ("the council") to the applicant on 6 August 2001. The order was made pursuant to Pt 6 Div 2A s 121B of the Environmental Planning and Assessment Act 1979 ("the EP&A Act") requiring the applicant, as owner of No.82 William Street, Paddington ("the property"), to connect certain stormwater pipes to the street gutter, install nominated drainage works and construct a low brick retaining wall along the northern boundaries of the property. 2 On 18 March 2002 the council issued further orders purporting to be pursuant to Pt 2 Ch 7 s 124 of the Local Government Act 1993 ("the LG Act"). The terms of the first order were:- 1. To do such things that are necessary to control the flow of surface waters so that they do not enter or affect the property at 84 William Street, Paddington. 3 Further details of the nature of the works required were specified in orders two to five, again requiring the connection of stormwater pipes to the street gutter, the installation of drainage and construction of a low brick retaining wall to the northern boundary of the property. These orders are more or less in the same terms as the orders made on 6 August 2001. 4 All orders were the subject of a s 34 conference conducted by Commissioner Hoffman, which commenced on 28 March 2002 pursuant to s 34 of the Land and Environment Court Act 1979 ("the Court Act"). 5 On 2 April 2002 the Registrar wrote to the applicant referring to the on-site conference. This letter appears to be a report on formal matters and a confirmation of directions made by the Commissioner. The directions included specification for work "That in the interim the parties shall do". The interim appears to be the period between the date of the on-site conference on 28 March 2002 and an adjourned hearing set for mention on 9 May 2002. 6 On 20 May 2002 the Registrar wrote a further letter to the applicant setting out the terms of directions made "At the Mention on 16 May 2002". The later directions related to investigation and design to be undertaken by an engineer. 7 A consulting engineer retained by the applicant produced a report on 3 June 2002. On 6 June 2002 the Court issued final formal orders. The first order was as follows:- 1. The Orders issued by Woollahra Council on 6 August 2001 under Part 6 Division 2A Section 121B of the Environmental Planning and Assessment Act 1979 , and on 18 March 2002 under Part 2 Chapter 7 Section 124 of the Local Government Act 1993 are hereby revoked as having been issued for incorrect reasons. 8 A second order specified works to be undertaken generally in accordance with recommendations made by the applicant's consulting engineer and prescribed the laying of a pavement, the construction of a containing wall and completion of drainage works, including new roof water downpipes at the property. Curiously, the Court Order prescribed further works to be undertaken by the owner of No. 84 William Street, Paddington ("the neighbouring property") notwithstanding that the adjoining owner was not a party to the proceedings. 9 In a letter addressed to the council on 18 June 2002 the applicant stated, inter alia, as follows:- As I have proved that council statements and reasons for the orders were incorrect and unfounded, I now ask that council should pay for the costs incurred by me in appealing the order and in obtaining experts advice and all necessary costs in the matter. 10 By notice of motion dated 20 June 2002 the applicant moved the Court for orders that the council pay her costs. 11 For the reasons explained in a letter dated 26 June 2002 addressed to the applicant, the solicitors for the council submitted that she withdraw the motion but that if she did not the council would file a notice of motion seeking its costs, together with the costs of the notice of motion and any costs in relation to the applicant's notice of motion. 12 On 29 August 2002 the council notified the applicant that the terms of the Court Order dated 6 June 2002 had been satisfied and that the council proposed to take no further action in the matter. 13 By Notice of Discontinuance dated 12 September 2002 the applicant purported to discontinue the proceedings. Heretofore, the applicant had been unrepresented. 14 By notice of motion dated 6 November 2002 the applicant moved the Court for an order, inter alia, that the respondent pay the applicant's costs of and incidental to the proceedings. 15 In the meantime, the council had filed a notice of motion dated 14 October 2002 seeking an order that the applicant pay the respondent's costs as a result of the discontinuance of the notice of motion dated 20 June 2002. 16 Other notices of motion have been filed but neither party now seeks the relief claimed in those notices of motion. Accordingly, the competing claims before the Court at present are whether the applicant should pay the respondent's costs incurred as a consequence of the filing of the notice of discontinuance in respect of the applicant's notice of motion dated 20 June 2002 and, conversely, whether the council should pay the applicant's costs of the proceedings. 17 The parties have proceeded on the basis that the Court's Practice Direction No. 10 has no application to proceedings by way of an appeal against either of the orders made by the council and that the Court should proceed to exercise its general discretion pursuant to s 69 of the Court Act. The approach taken by the parties is consistent with the determination made by Pain J in Altomonte v Hunters Hill Council (2002) 120 LGERA 286. I agree with the reasons expressed by her Honour in that case, particularly at p 290 – 1. The s 34 Conference 18 There is no formal record of what occurred during the conference, which was held pursuant to s 34 of the Court Act. No Court records have been produced other than the formal documents filed by the parties and the letters directed to the applicant by the Registrar referred to above. 19 The applicant, a council officer and the council's solicitor have all sworn affidavits attesting to conversations which are alleged to have taken place at the s 34 conference. None of the witnesses have given oral evidence. There is a clear disagreement between the applicant's and the council's witnesses in respect of what took place at the s 34 conference and, in particular, in respect of the conversations between the representatives of the parties and the Commissioner. There is even a dispute about the findings of the Commissioner and his reasons for making order No. 1 in the formal orders made on 6 June 2002. Notwithstanding the apparent explanation for revoking the council's orders as stated in order No. 1, namely "as having been issued for incorrect reasons" the council's witnesses insist that the Commissioner limited his oral observations to only one of the reasons stated in the first order dated 6 August 2001 and one reason stated in the second order dated 18 March 2002. It is submitted on behalf of the council that the subsequent orders made specifying work to be carried out confirms that the Commissioner agreed with at least one reason stated in the first order and two reasons stated in the second order. 20 The evidentiary conflict highlights an inherent difficulty for the Court, where the judge is not privy to the proceedings at a s 34 conference. It is not able to determine the reasons for orders made. Although a Commissioner presiding at a s 34 conference is obliged to give reasons for the decision made at the conference, the lack of any proper recording of the proceedings presents a significant impediment to resolving any dispute between the parties as to what occurred. 21 The council contends that it was successful. It claims this is reflected in the formal orders ultimately made by the Court. 22 On the other hand, the applicant contends that as the formal orders bear almost no resemblance to the original orders the council failed to support its position. Furthermore, because the reasons given for the making of the council's orders were rejected by the Commissioner, as confirmed by the terms of order No. 1, the making of the original orders by the council was not justified. The latter argument was the subject of consideration by the Court of Appeal in J & J O'Brien Pty Ltd v South Sydney City Council (2002) 121 LGERA 223. In that case, Stein JA (with whom Handley and Giles JJA agreed) relied on the establishment of an alternative source of power to issue an order (see Minister for Urban Affairs and Planning v Rosemount Estate Pty Ltd (1996) 91 LGERA 31 at pp 31,48 and 85) to conclude that, in his opinion, there is no reason to confine an appeal to the reasons articulated in a council's order. In this respect Stein JA referred to the width of the powers of the court conferred by s 121ZK(4) of the EP&A Act to find that the hearing of the appeal is not to be confined by the original reasons (p 232). 23 Nevertheless Mr Fraser, who appears for the applicant, makes the point that his client was faced with a dilemma in that she could either comply with the orders made by the council to avoid prosecution or civil enforcement proceedings or she could appeal. In the circumstances there is an obligation for the council to be accurate. 24 If it is shown to have erred in that respect then the making of orders more or less in accordance with the recommendations made by an appellant's expert would justify the making of a costs order in favour of the appellant. 25 Furthermore, Mr Fraser points to the fact that the cause of the complaint which gave rise to the issue of the orders by the council in the first place was as much the manner in which improvements had been carried out at the neighbouring property over the years as it was the state of the applicant's premises. 26 Moreover, the applicant was successful in persuading the Court to make significant changes to the timetable for the carrying out of the works. On that ground alone, Mr Fraser says, the applicant is entitled to an order for costs. 27 The parties and the Court are left to speculate about the reasons relied upon by the Commissioner for making orders under both s 121ZK(4)(f) of the EP&A Act and s 180(4)(f) of the LG Act or what circumstances in Column 2 of the Table to either s 121B of the EP&A Act or s 124 of the LG Act were relied upon. 28 Mr McEwen, who appears for the council, submits that it is sufficient to look at the practical result of the proceedings and the orders made to determine who is the successful party. In this respect the council submits that the orders made by it were effectively confirmed by the formal orders made by the Court on 6 June 2002. 29 Mr McEwen argues that the issue of two orders relying upon distinct statutory powers does not of itself justify an order for costs. Nevertheless the parties proceeded on the basis that both orders were the subject of the appeal. This, he says, is reflected in the outcome encapsulated in the formal orders of the Court. 30 In summary, therefore, the applicant contends that in the judicial exercise of its discretion in respect of costs pursuant to s 69 of the Court Act, the Court, in the circumstances of this case, should order that the council as the unsuccessful party pay the applicant's costs for the following reasons:- (1) The applicant proved that the fundamental basis for the council's orders was misconceived; (2) The orders made by the Court were different to those the council sought to defend in the conduct of the proceedings. The orders reflected the applicant's concern that the applicant had done nothing on her property to cause those problems that were obviously present at the neighbouring property; and (3) The time for compliance was changed by the Court to a more reasonable period. 31 It is further submitted on behalf of the applicant that an applicant who succeeds in having an order changed in any way (other than a trifling change of no substance) must be considered the successful party. Furthermore, the apparent finding by the Commissioner that the original orders were issued for the incorrect reasons, means those orders were fundamentally flawed. When the correct reasons for the apparent cause of concern were properly identified the Commissioner recognised that the responsibility for rectification did not exclusively lie with the applicant and he accordingly made orders that incorporated work to be carried out by the owner of the neighbouring property. 32 On the balance of probabilities the Court is able to find that the cause of the problems, which gave rise to the issue of the council's orders, was a shared responsibility between the applicant and her neighbour. After investigation by the applicant's consulting engineer it became apparent that the underlying problems could only be resolved if both owners were required to take remedial action. Although there was some deficiency with the piping and drainage installed within the applicant's property, nevertheless the problem could not have been resolved without addressing the work required on the neighbouring property and in respect of which the applicant had no responsibility. The council failed to recognise this fact when it made orders directed only to the applicant. 33 Both parties to the proceedings are entitled to claim a degree of success. The council was able to persuade the Commissioner to maintain orders against the applicant whereas the applicant was able to persuade the Commissioner that the orders should be made in a way generally consistent with the evidence and recommendation of her consultant. In fairness, the council was seeking, in general terms, that the applicant "do such things that are necessary to control the flow of surface waters so that they do not enter or affect the property at 84 William Street, Paddington". Although it was not so stated in the original order made on 6 August 2001 it was expressed in those terms in the subsequent order made on 18 March 2002. The other orders made were identical in both cases and can be fairly recognised as a specification of the things that the council considered necessary to control the flow of surface waters across the property. Ultimately, the orders specifying the actual work to be carried out were more in keeping with the recommendations made by the applicant's consultant rather that the contentions made by the council. In principle, however, the perceived result in either case is not in practical terms distinguishable from the other. 34 In the circumstances, it would be an unjust result if the council was required to pay the whole of the applicant's costs in relation to the proceedings. The action of the council by issuing an order was justified. The council's misconception of the reasons for the problem and the changes made to the context of the orders by the Court following the s 34 conference justify a limited costs order in favour of the applicant in order to compensate her for costs incurred as a consequence of the council's error. Doing the best that I can relying only upon the material before me, which is sadly deficient (not, I might add, as a consequence of any fault by either party but rather as an inherent consequence of the nature of a s 34 conference) the Court determines that the council should pay one half of the applicant's costs of the proceedings up to 6 June 2002. The applicant's notice of motion and notice of discontinuance 35 An affidavit filed in support of the applicant's notice of motion dated 20 June 2002 makes it abundantly clear that the applicant was seeking to recover not only the costs of conducting the appeal but also re-imbursement for the cost of carrying out works pursuant to the orders made on 6 June 2002. 36 I have already referred to the letter from the council's solicitors dated 26 June 2002 whereby the applicant was requested to withdraw her motion. Notwithstanding this request the applicant confirmed in writing on 26 June 2002 that she wished to proceed unless the council was prepared to make a contribution to her costs. 37 Mr Fraser submits that the advice by the council on 29 August 2002 that the council proposed to take no further action in the matter following satisfaction of the orders made by the Court on 6 June 2002 either disentitles the council to its costs in respect of the applicant's notice of motion or, at least, justifies the reasonable response by the applicant, namely to discontinue the proceedings. The Court has some difficulty in following this submission as it is not readily apparent how the confirmation that the terms of the Court's orders had been complied with could bear any relationship to the contention made by the applicant that she was entitled to recover compensation for the cost of complying with those orders. 38 Apart from questions raised by Mr McEwen as to whether the claim for compensation was made within the prescribed statutory period, his principal submission relies upon Pt 11 r 5(1) of the Land and Environment Court Rules 1996 which provides that if a party to any proceedings discontinues then the Court may order the discontinuing party to pay the costs of the other party where that party does not consent to the discontinuance. 39 The applicant has not attempted to justify the substance of her claim other than on the basis outlined in her supporting affidavit which reiterates her dissatisfaction with the council's actions generally and her disagreement with the terms of the orders made by the Court. There is no evidence that the applicant carried out any work on her land prior to the making of the Court's orders although it is self-evident that she incurred costs of investigative work as a consequence of the original orders made by the council so much as is contemplated by s 181 of the LG Act. However, the outcome of the s 34 conference and the evidence before the Court at present lends no weight to an argument that the giving of the original order was unsubstantiated or that the terms of the order were unreasonable in the context of s 181. 40 Even taking into account that at the time the notice of motion was filed the applicant was unrepresented nevertheless she has not demonstrated that her claim reiterated in the notice of motion was justified. Accordingly, the implication of Pt 11 r 5, namely that a party against whom a discontinued claim is brought may have an order for costs made in their favour, has not been refuted. 41 Again, having regard to the whole of the circumstances the Court is satisfied that the council is entitled to an order that the applicant pay its costs in respect of the discontinued proceedings arising out of the applicant's notice of motion dated 20 June 2002. Formal orders 42 The Court makes the following formal orders:- (1) The respondent pay one half of the applicant's costs in the proceedings up to 6 June 2002. (2) The applicant pay the costs of the respondent in respect of the applicant's notice of motion dated 20 June 2002. (3) The respondent pay one half of the applicant's costs in respect of order No. 3 in the applicant's notice of motion dated 6 November 2002. (4) The applicant pay the respondent's costs in respect of the respondent's notice of motion dated 14 October 2002. (5) 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.