Land and Environment Court of New South Wales CITATION : Kurnell Lodge Pty Limited v Bourne & Anor [2004] NSWLEC 329 APPLICANT: Kurnell Lodge Pty Limited PARTIES : RESPONDENTS: Barbara Anne Bourne and Heather Anne Bourne FILE NUMBER(S) : 41311 of 2003 CORAM: Lloyd J KEY ISSUES: Costs :- applicant's claim satisfied after proceedings commenced - undertaking to the court - costs ordered LEGISLATION CITED: Land and Environment Court Act 1979 s 69 Land and Environment Court Rules 1996 Pt 15 r 7 Byron Shire Council v MacAdam (2001) 116 LGERA 418; CASES CITED: Latoudis v Casey (1990) 170 CLR 34; Oshlack v Richmond River Council (1998) 193 CLR 72; Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia & Anor; Ex parte Lai Qin (1997) 186 CLR 622 DATES OF HEARING: 24/05/2004 EX TEMPORE 05/24/2004 JUDGMENT DATE : APPLICANT: Mr P W Larkin (barrister) SOLICITORS: Spiegel & Associates LEGAL REPRESENTATIVES: RESPONDENTS: Ms L M Byrne (barrister) SOLICITORS: Woolf Associates JUDGMENT: - 4 - IN THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES 41311 of 2003 Lloyd J Monday, 24 May 2004 KURNELL LODGE PTY LIMITED - V - BOURNE & ANOR EX TEMPORE JUDGMENT 1 This is an application for costs by the applicant against the respondents in a case which has been settled today by the respondents giving certain undertakings to the Court. The proceedings were commenced on 30 October 2003 by the applicant seeking declaratory and injunctive relief against the respondents for allegedly keeping horses on land otherwise than in accordance with a development consent issued by this Court. 2 There are some facts which are undisputed. The applicant owns land at No. 105 Torres Street, Kurnell. The respondents own land at No. 93 Torres Street, Kurnell. The Court granted consent to a development application on 28 March 2000 to demolish some stables which had been previously unlawfully erected at No. 93 Torres Street and to erect new stables and exercise yards to house four horses. That consent was granted subject to conditions. 3 Subsequent to the commencement of the proceedings the respondents apparently carried out considerable work on their property with the result that an undertaking was offered today in the following terms, namely: an undertaking to the Court to firstly install a protective covering on the upper section of the impermeable barrier already in place surrounding the exercise yards; and secondly to adjust the finished surface level of the sand surface of the exercise yard to grade from approximately 1.65 metres AHD on the western edge to 1.55 metres AHD on the eastern edge. In the light of the giving of that undertaking it seems that nothing left is to be determined in the principal proceedings other than the question of costs. 4 Prior to the commencement of the proceedings there was some correspondence between the parties which resulted in a letter dated 12 September 2003 from the respondents to the applicant's solicitors confirming that construction of the stables, including drainage works, will be in accordance with the development consent granted by this Court. Unfortunately there is no indication in that letter as to when those works would be done. 5 After the commencement of the proceedings there were a number of appearances before the Chief Judge of the Court. On 9 December 2003, in open court, the applicant indicated that it would accept an undertaking from the respondents to perform certain works recommended in a joint experts' report to answer its complaints concerning an alleged non-compliance with a particular condition of the consent. The respondents at that time asked for time to obtain quotes from tradespersons before they would commit themselves to an undertaking to complete those works within a given time. 6 On 15 December 2003 the respondents indicated that they were unable to commit to any timetable for the works. On 17 December 2003 the respondents gave an inter parties undertaking to use their best endeavours to complete the works referred to in a second joint experts' report by the last week of January 2004 or first week of February 2004. The works were not completed within that time. On 11 February 2004 the respondents requested a further adjournment stating that the works would be completed within two weeks. By March 2004 the necessary works were almost complete. It seems that it was the respondents, in seeking to oppose the order for costs, who sought to have a hearing date fixed. The question then, is whether in these circumstances the applicant is entitled to an order for costs. 7 By far the most important factor which courts have viewed as guiding the exercise of the costs discretion is the result of the litigation. A successful litigant is generally entitled to an order for costs: see, for example, Oshlack v Richmond River Council (1998) 193 CLR 72 at 96. Of course, costs are not awarded by way of punishment of the unsuccessful party; they are compensatory in the sense that they are awarded to indemnify the successful party against the expense to which it has been put by reason of the proceedings: see Latoudis v Casey (1990) 170 CLR 534 at 543. The rationale of an order for costs is that it is just and reasonable that the party who has caused the other party to incur the costs of litigation should reimburse that party for the liability incurred. 8 Where the court has not embarked on a hearing of the merits and the proceedings have in effect been settled, different considerations apply. The position is governed by the judgement of McHugh J in Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia & Anor; Ex parte Lai Qin (1997) 186 CLR 622. McHugh J noted that ordinarily the power to award costs is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Where there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order. The court will not try a hypothetical action between the parties. I note, however, that McHugh J goes on to say that in an appropriate case a court will make an order for costs even where there has been no hearing on the merits and the moving party no longer wishes to proceed with the action, the question being whether or not the moving party has acted reasonably in bringing and continuing the proceedings. 9 The Court's discretion to order costs is at large: s 69 of the Land and Environment Court Act 1979. Moreover, Pt 15 r 7 of the Land and Environment Court Rules 1996 states: The Court may order the respondent to pay the costs of the proceedings where a respondent satisfies or causes to be satisfied the claim of the applicant after the proceedings have been commenced. 10 In the present case the fact that the respondents have now given an undertaking in the terms which I have outlined suggests that the claim of the applicant was satisfied after these proceedings had been commenced. The position seems to be similar to that in the case of Byron Shire Council v MacAdam (2001) 116 LGERA 418, a decision of Talbot J, in which the claim of the applicant was satisfied after the proceedings had been commenced. On this basis, Talbot J was satisfied that the applicant was entitled to an order for the payment of its costs by the respondent. 11 It is said on behalf of the respondents that there has been some disentitling conduct on behalf of the applicant. Reference is made to correspondence passing between the parties in which the respondents expressed a willingness to comply with the conditions of the development consent. Unfortunately, in none of the correspondence is there any indication by the respondents, or on behalf of the respondents, as to when they proposed to comply with the conditions of the consent. In all the circumstances I am satisfied that, in the present case, Pt 15 r 7 of the Land and Environment Court Rules may be applied. It can also be said that the applicant is the successful party. The proceedings were justifiably commenced and justifiably continued until the giving of the undertakings proffered by the respondents today. It follows, therefore, that there be an order that the respondents pay the applicant's costs. The proceedings are otherwise dismissed. The exhibits may be returned. I hereby certify that the preceding 11 paragraphs are a true copy of the reasons for judgment herein of the Honourable Mr Justice D H Lloyd. Associate ***** 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.