Land and Environment Court of New South Wales CITATION : Wollondilly Shire Council v James Leslie Godfrey and Ors [2007] NSWLEC 281 APPLICANT Wollondilly Shire Council FIRST RESPONDENT James Leslie Godfrey SECOND RESPONDENT JGE Earthmoving Pty Limited THIRD RESPONDENT All Picton Sand and Soild Pty Ltd FOURTH RESPONDENT Allstate Asphalt Pty Ltd PARTIES : FIFTH RESPONDENT A1 Truck Repairs Pty Limited SIXTH RESPONDENT Earth Civil (NSW) Pty Ltd SEVENTH RESPONDENT JGE Machinery Pty Ltd EIGHTH RESPONDENT Southern Equipment Sales & Rental Pty Ltd NINTH RESPONDENT Zayrate Pty Limited FILE NUMBER(S) : 41537 of 2005; 40855 of 2006 CORAM: Jagot J KEY ISSUES: Costs :- civil enforcement proceedings resolved by undertaking and development consent in related Class 1 appeal - disentitling conduct - whether respondents surrendered - orders for costs made in one proceeding but not the other LEGISLATION CITED: Environmental Planning and Assessment Act 1979 ss 124(3) and 69 Protection of the Environment Operations Act 1997 s 96 Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194 ; CASES CITED: Kiama Council v Grant (2006) 143 LGERA 441; One.Tel Ltd v Commissioner of Taxation (2000) 101 FCR 548; Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin (1997) 186 CLR 622. DATES OF HEARING: 16/5/07 DATE OF JUDGMENT: 24 May 2007 APPLICANT Mr M Wright SOLICITORS Marsdens Law Group FIRST, THIRD, FOURTH, FIFTH, SIXTH, SEVENTH & NINTH RESPONDENTS LEGAL REPRESENTATIVES: Mr P Clay SOLICITORS Moloney Lawyers SECOND & EIGHTH RESPONDENTS N/A SOLICITORS N/A JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES Jagot J 24 May 2007 41537 of 2005 40855 of 2006 WOLLONDILLY SHIRE COUNCIL Applicant JAMES LESLIE GODFREY & ORS Respondent JUDGMENT Jagot J: 1 I made orders today in proceedings 10865 of 2006 upholding an appeal in Class 1 of the Court's jurisdiction and thereby granting development consent relating to lot 2 in deposited plan 570466 known as 28 Wonga Road, Picton. As a consequence, Wollondilly Shire Council will discontinue two Class 4 proceedings and has sought associated orders for costs of those proceedings. To understand the basis of the Council's claims for costs and their defence by the respondents it is necessary to identify the genesis of the proceedings and their interrelationship. 2 The Council considered that the use of the land was causing the emission of offensive noise. On 26 April 2005 it served a direction on Mr Godfrey, as the person alleged to be carrying on the activities, restricting the hours during which certain activities could be carried out (subject to exceptions) under s 96 of the Protection of the Environment Operations Act 1997. Insofar as the Council was concerned, Mr Godfrey had not complied with that notice. The Council's solicitors notified Mr Godfrey that enforcement proceedings would be commenced on 5 July 2005 to ensure compliance. The Council commenced the proceedings on 20 December 2005 (proceedings 41537 of 2005). In the meantime, in October 2005, Mr Godfrey lodged a development application with respect to the land. Directions were made on 8 February 2006 for the conduct of the proceedings, which were listed for hearing in May 2006. Mr Godfrey did not comply with the directions and changed solicitors twice in April and May 2006. A few days before the hearing, Mr Godfrey's new solicitors filed and served a motion seeking orders that the proceedings be struck out as an abuse of process. The motion (which was amended) was returnable at the hearing. The Court dismissed the motion and ordered Mr Godfrey to pay the Council's costs. Mr Godfrey applied for an adjournment of the hearing, which the Council opposed. The Court granted the adjournment and ordered Mr Godfrey to pay the costs thrown away. 3 As part of its directions at the hearing in May 2006, the Court allowed the Council to file and serve an amended application and points of claim. These documents were served on 29 May 2006. They expanded the proceedings to seek declarations with respect to an alleged breach of the Environmental Planning and Assessment Act 1979. Mr Godfrey did not comply with the directions for the filing and service of his points of defence and evidence. At a mention on 3 July, the Court listed the proceedings for hearing on 18 to 20 September 2006. 4 On 9 August 2006 the Council refused the development application. On 15 September 2006, the Council filed and served another Class 4 application (proceedings 40855 of 2006). This Class 4 application sought declarations to the effect that one of the development consents relating to the land had lapsed and that many activities carried out on the land were in breach of the Environmental Planning and Assessment Act 1979, as well as associated orders restraining those activities. These proceedings were brought against multiple respondents said to have some connection with the activities being carried out on the land, including Mr Godfrey. Mr Godfrey then filed a Class 1 appeal appealing against the Council's refusal of the development application on 18 September 2006, the first day of the hearing in the 2005 Class 4 proceedings. On 18 September 2006 the respondents sought an adjournment of the 2005 Class 4 proceedings on the basis that those proceedings could not be properly determined in isolation from the 2006 Class 4 proceedings that the Council had commenced on 15 September 2006. I adjourned the hearing of the 2005 Class 4 proceedings on the basis that all three proceedings be listed for case management on 19 September 2006. As a consequence of the case management, certain respondents in the 2006 Class 4 proceedings (including Mr Godfrey) gave interim undertakings not to use the land outside certain hours, subject to exceptions. I listed the Class 1 appeal for hearing on 11 to 13 December 2006 and the two Class 4 proceedings for hearing on 18 and 19 December 2006. As a consequence of circumstances arising in the Class 1 proceedings (see my reasons for decision of today's date in proceedings 10865 of 2006), the Class 4 hearing days were used to complete the Class 1 hearing. The orders I made today in the Class 1 appeal, granting consent to the amended development proposal, has rendered both Class 4 proceedings otiose. The respondents who gave the undertakings in the 2006 Class 4 proceedings agreed that the undertakings should continue until an occupation certificate is issued for the development the subject of the orders in the Class 1 appeal. 5 The Council submitted that a costs order should be made in its favour in both Class 4 proceedings for the following reasons: (1) The 2005 Class 4 proceedings primarily related to a prevention notice, the purpose of which was to ameliorate noise impacts on adjoining residential properties (particularly the property of Mr and Mrs Walker). (2) Those proceedings were listed for hearing in May 2006. The Council was ready and able to proceed with the 2005 proceedings on the allocated hearing dates in May 2006. The day before the hearing, the respondent filed and served a motion seeking summary dismissal. The Court dismissed that motion and made directions requiring the Council to amend its Class 4 application and points of claim, which were satisfied. The proceedings were fixed for hearing in September 2006. (3) The Council was ready and able to proceed with the 2005 proceedings on the allocated hearing dates in September 2006. It opposed the adjournment of those proceedings by reason merely of the commencement of the 2006 Class 4 proceedings on 15 September 2006 and the Class 1 appeal on 18 September 2006. The 2005 Class 4 proceedings were adjourned over the Council's objection but on the basis of directions requiring case management in all the proceedings and the giving of the undertakings in the 2006 Class 4 proceedings. The case management resulted in the 2005 Class 4 proceedings being fixed after the Class 1 appeal hearing. However, events in the Class 1 appeal and the continued undertakings rendered the 2005 Class 4 proceedings redundant. (4) Therefore, the Council was ready to proceed to hearing at all times in the 2005 Class 4 proceedings. Its claims were satisfied by the undertakings in the 2006 Class 4 proceedings and the outcome of the Class 1 appeal. Its claims having been satisfied, the Council was entitled to an order for costs. (5) The Council commenced the 2006 Class 4 proceedings to enforce the respondents' legal obligations. The applicant lodged its Class 1 appeal to regularise the situation in response. (6) In the 2006 Class 4 proceedings, the giving of the undertakings and resolution of the Class 1 appeal satisfied the Council's claims. These were both events in the Council's favour, the effect of which was to regularise the activities that prompted the 2006 Class 4 proceedings to the Council's satisfaction. This is evident from the fact that the undertakings will continue until an occupation certificate is issued with respect to the development the subject of the orders granting consent in the Class 1 appeal. 6 The respondents in the Class 4 proceedings submitted that no orders for costs should be made for the following reasons: (1) The Council commenced the 2006 Class 4 proceedings without warning one working day before the hearing of the 2005 Class 4 proceedings. Its pleadings in the two proceedings were inconsistent. Specifically, in the 2005 Class 4 proceedings the Council sought to enforce compliance with conditions of a consent it alleged had lapsed in the 2006 Class 4 proceedings. (2) The hearing of the 2005 Class 4 proceedings had to be adjourned given the common issues and inconsistent pleadings between those proceedings and the peremptorily commenced 2006 Class 4 proceedings. The respondents had sought the costs of that adjournment, which was caused by the Council's conduct. (3) If the Council had given notice of the proposed commencement of the 2006 proceedings, the respondents would have had the opportunity to inform the Council of the prospective Class 1 appeal arising from the Council's refusal of the development application in August 2006. Having regard to s 124(3) of the Environmental Planning and Assessment Act 1979, the Council would then have appreciated the futility of commencing the 2006 Class 4 proceedings. Further, as events demonstrated, the respondents were willing to give satisfactory undertakings. Instead the 2006 Class 4 proceedings were unreasonably commenced without warning (the last communication threatening proceedings having been in October 2005). (4) The 2005 Class 4 proceedings were attended by significant uncertainty with respect to any success on the part of the Council. Substantial arguments were available that the prevention notice was invalid and that the respondent Mr Godfrey was not the appropriate recipient of that notice. (5) The Council's claims have not been satisfied in the proceedings. The 2005 Class 4 proceedings concerned a prevention notice. The undertakings were given in the 2006 Class 4 proceedings. For example, why should the Council receive two sets of costs if the substance of the proceedings was the same? 7 Section 69 of the Land and Environment Court Act 1979 vests a broad discretion in the Court with respect to the making of costs orders. This discretion is to be exercised having regard to conventional principles, including those applicable where there has been no hearing on the merits of claims. Preston J conveniently summarised those principles in Kiama Council v Grant (2006) 143 LGERA 441 at [43] to [80]. The following aspects of those principles are particularly relevant in the present circumstances: (1) It will rarely, if ever, be appropriate to determine the outcome of a hypothetical trial. However, the reasonableness of parties in commencing and defending proceedings is relevant ( Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194 at 201). (2) Where both parties have acted reasonably in commencing, defending and continuing the proceedings and the proceedings have become futile, it will often be appropriate to make no order as to costs ( Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin (1997) 186 CLR 622 at 624). (3) The cause of the proceedings becoming futile is relevant. Where one party effectively surrenders to the other and the result sought is achieved without a hearing on the merits, it will often be appropriate to order the surrendering party to pay costs as it will then be apparent that the other party has "simply won". Where, however, some "supervening event or settlement so removes or modifies the subject of the dispute" and it cannot be said that one party has "simply won", the issue of costs "often creates problems since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs" ( One.Tel Ltd v Commissioner of Taxation (2000) 101 FCR 548 at [6] to [7]). 8 Five matters are apparent from the present circumstances: (1) The Court could not be satisfied that one or other party would certainly have succeeded had either the 2005 or 2006 Class 4 proceedings been fully tried. (2) Although the 2005 Class 4 proceedings focused on the prevention notice, the primary matters regulated by that notice are covered by the undertakings in the 2006 Class 4 proceedings. One reason for this is obvious. The defence to the 2005 Class 4 proceedings included an argument that persons other than Mr Godfrey were responsible for the activities. The 2006 Class 4 proceedings nominated these other persons as respondents. The undertakings in the 2006 Class 4 proceedings were given by seven of the nine respondents in those proceedings. (3) Although the 2005 Class 4 proceedings involved certain allegations dependent on the various development consents, those matters were added pursuant to the directions of the Court in May 2006. The essence of the 2005 Class 4 proceedings was the enforcement of the prevention notice. That result was achieved by the undertakings the respondents gave in the 2006 Class 4 proceedings. The grant of consent in the Class 1 appeal did not remove or modify that dispute. By the undertakings (albeit in different proceedings) it is apparent that the Council "simply won" the 2005 Class 4 proceedings. If and when an occupation certificate is granted with respect to the consent issued in the Class 1 appeal, the comprehensive consent conditions will enable the undertakings to be released. (4) The filing and service of the Class 1 appeal had the potential to render both Class 4 proceedings redundant (as evidenced by events). Mr Godfrey had a right of appeal against a deemed refusal of the development application for many months before the actual refusal on 9 August 2006. Mr Godfrey commenced the Class 1 appeal in response to the Council commencing the 2006 Class 4 proceedings. The Class 1 appeal prompted the adjournment of the 2005 Class 4 proceedings. (5) The Council did not give a fresh warning about the 2006 Class 4 proceedings after it refused the development application in August 2006. The warning on 13 October 2005 crossed with the lodging of the development application on 10 October 2005. The relief sought in the 2006 Class 4 proceedings is far more extensive than the concerns identified in the correspondence in 2005 or the scope of the development consent granted in the Class 1 appeal. 9 Having regard to these matters, I consider that the Council's primary claims in the 2005 Class 4 proceedings were satisfied by the giving of the undertakings, despite the fact that the undertakings were given in the 2006 Class 4 proceedings. The commencement of the 2006 Class 4 proceedings, in the circumstances I have described, was not disentitling conduct for the purpose of the 2005 Class 4 proceedings. The primary cause of the vacation of the hearing was the Class 1 appeal. Although prompted by the 2006 Class 4 proceedings, Mr Godfrey could have commenced the Class 1 appeal at any time during the many months leading up to the hearing. It is clear from the events that have occurred, particularly the undertakings and their proposed continuation, that the Council "simply won" the 2005 Class 4 proceedings. It obtained the substance of its primary claims. Accordingly, the usual order for costs in the 2005 Class 4 proceedings should be made in the Council's favour. 10 The same result does not follow for the 2006 Class 4 proceedings. The relief the Council sought in those proceedings was far more extensive than the scope of the undertakings. There has been no surrender by the respondents in the proceedings. It is not possible from the circumstances to be satisfied that the Council "simply won" the proceedings. While the consent granted in the Class 1 appeal rendered the proceedings redundant, it did so by transforming the factual context. The subject of the dispute has been so modified by the outcome in the Class 1 proceedings that no issue remains other than costs. In these circumstances, I am satisfied that the appropriate exercise of discretion in the 2006 Class 4 proceedings is for each party to pay its own costs. It is also necessary that the discontinuance of those proceedings be on the basis of the continuation of the undertakings. Given the need for the continued undertakings I propose to hear from the parties further on the final form of the orders. **************************** 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.