Land and Environment Court of New South Wales CITATION : Strathfield Municipal Council v. Franklins Limited [1998] NSWLEC 107 APPLICANT Strathfield Municipal Council PARTIES : RESPONDENT Franklins Limited FILE NUMBER(S) : 40096 of 1998 CORAM: Bignold J KEY ISSUES: :- LEGISLATION CITED: CASES CITED: The Minister for Immigration and Ethnic Affairs; exparte Lai Qin 1997 186 CLR at 622; Hayden Theatres Pty Limited v Penrith Council (unreported 1 April 1998). DATES OF HEARING: 22/05/98 EX TEMPORE JUDGMENT DATE : 05/22/1998 APPLICANT Mr Kondilios, Solicitor Dunhill Madden Butler LEGAL REPRESENTATIVES: RESPONDENT Ms J C Kelly, Barrister Gadens JUDGMENT: This is an application for costs brought by the Council in class 4 proceedings which were filed on 11 May this year in which the Council sought a declaration concerning the currency in force of a condition of development consent which had been granted by the Council in 1996 for the use by the Respondent of a large supermarket in Strathfield. The proceedings came before the Court for the first time on 15 May, 1998 (that is last Friday) and on that occasion the Council obtained leave to file an amended application which included in paragraph 1A a claim for interlocutory injunction. In the event the claim for interlocutory injunction did not proceed to a hearing last Friday. I should note that the Respondent was opposed to a hearing on that occasion and sought an opportunity, if the matter was to be proceeded with, to put on evidence. However, in the event the parties agreed that the reserved decision of Sheahan J in class one proceedings between the same parties heard by his Honour in February this year, could have a vital and decisive bearing upon the dispute between the parties, and with the parties concurrence I adjourned the matter before me to inquire of his Honour as to when he expected to give judgment in the class one proceedings which involved an appeal or a section 102 modification application - I think the former - against the imposition of condition 10B of the Development Consent, that is the very condition the subject of the present class 4 proceedings. After I informed the parties following consultation with his Honour, that his Honour proposed to give judgment in the class one proceedings on the following Friday, the parties asked that I adjourn the proceedings until today to await the outcome of his Honour's decision. The question of costs of the matter before me was reserved. Earlier today Sheahan J delivered judgment in the class one proceedings. The appeal was allowed and condition 10B was replaced by a substitute condition formulated by his Honour. I understand that the condition extends the hours for operation of the loading dock beyond the hours previously permitted by condition 10B of the original development consent, but does not extend them to such a degree as the Respondent had sought. In the result the very condition (the subject of the present class 4 proceedings) has in fact been displaced and replaced by a substitute condition imposed by his Honour in his judgment today in the class one proceedings. The practical effect of his Honour's decision is, in truth, to render the class 4 proceedings of no further utility, a matter that seems to have been acknowledged in correspondence passing between the parties' solicitors earlier this week. Accordingly, the only question to remain in these class 4 proceedings is the question of costs and I have been assisted in the competing arguments advanced on that behalf today. The Council claims its costs of the proceedings and this application is opposed by the Respondent which in turn counter claims with an application for costs by itself. The principles to be applied in the adjudication of the disputed question of costs in the circumstances of the present case (where there has been no adjudication on the merits and there is no utility in proceeding with the claim) are to be found, in my respectful opinion, in the judgment of McHugh J in Re: The Minister for Immigration and Ethnic Affairs; exparte Lai Qin 1997 186 CLR at 622, especially in the passages at 624 and 625 which I cited and applied in a recent decision Hayden Theatres Pty Limited v Penrith Council (unreported 1 April 1998). In the present case the evidence essentially is found in the letters passing principally between the parties' respective solicitors prior to the commencement of the action, all arising after the hearing of the class one proceedings by Sheahan J which had concluded on 13 February this year. The affidavit of Mr Baird indicates that the Council in March and April of this year continued to receive complaints alleging nuisance in the operation of the Respondent's business, or so much of it as concerned the delivery of food stuffs and the like to the premises. This led ultimately to the Council's Solicitors, by letter of 27 April this year, seeking an undertaking that the condition as imposed in the Council's development consent be complied with, failing which, legal proceedings would be instituted for appropriate interlocutory relief. A considerable amount of correspondence passed between the parties' solicitors the drift of which was the continued insistence on behalf of the Council for compliance with the condition of development consent, as imposed by the Council, and a measured resistance of that claim on the part of the Respondent on the basis that it was willing to investigate the complaints and the allegations, and take whatever remedial action it could to abate the alleged nuisances. At one stage in the correspondence, the Respondent's solicitors put in issue the operation of the relevant condition imposed in the original development consent, because of the pending of the class one proceedings in this Court, a proposition stoutly resisted by the Council's solicitor, and ultimately not resolved in the exchange of correspondence between the parties' lawyers. Moreover, I take it that it was this unresolved contention which provides the background and the clue to the nature of the declaratory relief claimed by the Council in the class 4 proceedings, which was to the effect that the relevant condition "remains in force at law unless and until varied by this honourable Court". On the face of it, this was an unusual declaration of a fact which should have not been seriously in controversy. In any event, because of his Honour's decision earlier today to substitute a different condition, it is common ground that there is no utility in further exploring or adjudicating upon the claim to both permanent and interlocutory relief claimed in the class 4 proceedings. On behalf of the Respondent, Ms Kelly has put a strong argument to the effect that the proceedings were essentially unreasonable in as much as they were based upon alleged contraventions of the relevant condition of the original development consent granted in 1996 and acknowledged by the Council to have been contravened regularly since then. In this respect, reliance was placed upon the letter of the Director of Planning and Environmental Services of the Council to the Respondent's lawyers dated 9 April 1997 which inter alia confirmed that no further action would be taken in relation to the contraventions pending the outcome of the then pending proceedings in this Court. (Those proceedings, according to his Honour's judgment handed down today, were in fact commenced on 3 April 1997). Be that as it may, it comes as no surprise that with the passage of time, (well over twelve months having expired since the proceedings were commenced) that the Council was apt to receive further complaints even after the hearing of the class one proceedings before Sheahan J had concluded on 13 February this year, and so it did. I am satisfied on the evidence, that in bringing these proceedings, the Council was responding to the concerns voiced by residents claiming to be affected adversely by the operations of the Respondent which, if the allegations were substantiated, clearly would involve a breach of the relevant condition. I also infer that the Council brought the proceedings when it did because at that stage no decision had yet been given by Sheahan J and that when the proceedings were commenced on 11 May, some three months had elapsed since his Honour had reserved his decision. Whether it is fortuitous or not that his Honour's decision has now been handed down, a matter of a week or so after the Council's claim to interlocutory relief first came to the Court, the fact is that that decision has undermined entirely those proceedings and they must, I think necessarily be dismissed because there is no longer any point to them. However, I am not able to accept Ms Kelly's argument that the Council brought the proceedings unreasonably because I accept, on their face, the objections raised and communicated to the Respondent that are referred to in Mr Baird's affidavit. Nor am I able to accept her submission that the Council in some fashion acted unreasonably in bringing the proceedings when it did without more detailed inquiry from the Court as to when Sheahan's J reserved judgment might be expected to be delivered. Accordingly I conclude that the bringing of the proceedings by the Council did not involve unreasonable conduct on its part, but so to conclude does not mean that the Council is accordingly entitled to its costs, because as the judgment of McHugh J makes clear, what must be considered is the conduct of both parties in proceedings which did not proceed to an adjudication. One thing the Court must not do, is to engage upon a hypothetical adjudication of what might have happened had the proceedings been litigated. This then directs attention at the Respondent's conduct and the critical question becomes, was the Respondent's conduct unreasonable in the proceedings or in matters leading to the proceedings. Again, in this respect, I find on the evidence that the Respondent acted reasonably in defending the proceedings and in seeking to avoid the proceedings ever being commenced. Given these findings the following statement in the judgment of McHugh J in Lai Qin at p 625 is relevant when his Honour says: "If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continue to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the costs discretion will usually mean that the Court will make no order as to the costs of the proceedings." His Honour pointed out that that approach had been adopted in a number of cases which he cited at the foot of p625. In my view that principle should be followed and applied in the present case. Accordingly, there shall be no order as to costs in the proceedings. Ms Kelly anticipating such an outcome has asked for costs of the Motion and relies upon a letter sent yesterday afternoon to the Applicant's solicitors in which it was offered that the matter be settled on the basis that the application and Motion be dismissed but each party pay its own costs but that if that offer were not accepted, this letter would be brought to the Court's attention today. Had that offer been given with greater notice than yesterday afternoon - the afternoon before the matter came before the Court, then it would have followed that the question of costs having been fully argued and the Council having lost its application for costs, the costs of the Motion would have gone in favour of the Respondent. However, because of the shortness of notice between the offer and the hearing of the matter this morning, I do not think that I should give decisive effect to this belated offer to settle the matter and I am of the view that t here should be no order as to costs in the proceedings, including the costs of today's Motion. In all of the circumstances I order that the application for both permanent and interlocutory relief be dismissed and that there be no order as to costs in the proceedings. The exhibits may remain with the Court papers. 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.