Land and Environment Court of New South Wales CITATION : Calardu Warrawong (Homestarters) Pty Limited v Wollongong City Council and Others (No.2) [2010] NSWLEC 26 APPLICANT Calardu Warrawong (Homestarters) Pty Limited FIRST RESPONDENT Wollongong City Council PARTIES : SECOND RESPONDENT Brett David McCurry THIRD RESPONDENT Jason Stanley McCurry FOURTH RESPONDENT Bradley Raymond McCurry FILE NUMBER(S) : 40516 of 2008 CORAM: Sheahan J KEY ISSUES: COSTS :- applicant only partially successful - action commenced without notice - principles for deciding burden of costs - settlement negotiations regarding both substantive matter and costs LEGISLATION CITED: Land and Environment Court Act 1979 Buzrio Pty Limited v Consumer, Trader and Tenancy Tribunal (No.4) [2010] NSWSC 41 Calardu Warrawong (Home Starters) Pty Limited v Wollongong City Council and Others [2008] NSWLEC 265 Cutcliffe and Another v Lithgow City Council and Others (2006) 147 LGERA 330 Homemakers Supacenta-Belrose Pty Ltd v Warringah Council and Another (No.2) [2008] NSWLEC 126 James & Ors v Surf Road Nominees & Ors (No.2) [2005] NSWCA 296 Kiama Council v Grant (2006) 143 LGERA 441 CASES CITED: Latoudis v Casey (1990) 170 CLR 534 Markisic v Department of Community Services NSW [2006] NSWCA 106 Monaghan v Holroyd City Council (2009) 167 LGERA 321; [2009] NSWLEC 112 Our Town FM Pty Ltd v Australian Broadcasting Tribunal (No.3) (1987) 77 ALR 609 R v The Australian Broadcasting Tribunal and others; ex parte Hardiman and others (1980) 144 CLR 13 Sydney City Council v Chapman [2007] NSWLEC 146 Trustee for the Salvation Army (NSW) Property Trust & Anor v Becker & Anor (No.2) [2007] NSWCA 194 DATES OF HEARING: 25 February 2010 EX TEMPORE JUDGMENT DATE : 25 February 2010 APPLICANT Mr M Staunton, Barrister SOLICITORS Gadens Lawyers FIRST RESPONDENT LEGAL REPRESENTATIVES: Mr M Seymour, Barrister SOLICITORS Kells the Lawyers SECOND, THIRD & FOURTH RESPODNENTS Mr A Pickles, Barrister, SOLICITORS M E McMahon & Associates JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES Sheahan J 25 February 2010 40516 of 2008 CALARDU WARRAWONG (HOMESTARTERS) PTY LIMITED v WOLLONGONG CITY COUNCIL and Others (No.2) EXTEMPORE JUDGMENT Introduction 1 His Honour: The applicant in these class 4 proceedings seeks orders for costs against the four respondents. Some of the correspondence among the parties indicates that those costs would be in the order of $60,000. 2 All the respondents urge the court to order that each party pay its own costs – they do not seek any orders in their favour, except perhaps on the motion itself. 3 The substantive issues remaining in the proceedings at the time it came on for hearing were determined by my judgment of 16 September 2008 – [2008] NSWLEC 265. Background 4 The Council had granted to the McCurry respondents on or about 28 February 2008, a consent for a bulky goods retail camping etc. outlet, and a smaller shop, intended for use as a Domino's Pizza shop. 5 The applicant, a Harvey Norman company which objected to the McCurry development application, launched this class 4 challenge to the consent on 27 May 2008, seeking a declaration that the consent was void, and an order restraining the McCurrys from relying on it. 6 The Points of Claim of 1 July 2008 asserted that the development was prohibited, and that the Council had inappropriately dealt with the carparking requirements in the relevant Local Environmental Plan and Development Control Plan. 7 On 11 July 2008, the Council filed a submitting appearance, save as to costs, and the hearing of the substantive matter was fixed for 4-5 September. 8 On the eve of the 4 September hearing, the applicant amended its Points of Claim in minor respects, and the McCurrys, in an amended defence, conceded that the Domino's component of the consent could not stand. 9 The hearing then focussed on (1) the asserted error on Council's part in the carparking calculations, but not as a matter to be determined on its merits, and (2) whether the court should make a s 25B order under the Land and Environment Court Act 1979. 10 I found that the breach of the law committed in the granting of consent was "substantive", rather than "technical", but that discretionary considerations favoured the McCurrys – see [26]-[27] of my judgment. 11 Accordingly, I made a limited s 25B order, in the terms submitted at trial by the McCurrys' counsel, Mr Pickles. His draft orders included the reservation of costs and liberty to apply, and the applicant's Notice of Motion for costs represents the only subsequent action on the court's file. New evidence relevant to costs 12 The court now knows that the McCurrys had made a settlement offer on 27 August 2008 – they would lodge a s 96 application, or consent to a s 25B order, the terms of which were only slightly different from the order ultimately made. 13 The applicant found those alternatives unacceptable, and pressed on to the hearing, only to change tack on the day. Basic Principles 14 Costs are "compensatory", not "punitive" (Latoudis v Casey (1990) 170 CLR 534), and are at the discretion of the court. The Council submits that, in addition, the court should see costs as protective of the court and of the interests of litigants, by guarding against attempts to manipulate the civil justice system. Markisic v Department of Community Services NSW [2006] NSWCA 106, at [16]. 15 In Class 4, costs usually "follow the event", leaving the court to identify the "event" before formulating a "just and reasonable" order in all the circumstances of the case. It is not suggested that this class 4 challenge was brought "in the public interest" – if it were, some special additional considerations would apply. 16 The court will make a s 25B order only when (1) satisfied of the invalidity of a consent, something which here was partially conceded by the beneficiaries of the consent, and (2) not convinced that a declaration of invalidity, with consequent orders, is appropriate. 17 Pain J said in Homemakers Supacenta-Belrose Pty Ltd v Warringah Council and Another (No.2) ("Homemakers") [2008] NSWLEC 126, at [11], that the relevant "event" is the court's "conclusion as to invalidity". 18 The McCurrys' concession of partial invalidity came very late, but amounts to an effective surrender to the applicant's claim (if only in respect of a small proportion of the site the subject of the consent). See Kiama Council v Grant (2006) 143 LGERA 441, at [80]. 19 That concession was coupled with a submission at trial that a s 25B order was appropriate. Submissions by the parties 20 The applicant submits it should still be entitled to its costs, as it made out a serious breach of the law, namely, the approval by the Council of a prohibited use. It says it could not have done so without bringing and prosecuting the proceedings. It submits that, "at the very least", it should get its costs "up to the eve of the hearing", but really should have its costs of the hearing, because it needed to establish its entitlement to a declaration before the s 25E discretion not to make one is engaged. It denies it is guilty of any "disentitling" conduct. It was entitled to rely upon its carparking claim to resist the making of the s 25B order. It had a statutory right to challenge the consent, and had no obligation to give notice before doing so. Council "submitted" rather than defend the proceedings, but did not concede invalidity. The Council should have admitted its breach, and then explored settlement of the proceedings by consent orders. Cutcliffe and Another v Lithgow City Council and Others ("Cutcliffe") (2006) 147 LGERA 330. 21 The applicant also submits that, for their part, the McCurrys were guilty of disentitling conduct in filing an amended defence, without leave, just before the hearing and, then producing at the hearing, and on no notice, some very late evidence on discretionary matters. 22 The Council argues that each party should pay its own costs. The applicant did not obtain the relief it sought, and did not establish that the consent as a whole was invalid. The "event" is that failure of the applicant's case, in the Council's submission. The McCurry concessions changed the nature of the proceedings, but the Council's submitting appearance amounted to an admission of the applicant's case, an admission that the Council "has no issue with the moving party", made so as to minimise the Council's exposure to costs. Buzrio Pty Limited v Consumer, Trader and Tenancy Tribunal (No.4) [2010] NSWSC 41, at [11]. See also the general discussion of such appearances in R v The Australian Broadcasting Tribunal and others; ex parte Hardiman and others (1980) 144 CLR 13; in Oshlack v Richmond River Council (1998) 193 CLR 72; in Our Town FM Pty Ltd v Australian Broadcasting Tribunal (No.3) (1987) 77 ALR 609; and in Cutcliffe; and see also UCPR 6.11. 23 If the applicant is to recover costs, it should not be from the Council, whose submitting appearance was made at the first opportunity, once the applicant's case had been explained. 24 The applicant pressed on, seeking relief beyond what the consent holders were prepared to concede, but failed in that endeavour. The submitting appearance did not complicate the case, and so increase its costliness. 25 From the Council's perspective the applicant is thought to be guilty of disentitling conduct – the respondents received no notice of the impending challenge, and the applicant made substantial reductions in its challenge once the hearing commenced. Once informed of the applicant's Points of Claim, after costs had begun to mount, the first respondent "conceded" by making its submitting appearance. Then the applicant reduced the scope of its challenge. See Sydney City Council v Chapman [2007] NSWLEC 146, per Jagot J. 26 If the applicant is to recover any costs at all, the Council says it should be only a small proportion of the assessment, largely because of its late changes in approach (dropping two out of three challenges), and its failure to provide opportunities for the parties to shorten and cheapen the proceedings by appropriate concessions. In the end, it had very limited success on the remaining issue. 27 Council's submission is that, if at all, it should be responsible for no more than, say, 10% of the Council's costs. 28 The McCurry respondents say that, if the court compares the relief sought with the orders made, it could not conclude that the applicant succeeded, other than "only marginally". Most of their consent is "unaffected by the orders" made. The court must look at all the circumstances of the case. See James & Ors v Surf Road Nominees & Ors (No.2) [2005] NSWCA 296. 29 The principles in Kiama Council v Grant, at [80], apply, even though each case turns on its own particular facts. The applicant failed to accept the McCurrys' offer of 27 August 2008 (Exhibit M1), after having commenced the proceedings without notice, and did no better than the offer made. See UCPR 42.15A and UCPR 20.26, and Trustee for the Salvation Army (NSW) Property Trust & Anor v Becker & Anor (No.2) [2007] NSWCA 194. 30 While the McCurrys do not seek a costs order (let alone on a Calderbank/indemnity basis), their offer is a factor to be taken into account in exercising the costs discretion. 31 The exercise of the costs discretion, on the McCurry submissions, might result in an order in favour of the McCurrys after 27 August 2008, and in favour of the Council after 11 July 2008. 32 The McCurrys also argue that the applicant is guilty of disentitling conduct – commencing without notice (see Chapman at [11]), failing to accept the reasonable offer, the late dropping of the merits arguments, and the unsuccessful resistance of the s 25B order. 33 If the applicant, however, is awarded some costs, Council should contribute 50% up to 27 August 2008. Cutcliffe, at [50](c). Conclusion 34 Many of these judicial review challenges are launched without any sort of "letter of demand", or other attempt to articulate and resolve problems which may not require court intervention. 35 I agree with Pain J (Homemakers, at [15]) that such practices in the modern legal profession are not to be encouraged. 36 A similarly unsound litigious approach, creeping into the profession when disputes arise, earned the court's displeasure and an appropriate costs order, in my judgment in Monaghan v Holroyd City Council (2009) 167 LGERA 321; [2009] NSWLEC 112. 37 The overwhelming objective must be the just and reasonable solution of the real problem affecting the parties in dispute, the clients who pay the costs. 38 I should add that it was also not appropriate for the discretionary material, relied upon by the McCurrys at the hearing, to have been omitted from the pre-trial correspondence, and "dropped on" the applicant and the Council at the hearing. 39 Having revisited the way in which the hearing was conducted, by counsel today referring me back to not only my published judgment, but also the written submissions made to me at the hearing, along with notation of how the positions taken in those submissions were pressed less firmly in oral argument, I have concluded that the most fair, just, and reasonable outcome of this matter is an order that each party should pay its own costs. Costs of the motion? 40 There is substantial evidence now before the court of attempts to find common ground on the question of costs. However, one letter sent on the McCurrys' behalf, putting their arguments on costs (Exhibit M2), dated 1 December 2009, appears not to have reached the applicant's representatives. 41 I think there was a genuine effort by the applicant to resolve the question without having to bring it back before the court, but, having failed in that endeavour, it has brought a Notice of Motion on in which it has been entirely unsuccessful. 42 The McCurrys suggested the costs dispute should be resolved on the basis that each party pay its own costs of the proceedings. The Council was prepared to join in a limited way (50% of costs before 11 July) in any agreement the applicant reached with the McCurrys on the payment of costs, or to pay an amount of $5,000, to avoid today's hearing. No such agreement was reached. The applicant consistently asserted its entitlement to recover its costs on a "joint and several" basis from the respondents (see Gadens' letter to respondents dated 28 August 2009), and the Council seeks its costs of the applicant's motion if it is unsuccessful. Orders 43 The orders of the court will be: 1. The applicant's Notice of Motion dated 19 October 2009 is dismissed. 2. The parties are each ordered to pay their own costs of the substantive proceedings. 3. The applicant is ordered to pay the costs of all respondents in respect of the costs Notice of Motion. 4. Exhibit M1 and Exhibit M2 are 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. 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