Land and Environment Court New South Wales Medium Neutral Citation: Khoury v Holroyd City Council [2014] NSWLEC 37 Hearing dates: 17 March 2014 Decision date: 17 March 2014 Jurisdiction: Class 1 Before: Preston CJ Decision: Orders as set out at [29] Catchwords: COSTS - appeal against order - requiring cessation of use - applicant applied to withdraw appeal on first day of hearing - leave to withdraw refused - appeal heard in absence of applicant - whether applicant should pay respondent's costs of appeal on indemnity basis - whether failed or delayed providing documents - whether acted unreasonably - whether appeal lacked reasonable prospects of success - applicant acted unreasonably in delaying notification of wish to withdraw - did not fail to file essential documents - unable to determine prospects of success - conduct not sufficiently delinquent for indemnity costs - applicant to pay respondent's costs of preparation and attendance at appeal after conclusion of conciliation conference - applicant to pay respondent's costs of notice of motion for costs Legislation Cited: Environmental Planning and Assessment Act 1979 ss 121B, 121ZK(1) Land and Environment Court Act 1979 s 34 Land and Environment Court Rules 2007 r 3.7(2) Category: Principal judgment Parties: Mr Robert Khoury (Applicant) Holroyd City Council (Respondent) Representation: Applicant in person Ms K Law (Solicitor) (Respondent) Applicant in person MatthewsFolbigg Lawyers File Number(s): 10472 of 2013 Publication restriction: No Judgment 1Holroyd City Council ('the Council'), by notice of motion, seeks an order that Mr Robert Khoury pay the Council's costs, on an indemnity basis, of Mr Khoury's appeal to the Court. The Council's notice of motion for costs has been heard today. Ms Law, solicitor, appeared for the Council and Mr Khoury appeared in person. 2The Council had issued, on 23 May 2013, an order under s 121B of the Environmental Planning and Assessment Act 1979 ('EPA Act') requiring Mr Khoury to cease using premises at 36 Frances Street, South Wentworthville, as an unauthorised boarding house ('the Council order'). Mr Khoury is the owner of the premises. The Council order specified a period of 60 days from the date of the order (23 May 2013) within which Mr Khoury was required to comply with the terms of the order. 3As was his right, Mr Khoury appealed under s 121ZK(1) of the EPA Act against the Council order to this court. Mr Khoury filed his appeal on 21 June 2013. 4After various interlocutory attendances before the Court, a conciliation conference was arranged under s 34 of the Land and Environment Court Act 1979 ('the Court Act') for 19 August 2013. The conciliation conference took place at the premises. The parties were not able to reach agreement to resolve the appeal and the conciliation commissioner terminated the conference and returned the matter to the Court on 27 August 2013 for directions to be made to prepare the appeal for a hearing. There were a number of directions hearings afterwards at which the Court made directions, including for the filing of evidence by Mr Khoury and the Council, and the fixing of the hearing of the appeal for 21 and 22 November 2013. 5A different commissioner of the Court to the conciliation commissioner was allocated to hear the appeal. The Court Act precluded the conciliation commissioner taking further part in the proceedings including conducting the hearing, unless the parties both agree (see s 34(3) of the Court Act). 6On the first day of the hearing on 21 November 2013, Mr Khoury appeared in person. The Council was represented by counsel instructed by a solicitor. Mr Khoury applied for the appeal to be heard by a judge and at a later date. The commissioner refused Mr Khoury's application for the matter to be transferred to a judge and for it to be adjourned. Mr Khoury stated that if there were not to be an adjournment, he would not be putting forward any evidence before the Court and he wished to withdraw his appeal. The commissioner advised Mr Khoury that if he elected not to participate in the proceedings, the appeal would be heard in his absence. Mr Khoury left the courtroom and did not participate further in the hearing of the appeal. 7The commissioner then proceeded to hear Mr Khoury's appeal in his absence. Of course, there was no case put for Mr Khoury, neither evidence nor submissions. The Council, on the other hand, contested Mr Khoury's appeal, reading affidavits, tendering documents and making submissions. At the conclusion of the hearing on 21 November 2013, the commissioner reserved her decision. 8On 11 December 2013, the commissioner delivered judgment and published written reasons for her decision. The commissioner gave reasons for refusing to adjourn the proceedings, as well as for her determination of the appeal. The commissioner substituted for the Council order an order to the same effect as the Council order requiring Mr Khoury to cease using the premises as an unauthorised boarding house, but specified the period for compliance with the order to be 60 days from the date of service of the Court's order on Mr Khoury. 9The Council now seeks its costs of the proceedings. 10An appeal under s 121ZK is within Class 1 of the Court's jurisdiction. Rule 3.7(2) of the Land and Environment Court Rules 2007 provides that, for proceedings in Class 1 of the Court's jurisdiction: The Court is not to make an order for the payment of costs unless the Court considers that the making of an order as to the whole or any part of the costs is fair and reasonable in the circumstances. 11Rule 3.7(3) specifies non-exhaustively some of the circumstances in which the Court might consider the making of a costs order to be fair and reasonable. The Council relied on three of these circumstances: (b) that a party has failed to provide, or has unreasonably delayed in providing, information or documents: (i) that are required by law to be provided in relation to any application the subject of the proceedings, (d) that a party has acted unreasonably in the conduct of the proceedings, (f) that a party has commenced or continued a claim in the proceedings, or maintained a defence to the proceedings, where: (i) the claim or defence (as appropriate) did not have reasonable prospects of success, or (ii) to commence or continue the claim, or to maintain the defence, was otherwise unreasonable. 12At the hearing, the Council read an affidavit of Ms Keli Law annexing notices and correspondence to Mr Khoury. Mr Khoury gave oral evidence explaining the background to his lodging the appeal and the circumstances of his application to withdraw his appeal at the hearing. He was cross-examined briefly by Ms Law. 13The Council submitted that it was fair and reasonable to order Mr Khoury to pay its costs on three grounds. 14First, the Council submitted that Mr Khoury acted unreasonably in the conduct of the appeal by failing to prepare his case, including filing and serving any evidence upon which he would rely in support of his appeal, and failing to run his case at the time fixed for hearing, including tendering any evidence or making any submissions as to why his appeal should be upheld and the Council order revoked. The Council submitted Mr Khoury came to the hearing unprepared to run his appeal. His oral application on the day of the hearing for the matter to be transferred to a judge and to be adjourned to a later date did not have reasonable prospects of success. Mr Khoury reasonably should have anticipated that the hearing of his appeal would not be adjourned and that he would be required to run his case on the date fixed for hearing. 15Mr Khoury's application to withdraw his appeal on the first day of the hearing was unreasonably delayed. The Council had been put to the expense of drawing and settling affidavit evidence, preparing a bundle of documents, instructing counsel, and preparing for a contested hearing fixed for two days, and then appearing at the hearing. Such expenditure was thrown away by Mr Khoury withdrawing his appeal on the first day of the hearing. If Mr Khoury had not wished to prosecute his appeal, he ought to have given earlier notice to the Council and to the Court and sought leave to discontinue before such expenditure was incurred by the Council. 16Secondly, the Council submitted that Mr Khoury failed to provide information and documents that were required to be provided by court directions and notices to produce. Mr Khoury did not file any evidence or statement of facts and contentions in accordance with the court directions or advise of any document that he wished to be included in the joint bundle of documents. 17Thirdly, the Council contended that Mr Khoury's claim did not have reasonable prospects of success. The Council relied upon the commissioner's findings upholding the Council order and the Council's case put at the hearing. 18Mr Khoury submitted that no order as to costs should be made. He said he contested the basis of the Council's order and said he was not using his premises as a boarding house. Mr Khoury said it was reasonable for him to appeal against the Council's order. 19Mr Khoury submitted that he participated in good faith in the conciliation conference. He believed that the conciliation commissioner having seen the premises would have understood Mr Khoury's argument that the premises were not being used for a boarding house. Mr Khoury was disappointed that the conciliation commissioner did not continue to participate in the proceedings and hear the appeal. 20Mr Khoury said that as the hearing neared and he read the Council's evidence, and then when he attended the hearing and saw the extent of evidence and the legal team marshalled against him, he believed he would have no reasonable prospects of succeeding before a commissioner but rather would need to have the matter transferred to a judge. Mr Khoury said he was a litigant in person and he had not come prepared to deal with such a case as the Council had assembled against him. 21For these reasons, Mr Khoury said he applied for the hearing to be before a judge and at a later time so that he could prepare to meet the Council's case. When that was denied, he believed his best option was to withdraw rather than to fight on. Mr Khoury thought that because it was his appeal, he could just withdraw his appeal on the day of the hearing by stating orally that he wished to withdraw it. He did not realise that there was a formal process by way of filing a notice of discontinuance. After the hearing, he tried to file a notice of discontinuance but neither the Council nor the Court would accept it. 22In my view, it is fair and reasonable in the circumstances to make an order for costs but only in respect of the costs the Council has thrown away by preparing for and attending the first day of the hearing. The justification for making a costs order in these circumstances lies in r 3.7(3)(d) that Mr Khoury acted unreasonably in delaying notifying that he wished to withdraw until the first day of the hearing. It was not unreasonable for Mr Khoury to have lodged the appeal or to have prosecuted it up to and including conducting the conciliation conference. However, after the conciliation conference was terminated and the matter returned to the Court in order to be prepared for and fixed for a hearing, Mr Khoury was on notice that his appeal would proceed to a contested hearing. He was directed on numerous occasions by the Court, and reminded by the Council, that he needed to prepare for that contested hearing. Mr Khoury did not do so. He was not in a position to run his case on the first day of the hearing, notwithstanding that he had had ample notice and opportunity to do so. 23If he had formed the view that he did not wish to proceed with his appeal, but rather wished to withdraw it, it was unreasonable for him not to notify the Council and the Court, but rather to stand by and let the Council prepare evidence, brief lawyers, and otherwise prepare for and attend the hearing, all of which is costly. 24The point is not that Mr Khoury was not entitled to withdraw or discontinue his appeal, he could; rather, it is the failure to give prior notice of wanting to withdraw and in delaying doing so until the first day of the hearing. 25I do not consider the Council has made out the other grounds for a costs order. The failure to file evidence and otherwise comply with court directions is part and parcel of Mr Khoury not preparing for the hearing and delaying notification of an intention not to proceed with the appeal. Such failure to provide information and documents does not fall within r 3.7(b)(i) which is concerned with the essential documents required by law to be filed with the originating process, in this case the Class 1 application. There were no essential documents that needed to be filed that were not filed by Mr Khoury. 26Given that Mr Khoury never ran his case at the hearing, and did not file a statement of facts and contentions, it is difficult to determine what Mr Khoury's case would have been and hence to make any evaluation of the prospects of success of any such case. I disagree with the Council that the commissioner's judgment allows an evaluation of whether Mr Khoury's claim had reasonable prospects of success. The commissioner never determined Mr Khoury's case, no doubt because it was unknown, but rather dealt only with the Council's case that the imposition of an s 121B order was lawful and meritorious. I cannot find that Mr Khoury had no reasonable prospects of success had he actually run his case. 27The Council also seeks an order that any costs awarded in its favour be on an indemnity basis, rather than the usual party/party basis. I do not consider that the unreasonable conduct that I find justified the making of a costs order for the costs thrown away by the Council preparing and running its case at the hearing is sufficiently delinquent as to justify awarding costs on an indemnity basis. 28The Council also seeks its costs of bringing this motion for costs. It has been successful in obtaining an order for costs, although not as extensive or on the basis sought by the Council. Nevertheless, such success is sufficient to warrant an order for costs of the motion for costs. 29Accordingly, I order: (1)Mr Khoury pay the costs of Holroyd City Council in relation to the preparation for and attendance at the hearing of the appeal after 19 August 2013, including the directions hearings on 27 August and 12 September 2013, the preparation of the affidavits of Messrs Ferguson, Stephenson, Guido and McDermott, and of the bundle of documents, and one day of the hearing on 21 November 2013, as agreed or assessed. (2)Mr Khoury pay the Council's costs in relation to the amended notice of motion for costs filed 16 January 2014. ********** 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. Decision last updated: 10 April 2014