Supreme Court New South Wales Medium Neutral Citation: Steel Supplies Bega v Shoveller [No.2] [2014] NSWSC 1838 Hearing dates: On the papers Decision date: 22 December 2014 Jurisdiction: Equity Division Before: McDougall J Decision: See at [40] Catchwords: PROCEDURE - judgments and orders - form of orders to give effect to judgment - the way in which the lessee should be ordered to comply with development consent - whether grant of new lease should be conditional on compliance with development consent PROCEDURE - costs - departing from the general rule - other cases - substantial success - whether party seeking relief against forfeiture should pay the opponent's costs - whether duration and costs of hearing extended unreasonably - balancing factors relevant to costs Legislation Cited: Civil Procedure Act 2005 (NSW) Conveyancing Act 1919 (NSW) Environmental Planning and Assessment Act 1979 (NSW) Cases Cited: Dee-tech Pty Limited v Neddam Holdings Pty Limited (No.2) [2012] NSWSC 517 Category: Consequential orders (other than Costs) Parties: Steel Supplies Bega Pty Ltd (Plaintiff) Carmen Maree Shoveller (Defendant) Representation: Counsel: P M Lane (Plaintiff) A Vernier (Defendant) Solicitors: David Griffiths Lawyers (Plaintiff) A R Walmsley & Co (Defendant) File Number(s): 2014/245619 Judgment 1. HIS HONOUR: This judgment deals with the form of orders to be made, to give effect to my decision on 14 November 2014 ([2014] NSWSC 1612). 2. The principal issues between the parties were: 1. whether the defendant lessor (Ms Shoveller) had validly terminated the lease of a property at Bega to the plaintiff (Steel Supplies); 2. whether Steel Supplies had validly exercised an option for renewal of that lease; and 3. equivalent issues under ss 129 and 133F of the Conveyancing Act 1919 (NSW). 1. I concluded that, in principle, Steel Supplies was entitled to relief under ss 129 and 133F. I directed the parties to make written submissions on the terms of any relief, the form of orders to be made and costs. 2. As to Ms Shoveller's notice under s 129 of the Conveyancing Act, to the extent that the numerous breaches alleged in it were pressed in final submissions, I concluded that: 1. the breach as to compliance with the conditions of a development consent, based on a failure to provide off street car parking spaces in accordance with the relevant condition of that consent, had been made out (see at [59] to [89] of my earlier reasons); 2. the breach alleged in relation to failure to insure had been rectified, at the latest, by 26 June 2014, which according to the s 129 notice was the last day for rectification of the alleged breaches (see at [90] to [93] of my earlier reasons); and 3. the alleged breach relating to parting with possession or assignment had not been made out (see at [94] to [120] of my earlier reasons). 1. In relation to the first and only breach that had been made out, I concluded that Steel Supplies should have relief against forfeiture, subject to conditions to be worked out (see at [121] to [148], [214] of my earlier reasons). 2. Although the breaches relied upon, in final submissions, in respect of Ms Shoveller's notice under s 133E of the Conveyancing Act did not precisely overlap those relied upon in respect of the s 129 notice, I concluded that there were no unrectified breaches as at the date of hearing. (For reasons that were not explained, the s 133E notice did not allege any breach arising out of the failure to comply with the relevant condition of consent in respect of off street car parking.) 3. Pursuant to directions that I gave when handing down my earlier judgment, the parties have provided written submissions on the outstanding questions, and written submissions in reply. The substantive disputes, in relation to the form of orders to be made, relate to: 1. the way in which Steel Supplies should ensure that it complies with the requirements of Bega Shire Council (the Council) in relation to off street car parking; 2. whether Ms Shoveller should be required to execute a new lease, pursuant to the exercise of the option and my conclusion that relief should be granted under s 133F of the Conveyancing Act, until, one way or another, compliance with the conditions of consent has been demonstrated; and 3. costs. The orders sought by Steel Supplies 1. It is convenient to deal with the question of relief to be granted by reference to the orders propounded by Ms Lane of Counsel, who appeared for Steel Supplies. 2. Those proposed orders were (omitting formal parts): 1. Order, by way of relief against forfeiture, that the Defendant be permanently restrained from exercising the power of re-entry granted by clause 12 of the Lease in reliance upon any failure by the Plaintiff to comply with clause 6.1.4 of the Lease in respect of the car parking facilities provided at the premises. 2. Order 1 is conditional on the Plaintiff, within 4 weeks of these Orders, making application to Bega Valley Shire Council pursuant to s.96 Environmental Planning and Assessment Act 1979 for consent to a variation of the development consent relating to application 2010.0388 in respect of the premises at 44-50 West St Bega, so as to ensure that the car parking for the premises complies with the terms of the development consent, and in respect of such other matters as are required to ensure formal compliance with the terms of the consent. 3. Order that the Defendant give owner's consent to the said development application pursuant to r.49(1)(b) Environmental Planning and Assessment Regulation 2000 and do any other thing required to be done to permit the application to be made to and determined by Council. 4. Declare, by way of relief against forfeiture, that the Plaintiff has validly exercised the option to renew the Lease of the Premises. 5. Order that the Defendant execute a further lease of the Premises in accordance with the terms of the Lease pursuant to the exercise of the Option. 6. The Defendant pay three-quarters of the Plaintiff's costs of the proceedings Order 1 1. Mr Vernier of Counsel, who appeared for Ms Shoveller, accepted that Steel Supplies was entitled in principle to relief of the kind sought, but submitted that it should be limited to an injunction restraining his client from acting on the actual notice of termination that had been given and on the actual s 129 Notice that had been given. 2. I think Mr Vernier's submission is correct. Mr Vernier also redrafted the orders. Apart from the matters that I have just dealt with, there is nothing of substance raised by that redrafting exercise. 3. Accordingly, the first order should read: Order, by way of relief against forfeiture under s 129(2) of the Conveyancing Act 1919 (NSW), that the defendant be restrained permanently from exercising any right of re-entry under the lease in reliance upon: (1) the defendant's notice dated 4 June 2014 under s 129 of the Conveyancing Act 1919 (NSW); and (2) the defendant's notice of termination and to quit dated 30 June 2014. Order 2 1. To understand the disputes in relation to the form of proposed order 2, a little detail is required. The development consent required: (1) 21 off street car parking spaces; and (2) in addition, a disabled access car parking space located in the position indicated on a plan stamped by the Council in connection with the issue of a construction certificate. 1. In fact, there are only 21 parking spaces in total. One of those is a disabled access parking space. It is not located in the required position. 2. Ms Lane submitted that the appropriate course was for her client to make application to the Council under s 96 of the Environmental Planning and Assessment Act 1979 (NSW). By that application, Steel Supplies would seek a variation of the relevant condition of the existing consent, in effect to legitimise the off street car parking that has been provided. 3. Mr Vernier submitted that, particularly where there is no guarantee that the Council would approve the s 96 application, the better course was to order Steel Supplies to provide off street car parking that complied with the existing consent. He submitted, correctly, that there was no evidence to show that compliance could not be achieved. 4. In her submissions in reply, Ms Lane did not contest the proposition that compliance with the existing consent could not be achieved. 5. There may be an inference from the evidence that was led that the Council is not overly concerned with the disconformity between what is required, in respect of off street car parking, and what has been provided. However, since the question was not directly raised and there has been no evidence from any officer of the Council, I do not think that it is safe to proceed on the assumption that the Council would accede to the s 96 application that Steel Supplies supposes. 6. In those circumstances, in my view, the better approach is in principle that suggested by Mr Vernier. The condition of relief against forfeiture should be, in substance, that Steel Supplies cause the off street car parking at the premises to comply with the relevant condition of the consent. I propose to fix a time for that to be done, with liberty to apply in the event that, for whatever reason, more time is reasonably required. 7. The following orders should be made in place of proposed order 2: (2) Order 1 is conditional on the plaintiff, by 31 January 2015 or within such further time as the Court on application may allow: (1) causing the off street car parking spaces at the premises 44-50 West Street Bega to be brought into compliance with clauses 5 and 7 of the development consent granted by Bega Valley Shire Council on application for development consent 2010.03.88; (2) forthwith upon the completion of that work, making application to Bega Valley Shire Council for a compliance certificate under s 109C(1)(a) of the Environmental Planning and Assessment Act 1979 (NSW); and (3) forthwith upon obtaining such certificate, providing a copy thereof to the defendant or her solicitors. Order 3 1. In view of my conclusions on proposed order 2, no order to the effect of proposed order 3 is necessary. Order 4 1. Mr Vernier submitted that proposed order 4 should be conditional on rectification of the breach in relation to off street car parking. He submitted, further, that the method of exercise that is to be declared to be valid should be specified in the form of declaration. 2. I agree with the latter submission. The former submission, and the equivalent submission in relation to order 5, could be dealt with by staying both those orders until the position in relation to off street car parking has been resolved. 3. The redrafted (and renumbered) proposed order 4, the renumbered proposed order 5, and a new order to give effect to the stay should be made as follows: (3) Declare, by way of relief under s 133F(2) of the Conveyancing Act, that by notice of exercise of option dated 22 August 2014, the plaintiff validly exercised its option to renew the lease of the premises. (4) Order that the defendant execute a further lease of the premises, in registrable form, in accordance with the terms of the lease and pursuant to the exercise of option, and do all such things as may be required on her part to be done to enable the plaintiff, at its own cost, to register the said further lease. (5) Order that orders 3 and 4 be stayed until the plaintiff complies with order 2. Costs 1. As will be seen from proposed order 6, Steel Supplies sought an order that Ms Shoveller pay three-quarters of its costs. 2. Ms Shoveller sought an order that Steel Supplies pay one-third of her costs; alternatively, that each party pay its own costs. 3. Ms Lane noted the general discretion of the Court (s 98 of the Civil Procedure Act 2005 (NSW)), subject to the general proposition set out in UCPR r 42.1, that costs should follow the event. Ms Lane submitted that the relevant "event" was her client's success on its claims for relief against forfeiture of the lease and of the option. 4. Ms Lane submitted that there was no general principal that a party seeking relief against forfeiture should pay the costs of the opponent. She relied on Dee-tech Pty Limited v Neddam Holdings Pty Limited (No.2) [2012] NSWSC 517 at [65]. 5. I agree with White J that a principle in general terms, that a party seeking relief against forfeiture should pay the opponent's costs, would not be compatible with r 42.1 (nor, I would add, s 98). 6. Further, I agree with what White J said at [68]. His Honour there noted that the Court should consider "all relevant circumstances in deciding what costs order is just". I also agree with his Honour's description of one of the relevant circumstances, in these words: Because the application for relief against forfeiture only arises because the plaintiff has lost the forfeited property owing to its breach and needs the court's order to restore its estate, there is good reason for the plaintiff's being required to pay the costs of the originating process and supporting affidavits, and the costs that would be occasioned by the defendant's considering its claim and appearing to indicate its consent or non-opposition. 1. At [69], [70], his Honour noted: (1) the requirement for a favourable exercise of discretion under s 133F afforded a reason why costs need not follow the event; (2) the conclusion that the plaintiff was conditionally entitled to relief against forfeiture suggested that it should have some of its costs, reflecting the extent to which those costs were increased by the defendant's resistance; and (3) where there defendant resisted the claim "beyond what was reasonable", there was another reason for granting the plaintiff partial relief in costs. 1. In short, as his Honour had suggested at [68], the requirement to consider all relevant circumstances necessitates, in substance, a balancing exercise. 2. In this case, the relevant circumstances seem to me to include the following matters: (1) as at the date of the s 129 Notice (4 June 2014), Steel Supplies was in breach of the provisions of the lease relating to insurance and relating to compliance with the off street car parking requirements of the development consent; (2) the former breach was, but the latter was not, rectified, at the latest, by the time specified in the s 129 Notice (26 June 2014); (3) none of the numerous other breaches specified in the s 129 Notice were made out; indeed, a number of them were expressly abandoned in final submissions; 1. a substantial amount of evidence, and substantial amount of time at the hearing, were taken up in relation to breaches that were either abandoned by final submissions or, on my conclusions, not made out; 2. to the extent that they were relied upon in final submissions, none of the breaches alleged in the s 133E Notice were shown to be still existing as at the date of hearing; 3. the breach in relation to insurance, which was made out but which had been rectified by 26 June 2014 at the latest, is, none the less, relevant to the exercise of discretion under s 133F; 4. otherwise, as with the s 129 Notice, there was substantial (although in general terms not additional) evidence and time taken in respect of breaches that were either not relied upon in final submissions or not made out. 1. In short, the duration and cost of the hearing were extended by Ms Shoveller's insistence on numerous breaches, most of which (to the limited extent that they were pressed in final submissions) were not made out. 2. In my view, the hearing should have concluded comfortably within one day. That a second day was required was due, in my view, to two things. One was Ms Shoveller's insistence in relying on breaches that were either not relied upon or were not made out. The other was what I regarded as the unreasonably lengthy, repetitive and substantially pointless cross-examination of the witnesses called by Steel Supplies. 3. In those circumstances, the starting point, in my view, is that Ms Shoveller should pay Steel Supplies' costs of the second day of the hearing. That day would not have been needed had the case been conducted efficiently, and had the issues been restricted to those that were properly arguable on the evidence. 4. That leaves the question of the costs of and preceding the first day. There is no doubt that Ms Shoveller was entitled to insist on the breach that I have found was made out as at the date of hearing: namely, in relation to compliance with the off street parking conditions of the development consent. On the other hand, there were numerous other issues that she persisted in arguing, which in my view were unreasonably pressed. 5. In addition, there are the factors that undoubtedly Steel Supplies was (and had been) in breach of the lease, and thus needed a favourable exercise of the statutory discretions to secure its estate under the lease and the exercise of option. 6. Balancing those factors as best I can, and accepting that the discretion as to costs is not necessarily capable of anything other than broad-brush application, I think that the appropriate order (apart from that which I have indicated should be made) is that Steel Supplies should pay one-half of Ms Shoveller's costs. Orders 1. I make the following orders: 1. Order, by way of relief against forfeiture under s 129(2) of the Conveyancing Act 1919 (NSW), that the defendant be restrained permanently from exercising any right of re-entry under the lease in reliance upon: (1) the defendant's notice dated 4 June 2014 under s 129 of the Conveyancing Act 1919 (NSW); and (2) the defendant's notice of termination and to quit dated 30 June 2014. 1. Order 1 is conditional on the plaintiff, by 31 January 2015 or within such further time as the Court on application may allow: (1) causing the off street car parking spaces at the premises 44-50 West Street Bega to be brought into compliance with clauses 5 and 7 of the development consent granted by Bega Valley Shire Council on application for development consent 2010.03.88; (2) forthwith upon the completion of that work, making application to Bega Valley Shire Council for a compliance certificate under s 109C(1)(a) of the Environmental Planning and Assessment Act 1979 (NSW); and (3) forthwith upon obtaining such certificate, providing a copy thereof to the defendant or her solicitors. 1. Declare, by way of relief under 133F(2) of the Conveyancing Act, that by notice of exercise of option dated 22 August 2014, the plaintiff validly exercised its option to renew the lease of the premises. 2. Order that the defendant execute a further lease of the premises, in registrable form, in accordance with the terms of the lease and pursuant to the exercise of option, and do all such things as may be required on her part to be done to enable the plaintiff, at its own cost, to register the said further lease. 3. Order that orders 3 and 4 be stayed until the plaintiff complies with order 2. 4. Order: (1) the defendant to pay the plaintiff's costs of the hearing on 3 November 2014; (2) the plaintiff otherwise to pay one-half of the defendant's costs of the proceedings up until and including the first day of hearing; (3) costs to be set off; and (4) otherwise no order as to costs. 1. reserve liberty to apply on 7 days' notice, either in respect of the implementation of these orders or generally. ********** Amendments 07 January 2015 - corrected formatting of paragraph numbers in [40] 08 January 2015 - - 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: 08 January 2015