Land and Environment Court New South Wales Medium Neutral Citation: Karimbla Properties v Council of the City of Sydney; Bayside City Council; and North Sydney Council (No 2) [2018] NSWLEC 3 Hearing dates: 19 October 2017; written submissions 19 and 20 December 2017 Date of orders: 29 January 2018 Decision date: 29 January 2018 Jurisdiction: Class 3 Before: Sheahan J Decision: See pars [56] and [57] Catchwords: COSTS: Whether costs and interest are recoverable by the Applicants following the principal judgment Legislation Cited: Civil Procedure Act 2005 Land and Environment Court Act 1979 Land and Environment Court Rules 2007 Local Government Act 1993 Recovery of Imposts Act 1963 Uniform Civil Procedure Rules 2005 Cases Cited: Arden Anglican School v Hornsby Shire Council (2008) 158 LGERA 224; [2008] NSWLEC 103 Barich v Parramatta City Council [2015] NSWLEC 98 Bloch v Bloch (1981) 180 CLR 390 Do Carmo v Ford Excavations Pty Ltd (1984) 154 CLR 234 Karimbla Properties v Council of the City of Sydney; Bayside City Council; and North Sydney Council [2017] NSWLEC 75 Letang v Cooper [1965] 1 QB 232 Macdonald v Mosman Municipal Council (No 2) (2000) 107 LGERA 211; [2000] NSWLEC 67 Maygood Australia Pty Ltd v Willoughby City Council [2013] NSWLEC 142 Meriton Apartments Pty Limited v Parramatta City Council [2003] NSWLEC 309 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 Port Stephens Council v Sansom [2007] NSWCA 299 Pyntoe Pty Ltd v Valuer-General of NSW (No 2) [2012] NSWLEC 231 Statewide Developments Pty Limited v Minister for Infrastructure and Planning (2005) 142 LGERA 154; [2005] NSWLEC 353 Ulan Coal Mines Pty Limited v Mid-Western Regional Council [2013] NSWLEC 1167 Wilpinjong Coal Pty Limited v Mid-Western Regional Council; Ulan Coal Mines Limited v Mid-Western Regional Council [2012] NSWLEC 277 Category: Costs Parties: Various "Karimbla Properties" Companies (Applicants) Council of the City of Sydney (Respondent) Bayside City Council (Respondent) North Sydney Council (Respondent) Representation: Counsel: Mr C McEwen, SC with Mr S Nash, barrister (Applicants) Mr I Hemmings, SC with Dr J Smith, barrister (Respondents – Council of the City of Sydney and Bayside City Council) Mr T Hale, SC with Mr T To, barrister (Respondent – North Sydney Council) Solicitors: General Counsel, Meriton Group (Applicants) Council of the City of Sydney (Respondent – Council of the City of Sydney) Houston Dearn O'Connor (Respondent – Bayside City Council) North Sydney Council (Respondent – North Sydney Council) File Number(s): 2016/245526, 2016/245527, 2016/245528, 2016/245529, 2016/245530, 2016/245531, 2016/245532, 2016/247852, 2016/301331,2016/305876, 2016/305877, 2016/305878 Judgment Introduction 1. I delivered the primary judgment in these twelve matters on 26 June 2017 ([2017] NSWLEC 75), and invited the parties (at [130] – [134]) to "negotiate, and, hopefully, agree upon, Short Minutes of Order" ("SMO") to implement my findings. 2. The main dispute in the case concerned whether land was being used for residential accommodation when it was in the process of being developed (by demolition, excavation, and construction activities), for residential purposes, prior to the issue of an occupation certificate. 3. The Applicants had paid rates levied by the Respondent Councils on a basis higher than "residential", and argued that the lands affected should have been re-categorised as "residential" once relevant development work had commenced pursuant to a consent. 4. There was agreed to be no real prejudice to the Councils arising from the Applicants' delay in seeking such relief from the Court, and I find no fault in the way they pursued their claims – despite some reformulation, the substantive relief sought remained constant (Reply subs, par 22). 5. In essence, I followed (at [97] – [99]) Pain J's decision in Meriton Apartments Pty Limited v Parramatta City Council ("Parramatta") [2003] NSWLEC 309, and also held (at [107] – [129]) that this Court has the power to order repayment by the respondent councils of monies paid to them on a rating basis later found to have been incorrect. 6. Despite (1) some attempts to re-agitate some issues settled by my judgment, and (2) the filing, without objection, of supplementary affidavit material (without all exhibits) – three affidavits by Nichola Alexandra Malouf (Applicants), and one each by solicitors Matthew Simon Pearce (North Sydney Council), Timothy James O'Connor (Bayside City Council), and Mardi Flick (City of Sydney Council) which detailed negotiations between the parties, both before and since my primary judgment – I find no reason whatsoever to alter my earlier judgment in any respect. 7. However, no agreement, or only partial agreement, has been reached on SMO, and a further hearing was held on 19 October 2017 to deal with outstanding issues, so that these proceedings can be finalised before (1) this Court deals with other similar proceedings involving the same issue, and (2) the Respondent Councils pursue a planned appeal to the Court of Appeal against my primary decision. 8. On 19 and 20 December 2017, while this judgment was reserved, the parties lodged supplementary written submissions. 9. The three outstanding issues listed for consideration on 19 October 2017 were – a possible stay of the proceedings pending the planned appeal; costs; and the Applicants' claim for interest. A stay? 1. On the question of a "stay", the Applicants agreed with North Sydney Council ("North") on the form of personal undertaking to be given to the Court by Mr Harry Triguboff AO, the Managing Director of the "Meriton" group of companies, which includes the Applicant Karimbla Companies (Exhibit N1), to the following effect: 1. To repay to North Sydney Council all sums (including any interest and costs) paid pursuant to orders made in proceedings no. 2016/301331 within twenty-eight (28) days of a written request to do so, in the event the said orders are set aside; and 2. To repay to North Sydney Council such sums paid pursuant to orders made in proceedings no. 2016/301331 within twenty-eight (28) days of a written request to do so, to the extent the said orders are varied so as to not require the sums to be paid. 1. As counsel for both City of Sydney Council ("Sydney") and Bayside City Council ("Bayside") – now Mr Ian Hemmings SC, replacing Mr Philip Clay SC – indicated that undertakings in those terms would be acceptable also to his clients (see Tp8, LL15 – 20), there remains no need for me to decide any "stay" question. 2. Undertakings were subsequently filed in the Court on 21 November 2017. Costs of the proceedings? 1. North also indicated its acceptance of a liability to pay the Applicants' costs on the ordinary (and not an indemnity) basis, but Sydney and Bayside resisted any costs order being made against them. 2. The Applicants did not press at the hearing any claim for indemnity costs, but seek orders for their costs in each matter, on a party-party basis, as agreed or assessed. Interest? 1. The other remaining issue for the Court to finalise concerns the Applicants' claim for interest on any repayment to them of monies paid to Councils on account of rates levied on a basis upset by my findings. 2. All three Councils argued that they have no obligation to pay interest, and that was the issue addressed by the supplementary written submissions. Relevant Provisions 1. In my earlier judgment I set out the statutory provisions primarily relevant to the issues that were there decided, namely the Local Government Act 1993 ("LG Act"), the Recovery of Imposts Act 1963, and the Land and Environment Court Act 1979 ("Court Act"). They need not be repeated here. 2. On the issues remaining in contention – namely costs, and interest – the crucial provisions are, respectively, Rule 3.7 of this Court's Rules, and s 100 of the Civil Procedure Act 2005 ("CP Act"). 3. Rule 3.7 (my emphasis) provides: 3.7 Costs in certain proceedings (cf Land and Environment Court Rules 1996, Part 16, rule 4) (1) This rule applies to the following proceedings: … (c) the following proceedings in Class 3 of the Court's jurisdiction: … (iv) appeals and applications under section 526 (including section 526 as applied by section 531) or 574 of the Local Government Act 1993, … (2) 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. (3) Circumstances in which the Court might consider the making of a costs order to be fair and reasonable include (without limitation) the following: (a) that the proceedings involve, as a central issue, a question of law, a question of fact or a question of mixed fact and law, and the determination of such question: (i) in one way was, or was potentially, determinative of the proceedings, and (ii) was preliminary to, or otherwise has not involved, an evaluation of the merits of any application the subject of the proceedings, (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, or (ii) that are necessary to enable a consent authority to gain a proper understanding of, and give proper consideration to, the application, (c) that a party has acted unreasonably in circumstances leading up to the commencement of the proceedings, (d) that a party has acted unreasonably in the conduct of the proceedings, (e) that a party has commenced or defended the proceedings for an improper purpose, (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. 1. In Statewide Developments Pty Limited v Minister for Infrastructure and Planning (2005) 142 LGERA 154; [2005] NSWLEC 353, Lloyd J pointed out, in a Class 1 context, at [4], (emphasis mine): The language of [the then Court rule, Part 16 Rule 4(2)] maintains the general presumption that there will not ordinarily be any order for costs in proceedings to which the rule applies, unless in the particular case there is some circumstance that would make it fair and reasonable that there should be an order for costs. In other words, costs will not be ordered in proceedings to which the rule applies unless in the particular case it is fair and reasonable to depart from the underlying presumption. 1. Section 100 of the CP Act provides for discretionary interest (again my emphasis): (1) In proceedings for the recovery of money (including any debt or damages or the value of any goods), the court may include interest in the amount for which judgment is given, the interest to be calculated at such rate as the court thinks fit: (a) on the whole or any part of the money, and (b) for the whole or any part of the period from the time the cause of action arose until the time the judgment takes effect. (2) In proceedings for the recovery of a debt or damages in which payment of the whole or a part of the debt or damages has been made after the proceedings commenced but before, or without, judgment being given, the court may include interest in the amount for which judgment is given, the interest to be calculated at such rate as the court thinks fit: (a) on the whole or any part of the money paid, and (b) for the whole or any part of the period from the time the cause of action arose until the time the money was paid. (3) This section: (a) does not authorise the giving of interest on any interest awarded under this section, and (b) does not authorise the giving of interest on a debt in respect of any period for which interest is payable as of right, whether by virtue of an agreement or otherwise, and (c) does not authorise the giving of interest in any proceedings for the recovery of money in which the amount claimed is less than such amount as may be prescribed by the uniform rules, and (d) does not affect the damages recoverable for the dishonour of a bill of exchange. ... Costs 1. Among the findings or comments in my original judgment, with which senior counsel for Bayside and Sydney Councils, Mr Hemmings SC, sought to take issue, was paragraph [131]: As my conclusion is that the applicants have been entirely successful in their arguments, it is appropriate that those negotiations also address the as-yet un-argued issue of costs. 1. Mr Hemmings submitted that the Applicants' success in the proceedings was, as yet, unable to be determined, as some matters in the proceedings had not yet been resolved (Tp15, L44 – p16, L5). He highlighted that there has been no criticism of the conduct of the Councils. The fact that the Applicants "won" is not part of the relevant consideration for the determination of the cost question (Tp16, LL22 – 25). His clients were successful in relation to the date question, but were unsuccessful in relation to the category question (Tp16, LL40 – 41). Since my earlier judgment involved evaluation of "merits", the Applicants cannot rely on Rule 3.7. 2. On the "vacancy" issue, Mr Hemmings argued that, in my accepting the judgment of Moore SC (as His Honour then was) in Ulan Coal Mines Pty Limited v Mid-Western Regional Council ([2013] NSWLEC 1167), and finding that the correct date, at which a relevant site was to be determined as "vacant" for the purposes of the declaration sought, was the date that work commenced, or the "implementing date" (Tp3, L40), the Applicants were, therefore, unsuccessful in relation to that issue. 3. However, relevant dates were in fact agreed at the principal hearing, on the basis of when tenants left buildings, not when buildings were removed from the site. 4. I accept the Applicants' submission (written subs 14 September 2017, pars 11 and 12) that (1) Rule 3.7(3)(a)(i) is engaged, that (2) it is, therefore, "fair and reasonable" to award costs in their favour, and that (3) there was no "disentitling conduct" on their part. As noted in their submissions: 11. ... The Applicants went to considerable effort and expense before and during the proceedings of establishing the factual basis for the declarations sought, and it was not until the hearing in March 2017 that the Respondents finally agreed on certain facts allowing the Court to focus on the central issue. At no time did the Applicant's (sic) case change in any material way, nor did the Applicants conduct the appeals in an unreasonable manner. 12. In relation to the other ancillary matters raised by the Respondents in their defences (viz the application of the Recovery of Imposts Act 1963, the question of the power to order repayment and the question of discretion), the Court found wholly in favour of the Applicants (it is noted, however, that the City of Sydney Council and Bayside Council did not call into question the power of the Court to order repayment). ... 1. Rule 3.7 embodies a presumption against costs orders in Class 3 cases, but the Court retains a discretion to find that presumption rebutted in appropriate cases: see discussions by, e.g., Pepper J in Maygood Australia Pty Ltd v Willoughby City Council [2013] NSWLEC 142, Biscoe J in Arden Anglican School v Hornsby Shire Council (2008) 158 LGERA 224; [2008] NSWLEC 103, and the Court of Appeal in Port Stephens Council v Sansom [2007] NSWCA 299. 2. I accept that the Applicants made genuine attempts to resolve the proceedings, but, when they went to hearing, they succeeded on the central legal issue. 3. I have concluded that, despite the Calderbank tenor of some of the parties' negotiations, there should be an order in favour of the Applicants for their party/party costs, to be agreed or assessed, up until 26 June 2017: see Craig J in Pyntoe Pty Ltd v Valuer-General of NSW (No 2) [2012] NSWLEC 231, at [46] – [54]. 4. Indications to the contrary in the decision in Barich v Parramatta City Council ("Barich") [2015] NSWLEC 98 (Sydney's written subs, par 13), do not affect my view. That decision did not involve any challenge to existing law, but rather to findings of fact, and a factual determination made by a Commissioner (Tp12, LL39 – 50). 5. In the present case, even Mr Hemmings acknowledged (Tp19, L4) that the facts were agreed, and that the central issue before the Court at the first hearing was the legal question of the correctness of Parramatta. As Mr McEwen submitted (reply subs 20), that issue was determinative of the proceedings. Interest 1. The arguments in the written and oral submissions at the October hearing were founded on the concept of "cause of action", as used in s 100(1)(b) and (2)(b). 2. In Letang v Cooper [1965] 1 QB 232, at 242-3, Lord Diplock defined a "cause of action" as "simply a factual situation the existence of which entitles one person to obtain from the Court a remedy against another person". 3. In Do Carmo v Ford Excavations Pty Ltd (1984) 154 CLR 234, Wilson J defined the term as "simply the fact or combination of facts which gives rise to a right to sue". 4. The Applicants submitted (1) that these proceedings are for the recovery of money, so enlivening s 100(1) of the CP Act, (2) that the cause of action under s 100(1)(b) arose when the change of use of the subject land to residential accommodation occurred, and (3) that, since a refund was "ordered" in the Principal Judgment, the requirements of s 100 are met, i.e. the proceedings are for the recovery of money. Once proceedings are commenced, interest is a matter for the CP Act, and not the LG Act. 5. Bayside and Sydney submitted that, until further orders against them are made, there is no requirement for "adjustment" of rates, and that such a requirement will arise only from the date on which the Court makes or orders an adjustment under s 527 of the LG Act. As those Councils have agreed to pay the Applicants any refund consequential upon such orders to do so, there can be no breach, and no reasonable anticipation of a breach, of the LG Act, such as to enliven s 674 of the LG Act. As the LG Act scheme does not contemplate any repayment of rates, there has been no breach in any event, and so no cause of action. A s 526 challenge is not an action for the "recovery of money". A "cause of action" for the "recovery of money" does not arise until the judgment is given, and the LG Act does not provide for the payment of interest. Section 100 cannot permit a result that is different from the result otherwise anticipated by the LG Act itself. 6. Mr Hale (for North) contended, in addition, that s 526 proceedings are a merits appeal, rather than an action for the recovery of money. There can be no overpayment until an adjustment is ordered, requiring a refund. Only then could it be argued that interest is payable. In any event, the proceedings are administrative and not judicial. 7. Judgment was reserved on those issues on 19 October 2017. 8. No party nor the court noted at that hearing the decision of the learned Chief Judge of this Court in Wilpinjong Coal Pty Limited v Mid-Western Regional Council; Ulan Coal Mines Limited v Mid-Western Regional Council ("Wilpinjong ") [2012] NSWLEC 277. 9. On 11 December 2017, the Court received, by email from the Applicants, a "joint communication from all parties", drawing my attention to Wilpinjong, which, it was said, "potentially affects the submissions made by the parties in relation to the Applicants' claim for interest under s100 ...", and seeking the opportunity to make further "short submissions", putting each party's position regarding that case. 10. North made a written submission on 19 December 2017, and, on 20 December 2017, I received a joint submission from Karimbla, Bayside and Sydney. 11. Section 100 presupposes a judgment for money, on the basis of a "cause of action" successfully pursued. 12. The Applicants argued before me, at the October hearing, that, even though the present proceedings sought a declaration, they are properly to be regarded as an action for recovery of money, which action required a declaratory intervention by the Court to correct the rating category applied (Tp13, L27 – p14, L22). Overpayment is established when the category is changed, and the obligation to refund arises, and interest is an "ordinary incident" of that obligation (Tp15, LL5 – 32). 13. In Bloch v Bloch (1981) 180 CLR 390, at 398, Wilson J (with whom the rest of the High Court agreed) rejected a contention in a trust case that, as the action sought a declaration, it could not be for recovery of money, and so not permit of an order for interest. The reasoning, however, was very sparse. 14. Wilpinjong addressed, squarely, the true nature of proceedings brought under s 526 of the LG Act. 15. Two mining companies sought to bring a large number of s 526 appeals in the same proceedings, pursuant to Uniform Civil Procedure Rules 2005 Rule 6.18. That can in some circumstances be accomplished by simple application of the rule, and others (such as that case) require the grant of leave. 16. A threshold question for Preston Ch J was ([7]) "whether an appeal under s 526 ... is a 'cause of action'". 17. His Honour said (in [8] and [9]): 8 An appeal under 526 is an appeal against an administrative decision, being the declaration of the relevant council under s 525 of the Local Government Act. The nature of the appeal is what is termed a merits review of the council's declaration. The court hearing the appeal has all of the functions of the council whose decision is the subject of the appeal and undertakes a re-hearing of the matter. The evidence on the appeal may be different to the evidence that was before the council when it made its original determination under s 525. The role of the court in determining such an appeal is to determine what is the correct or preferable decision based on the facts and law that apply at the time of determining the appeal. Such an appeal does not involve a claim by a plaintiff that any right of the plaintiff has been infringed by the defendant. The mining companies, being the rateable persons who made the application under s 525 of the Local Government Act for a change in the category of the rateable land, have no substantive right, including that their nominated category be upheld as the appropriate category. As I have said, there is no liability on the Council either. 9 The concept of a cause of action is different to the procedural right that a rateable person has to appeal to the Land and Environment Court under s 526 of the Local Government Act. Justice Brennan in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 610-611 discusses the imprecise meanings of the term 'cause of action'. Although various, they have at their heart a right which is infringed and the bringing of the proceedings is to uphold that right and remedy the infringement. However, as I have said, an appeal under s 526 does not involve the upholding of any independent right or a claim that a right has been infringed and seeking a remedy for that infringement. The only right is a procedural right and that is to lodge an appeal against the declaration under s 525 and ask for the Court to determine the correct category on the merits review appeal. 1. His Honour held that Rule 6.18 was not available to the companies, because s 526 does not involve a "cause of action". That conclusion is the ratio of his Honour's decision, not merely obiter. 2. The Applicants sought to contend before me that His Honour's decision simply means that s 100(1)(b) is not engaged in the present case, but s 100(1)(a) still allows their interest claim to be made. 3. Their submission pays no regard to the use of the word "and" between pars (a) and (b) of s 100(1). 4. I accept the Councils' submissions that His Honour's decision is fatal to the present Applicants' claim for interest. Section 100 is not enlivened. Conclusion 1. The Applicants are entitled to their costs of the proceedings, as specified in [29] above, but not to interest, and the parties should now formulate the SMO sought by the Court in the primary judgment. 2. Those SMO should address also the question of all parties' costs of the 19 October 2017 hearing. North did not contest the issue of costs, and Bayside and Sydney were unsuccessful in their argument against costs. All three Councils were successful on the issue of interest. 3. In those circumstances, I consider that each party should pay its own costs of the 19th October hearing: see Lloyd J in Macdonald v Mosman Municipal Council (No 2) (2000) 107 LGERA 211; [2000] NSWLEC 67, at [15] – [18]. Orders 1. The parties are ordered to submit, within 21 days, agreed Short Minutes of Order to reflect the Court's decisions in Judgment [2017] NSWLEC 75, and in this judgment, for final orders to be made in chambers. 2. All exhibits may now be returned, except for the submissions contained at tabs 64, 65 and 66 of Exhibit A6, and tabs 12, 13 and 14 of Exhibit A2. ********** 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: 29 January 2018