Land and Environment Court New South Wales Medium Neutral Citation: Wollongong City Council v Phillips [2019] NSWLEC 64 Hearing dates: 17 June 2019 Date of orders: 20 June 2019 Decision date: 20 June 2019 Jurisdiction: Class 4 Before: Moore J Decision: (1) Pursuant to s 98(4)(c) of the Civil Procedure Act 2005, the Respondents are jointly and severally liable to pay to the Council the costs of these proceedings (including the costs of the costs hearing) in the gross sum of $6,000; and (2) The exhibits are returned. Catchwords: COSTS - Class 4 proceedings - consent orders - outcome achieved by the Applicant by the consent orders substantially in accordance with that sought in the initiating Summons - costs follow the event absent disentitling conduct - no disentitling conduct - costs order appropriate - consideration of whether gross sum order appropriate - gross sum order appropriate - costs ordered in gross sum of $6,000. Legislation Cited: Civil Procedure Act 2005, s 98 Uniform Civil Procedure Rules 2005, Pt 40 r 42.1 Cases Cited: Grant v Kiama Municipal Council [2006] NSWLEC 70 Latoudis v Casey (1990) 170 CLR 534 Sze Tu v Lowe (No 2) [2015] NSWCA 91 Category: Costs Parties: Wollongong City Council (Applicant) Vanessa Phillips (First Respondent) Matthew Bailey (Second Respondent) Representation: Solicitors: Wollongong City Council (Applicant) Ms V Bailey (In person) Mr M Bailey (In person) File Number(s): 366176 of 20180 Publication restriction: No TABLE OF CONTENTS Introduction No indemnity costs application is made by the Council Representation of the costs hearing Evidence at the costs hearing The relevant statutory provisions The factual history The Council's submissions on costs The Respondents' submissions on costs Consideration A gross sum costs order? Orders JUDGMENT Introduction 1. On 28 November 2018, Wollongong City Council (the Council) commenced Class 4 civil enforcement proceedings against Ms Phillips and Mr Bailey (collectively, the Respondents) concerning development activities which had been undertaken at a residential property they own in Woonona, a Wollongong suburb. The Summons commencing the Class 4 proceedings contained the following operative prayers for relief: 1 An order that the Respondents, by themselves, their servants or agents, return that portion of the Subject Property marked "Rear Setback" on the Drawing to the levels shown on the Drawing within 30 days from the date of these orders, or such other time as the Court may allow. 2 The works the subject of order 1 above are to be confirmed by survey prepared by a registered surveyor, with such a survey to be provided by the Respondents, or on their behalf, to Council within 21 days following the return of the levels to that shown on the Drawing. 3 An order that the Respondents, by themselves, their servants or agents, demolish and remove that portion of the timber deck located around or adjacent to the swimming pool on the Subject Property that lies within 900mm from the boundary of the Subject Property with neighbouring properties, with such demolition and removal to be completed within 30 days from the date of these orders, or such other time as the Court may allow. 4 In the alternative to orders 1, 2 and 3 above, an order that the Respondents comply with the Council Orders, or cause the Council Orders to be complied with, within 30 days of the date of the Court's order, or such other time as the Court may allow. 1. The first return date for the Summons was on 15 February 2019. 2. Following that, there were two further procedural attendances. 3. On 31 May 2019, Mr Jeffrey Reilly, a solicitor employed by the Council, and the Respondents, personally, appeared before me as the List Judge. On that occasion, Consent Orders were handed up disposing of the substantive matters that had been pressed by the Council in its Summons. Those orders were in the following terms: 1 The Respondents, by themselves, their servants or agents, return that portion of the Subject Property shown hatched on the Site Plan to the levels shown in black on that Site Plan within 90 days of the date of these orders. 2 The works the subject of order 1 above are to be confirmed by survey prepared by a registered surveyor, with such a survey to be provided by the Respondents, or on their behalf, to Council within 21 days following the return of the levels to those shown in black on the Site Plan. 3 Within 90 days of these orders, the Respondents, by themselves, their servants or agents, must install and maintain a planter box at the northern end of the timber deck that surrounds the pool at the Subject Property. The outer northern edge of the planter box is to be at least a metre from the northern boundary of the Subject Property, and extend across the timber deck so as to prevent access past the plant box to the northern edge of the deck. The planter box must at all times be located outside the non-climb zone identified at clause 2.2.4 of Australian Standard 1926.1-2012. 1. However, the Respondents opposed any order being made which would require them to make any payment to the Council for its costs incurred in these proceedings. As a consequence, it was necessary for me to refer the matter to the Registrar to obtain a date for a costs hearing before a Judge or the Registrar (with a hearing estimate of half a day). The costs hearing was set down for Monday 17 June 2019 and the Chief Judge assigned the matter to me for determination. No indemnity costs application is made by the Council 1. I enquired of Mr Reilly as to whether the Council was seeking to have any of its costs paid on the indemnity basis rather than on an "as agreed or assessed" basis. He took me to a letter of 3 June 2019 in Exhibit A, Tab 30 which set out an offer from the Council as to the basis upon which the Council was prepared to settle any costs consequences potentially arising from the settlement of the substantive matters with which the Class 4 proceedings were engaged. 2. In response to my specific question about indemnity costs, Mr Reilly indicated that the Council was not seeking to have any of its costs ordered to be paid on that basis. 3. As a consequence, it is unnecessary that I pay any further heed to the Council's letter of 3 June 2019 or as to whether it could potentially satisfy any of the necessary tests to found an indemnity costs order. Representation of the costs hearing 1. The Council was represented at the costs hearing by Mr Reilly, whilst the Respondents appeared in person. Evidence at the costs hearing 1. Three affidavits were read on behalf the Council. These comprised primary affidavits from: * Mr Reilly; and * Mr David Day, the Council's Environment & Development Compliance Manager. 1. The Council also read an affidavit in reply from Mr Reilly. A substantial folder of documentary material was exhibited to Mr Reilly's primary affidavit and this material was admitted, without objection, becoming Exhibit A on the costs' motion. 2. The Respondents did not object to any of the Council's affidavits and neither of the deponents was required for cross-examination. 3. The Respondents relied on two affidavits, being one affidavit deposed to by each of them. Each of the Respondents' affidavits had a variety of documents and photographs exhibited to them. 4. Each of the Respondents' affidavits was also read without objection and the various documents and photographs exhibited to each of them were admitted without objection by the Council. Although the Respondents' affidavits and their exhibited material were all in a common folder, the material exhibited to Ms Phillips' affidavit became Exhibit 1, whilst that exhibited to Mr Bailey's affidavit became Exhibit 2. 5. Neither of the Respondents was required for cross-examination. The relevant statutory provisions 1. Two statutory elements require to be considered in these proceedings. The first of them comprises the terms of s 98 of the Civil Procedure Act 2005 (the Civil Procedure Act). This provision, relevantly, is in the following terms: 98 Courts powers as to costs (1) Subject to rules of court and to this or any other Act: (a) costs are in the discretion of the court, and (b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and (c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis. (2) … (3) … (4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to: (a) …, or (b) …, or (c) a specified gross sum instead of assessed costs, or (d) ... (5) … (6) … 1. There are two elements of this statutory provision to which it is appropriate to draw attention. The first is that there is a broad general costs' discretion in the Court in proceedings such as these conducted in Class 4 of the Court's jurisdiction. The second is that there is, in s 98(4)(c), a specific discretion to make a "gross sum" costs order. This provision specifically means that I am able to make a costs order that nominates the amount that is to be paid if I conclude that a costs order in favour of the Council should be made and that the basis of that costs order would otherwise be on an "as agreed or assessed" basis rather than on the indemnity costs basis. 2. The second relevant provision is contained in Pt 40 r 42.1 of the Uniform Civil Procedure Rules 2005 (the UCPR). This provision is in the following terms: 42.1 General rule that costs follow the event Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs. 1. The presumption that costs will follow the event merely reflects the seminal decision of the High Court in Latoudis v Casey (1990) 170 CLR 534. 2. It will be necessary, later, to examine what is to be regarded as "the event" for the purposes of these proceedings. The factual history 1. On 18 May 2015, the Respondents were granted development consent by the Council for the erection of a new dwelling on the site. The conditions attaching to that development consent included two that have provided the foundation for the matters that have brought the Respondents and the Council into dispute since that time. The first of these conditions, condition 5, prohibited the placing of any fill on the site other than that which was necessary for the creation of a pad upon which the dwelling and its access were to be constructed. This condition was imposed as a consequence of the fact that the site is in a floodplain. 2. The second condition, condition 33, related to prohibiting any adverse effect on stormwater drainage from other properties. 3. The Respondents did not appoint the Council as the Principal Certifying Authority (PCA) for the construction of the new dwelling. A private certifier was appointed for this purpose. 4. Construction activities subsequently began on the site pursuant to the consent. 5. On 2 May 2016, the appointed PCA advised the Council that he had issued a Notice of Intention to Issue an Order to the Respondents. The basis of the proposed order was that, contrary to the first of the conditions noted above, the Respondents had imported fill to the backyard - raising its level. 6. As a consequence of this notification, the Council inspected the site on 14 July 2016 and, subsequently, issued the Respondents with three Orders requiring them to undertake various remedial activities on the site, including the removal of the fill placed in the rear yard of the site in breach of the first of the above-noted conditions. The Respondents did not comply with these orders. The Council issued Penalty Infringement Notices (PINs) to each Respondent for the failure to comply with the requirements set out in the notices. 7. The Respondents elected to challenge the penalties imposed by the PINs, but were unsuccessful in the Local Court where they were fined. This occurred on 14 June 2018. 8. It is to be noted that, during the period whilst these matters were in dispute, the Respondents made, on their account, more than a dozen requests to the Council to inspect the site and advise them as to what, specifically, the Council required them to do to rectify the matters of concern to the Council. It was their evidence that each of these requests was met with the response that it was a matter for their appointed PCA, and not for the Council, to undertake such inspections. 9. In December 2017, the PCA issued a Final Occupation Certificate, certifying that the development had been completed in a fashion compliant with the terms of the development consent and its conditions (issued by the Council on 18 May 2015 as earlier noted). Despite that certificate, the requirements of the notices remained unsatisfied. It is to be observed that the PCA has not been made a respondent to these proceedings. 10. During the period after the issuing of the Final Occupation Certificate, there remained contact between the Council and the Respondents concerning what the Council regarded as the unsatisfied requirements of the Orders. 11. On 2 August 2018, Mr Reilly wrote to the Respondents and advised them that continued failure to satisfy Council as to outstanding matters arising from the Orders would lead to the Council commencing Class 4 proceedings against them. 12. On 28 November 2018, as consequence of the Council remaining of the view that the notice requirements had not been satisfied, these proceedings were commenced. The substantive matters pressed by the Council in the Summons have earlier been set out, as have the terms of the Consent Orders made by me as the List Judge on 31 May. 13. It is to be recorded that the Respondents have accepted that, as at the commencement of the proceedings, works remained required to be carried out at their property for their residential development to be compliant with the terms of the development consent and for satisfaction of the Council's orders. That proposition, in addition to being acknowledged during the course of the hearing before me, is a necessarily inherent conclusion to be drawn from the fact that the Consent Orders of 31 May require works to be undertaken by the Respondents - including, of particular note, removal of fill from identified portions of the rear yard of the property. The Council's submissions on costs 1. In his opening submissions, Mr Reilly put that, although the consent orders of 31 May were not in precisely the same terms as the prayers for relief contained in the Summons initiating these Class 4 proceedings, nonetheless the functional outcome was that the Council had had success in requiring the Respondents to achieve compliance, to the Council's satisfaction, with the outstanding matters in dispute. 2. This, he submitted, constituted "the event" for the purposes of costs triggering pursuant to r 42.1 of the UCPR. 3. He drew my attention to the relevant portion of Sze Tu v Lowe (No 2) [2015] NSWCA 91 (Sze Tu)), where Gleeson JA (Meagher and Barrett JJA concurring) wrote, at [37] and [38]: Costs are not awarded by way of punishment of the unsuccessful party but, rather, "are compensatory in the sense that they are awarded to indemnify to successful party against the expense to which he or she has been put by reason of the legal proceedings": (citations omitted). It follows that the inquiry as to what costs order should be made is primarily directed to the position of the successful party: (citations omitted). The starting position is s 98 of the Civil Procedure Act 2005 (NSW) which provides that, subject to the rules of court, costs are in the discretion of the Court including by whom, to whom and to what extent costs are to be paid. Reference should also be made to r 42.1, Uniform Civil Procedure Rules 2005 (NSW) (UCPR), which provides that if the Court makes any order as to costs, it should be in terms that costs follow the event unless it appears to the Court that some other order should be made as to the whole or part of the costs. 1. Although the decision of Preston CJ in Grant v Kiama Municipal Council [2006] NSWLEC 70 (Grant v Kiama) concerned costs in Class 1 proceedings, Mr Reilly submitted that none of the potentially disentitling factors discussed in that decision were here applicable. He submitted that, as a consequence, there was nothing to displace the presumption that the Council was entitled to a costs order in its favour in these proceedings. 2. On this basis, Mr Reilly submitted that the Council was entitled to a costs order on the ordinary basis (this being on an "as agreed or assessed" basis). The Respondents' submissions on costs 1. In effect, the position advanced by the Respondents in their affidavit evidence, the documents contained in Exhibit 1 and Exhibit 2 and the oral submissions that each of them made to me was that they considered that the Council had had a responsibility to take a more active role and advise them as to what works were required (and why) in order to satisfy the Council about the appropriateness of their development. They considered that the deferring of the matter for them to discuss with their PCA had been unfair. 2. They had considered that the importation of some 20 centimetres of topsoil for the laying of turf in the rear yard was a permissible activity and did not constitute a breach of condition 5. They had considered that the approved plans permitted the removal of the (redundant) drain in the rear yard as the neighbour had now drained stormwater to the street. 3. In essence, however, although not put in terms citing the Chief Judge's decision in Grant v Kiama, the essence of the position advanced by both the Respondents was that the unfairness of the Council's conduct was disentitling and that no costs order should be made against them. Consideration 1. It is not the purpose of these costs proceedings to relitigate matters which led to the Respondents' convictions in the Local Court for failing to comply with the remedial Orders issued by the Council. 2. It is, contrary to the position adopted by the Respondents, sufficient to observe that the Consent Orders entered into on 31 May substantially reflect the prayers for relief which were sought by the Council in the Summons commencing these proceedings. 3. Whatever might have been the appropriateness or otherwise of the interaction between the Council and the Respondents leading up to the commencement of these proceedings, it is nonetheless the position that, as at the date of filing the Summons (28 November 2018), there remained works required to be undertaken on the site in order to satisfy outstanding matters from the Orders which had led to the Local Court proceedings. The Respondents, by entering into the consent orders, acknowledged that there were aspects of the development on their property that required works to be undertaken. This was confirmed during the costs hearing before me. 4. The fact that the outcome of the substantive elements of the proceedings was that the Respondents agreed to court orders mandating the matters to be undertaken to satisfy those orders demonstrates that "the event" as the outcome of the proceedings is essentially that sought by the Council. It also acknowledges the appropriateness of that outcome being effected in a fashion whereby any failure by the Respondents to satisfy the requirements of the Court's orders could have serious punishment consequences for the Respondents if the Council subsequently considered it necessary to take contempt proceedings if the Respondents were not compliant with the requirements of the orders. 5. In Sze Tu, Gleeson JA (Meagher and Barrett JJA concurring) also wrote, at [39]: How "the event" should be defined will depend upon the nature of the litigation. Generally the "event" refers to the event of the claim and may be understood as referring to the practical result of a particular claim. 1. The matters sought in the Summons were, functionally, reflected in the Consent Orders of 31 May. This means that, for relevant assessment of outcomes, the "event" is that the Council has succeeded in these proceedings. 2. The sequence of commencement of proceedings at a time of outstanding compliance matters, followed by settlement of the substantive issues on terms generally consistent with the relief sought in the Summons, provides a compelling basis (in the absence of any disentitling conduct by the Council during the course of the proceedings) why this hearing must, inevitably, lead to the Council succeeding in its costs application. 3. It is to be observed that, on my examination of the entirety of the documentary material contained in Exhibits A, 1 and 2, there is no basis upon which I could conclude that there had been any inappropriate conduct by the Council, in any respect, prior to the commencement of the proceedings. 4. It is fair to observe that it has been the reluctance of the Respondents to accept the legal and practical realities of the circumstances which have arisen from, initially, their breaching of the terms of the conditions of their development consent and, subsequently, their failure to carry out the requirements mandated by the Orders served on them by the Council that brings them to the present position. Indeed, although they entered into Consent Orders on 31 May (with both of them being in court at the time the orders were made), it seems to me during the course of these costs proceedings that they remained of the view that these proceedings, and the necessity for those orders, were still founded on unfairness by the Council. 5. Although my examination of all of the factual material inexorably leads to the conclusion that they are the architects of their own misfortune, the costs order I make in these proceedings is not a punitive one; it is one which merely partially compensates the Council for the actual costs it has incurred in these proceedings. Punishment was the function performed by the Magistrate in the Local Court proceedings. 6. I have earlier set out authority for the longstanding proposition that costs, if ordered, are compensatory for the successful party of the expenses necessarily incurred in commencing proceedings and are, expressly, not to be regarded as punishment for the unsuccessful party. That is the position that is here applicable and is the reason why I have concluded that it is appropriate that a costs order be made, jointly and severally, against them. A gross sum costs order? 1. I have earlier set out the terms of s 98(4)(c) of the Civil Procedure Act, being the provision that permits me to make a "gross sum" costs order if I was to conclude that this was the appropriate course to be followed. I indicated to Mr Reilly that I considered it appropriate that he address me on whether that might be appropriate and, if so, on what basis should such an order be made. 2. I explained to the Respondents the concept of a gross sum costs order and that, if such an order was to be made, it would generally be expected to be made within a percentage range applied to, and less than, the costs actually incurred. I indicated that, if I was minded to make a costs order in favour of the Council and to do so on a gross sum basis, such an order would be somewhere in the range of 65% to 75% of the costs actually incurred by the Council (this being the accepted process for addressing the likely outcomes of a formal costs assessment process if an "as agreed or assessed" costs order was made and agreement was not able to be reached between the parties as to the quantum of costs appropriate to resolve such costs' outcome. 3. Mr Reilly initially advised me that the Council's costs up to but not including costs incurred in preparation for, and his carriage of, the costs hearing were $7,900. He informed me that, inclusive of preparation for and conduct of the costs hearing, the Council's costs would be $8,900. 4. He indicated to me that, if I was minded to make a gross sum costs order, the Council accepted that such an order in the amount of $6,000 would be appropriate. 5. I am satisfied that it is appropriate to finalise these proceedings by making a gross sum costs order pursuant to s 98(4)(c) of the Civil Procedure Act. Given that Mr Reilly has indicated that, if I was minded to do so, the Council would be content with an order in the sum of $6,000 (being a little more than 67% of the costs incurred by the Council up to and including these costs proceedings; I am satisfied that it is appropriate to make an order in that amount, as it is well towards the bottom end of the "rule of thumb" range within which the discounting of actual costs incurred to reflect a likely "as agreed or assessed" outcome would fall. 6. Finally, I observe that the Council made no submission that I should nominate any time period within which the Respondents should make payment in satisfaction of this costs order. As a consequence, the timing for payment to the Council, and any instalment arrangements which the Respondents might seek, are entirely a matter between them and the Council. Orders 1. It follows that, for the reasons I have earlier set out, the order of the Court is that: 1. Pursuant to s 98(4)(c) of the Civil Procedure Act 2005, the Respondents are jointly and severally liable to pay to the Council the costs of these proceedings (including the costs of the costs hearing) in the gross sum of $6,000; and 2. The exhibits 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. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 June 2019