2 Phillip Rise Pty Ltd v Kempsey Shire Council

Land and Environment Court (NSW)|2023-04-03|Before: Moore J

TABLE OF CONTENTS Introduction The stay application orders The Company's submissions on costs of the stay application The Council's submissions The Company's reply submissions Consideration Orders

Introduction

On 22 March 2023, I upheld an appeal by 2 Phillip Rise Pty Ltd (the Company) pursuant to s 56A of the Land and Environment Court Act 1979 (the Court Act) against the dismissal by Bradbury AC of the Company's appeal against the refusal of Kempsey Shire Council (the Council) to issue a construction certificate that would permit the Company to implement a development consent granted in 1993 for a development at South West Rocks. For the purposes of understanding the matters that are dealt with in this costs' application concerning a stay application initiated by the Council arising out of my principal decision, familiarity with my principal decision (2 Phillip Rise Pty Ltd v Kempsey Shire Council [2023] NSWLEC 28) is assumed.
On 29 March 2023, the Council's legal representatives sought that I stay implementation of the outcome of my principal decision in order to permit the Council to consider whether it wished to pursue an appeal to the Court of Appeal pursuant to s 57 of the Court Act. The detail of the processes which followed this approach seeking a short-term stay of my decision are outlined in the written submissions on the costs of the stay application that have been made on behalf the Company ‑ submissions which are reproduced, in full, below.

The stay application orders

On 3 April 2023, I made orders in agreed terms that enabled the issuing of the construction certificate sought by the Company, subject to an undertaking given on behalf the Company protecting various vegetated elements of the site pending consideration by the Council as to whether or not it wished to pursue an appeal against my principal decision. Had the Council elected to pursue such an appeal, the question of whether or not there should have been any extension of the stay granted by me until 19 April 2023 would have been a matter for the Court of Appeal rather than for further consideration in this court.
It is appropriate to set out the terms of the orders made by me on 3 April and of the undertaking given by the Company. The orders and the undertaking were in the following terms: The Court orders: 1. The appeal is allowed. 2. The application for Construction Certificate CFT-78801 is approved. 3. The Respondent is to use the NSW planning portal to issue a construction certificate to the Appellant in the form contained in 'Annexure A' to these orders within 24 hours. 4. The Respondent is to pay the Appellant's costs of this appeal as agreed or assessed, excluding the costs of the stay application which are reserved. 5. By 4pm on 12 May 2023, the parties are to electronically serve and provide to my Associate by email written submissions on costs of the stay application not exceeding two pages. 6. By 4pm on 19 May 2023, the parties are to electronically serve and provide to my Associate by email any written submissions in reply of no more than one page. 7. Liberty to restore on three days' notice on the question of costs of the stay application. The Court notes: 1. the Appellant, Mr Daniel Pszczonka, have given an undertaking to the Court that: a. notwithstanding orders (1) to (4), the Appellant will ensure that no clearing by its agents, servants or invitees of vegetation occurs pursuant to Construction Certificate CFT-78801 or development consent T4-91-195 on Lot 2 in DP 1091323 outside of the area marked with orange hatching on the plan attached and marked Annexure 'B'; b. until 19 April 2023, notwithstanding orders (1) to (4), the Appellant will ensure that no clearing by its agents, servants or invitees of vegetation occurs pursuant to Construction Certificate CFT-78801 or development consent T4- 91-195 on Lot 2 in DP 1091323 within the areas marked "RETAIN" and bound in red pen on the plan attached and marked Annexure 'C'.
As can be seen from orders 5 to 7, the costs of the stay application were reserved and a submissions' timetable set for addressing the costs of the stay application.
The Company subsequently submitted that the Council be required to pay its costs of the stay application.

The Company's submissions on costs of the stay application

On 12 May 2023, brief written submissions were filed on behalf of the Company in support of the proposal that the Council pay its costs of the stay proceedings. It is appropriate to reproduce, in full, the terms of the Company's submissions: INTRODUCTION 1 The Appellant submits the Court should exercise its discretion pursuant to s 98 of the Civil Procedure Act 2005 (NSW) and award the Appellant its full costs incurred on the Council's irregular application to stay the judgment pending the expiration of the appeal period. RELEVANT CHRONOLGY 2 On 22 March 2023, judgment was delivered in favour of the Appellant with a direction that the parties were to settle the terms of the orders to give effect to the outcome of the appeal. The matter was listed for further mention on 30 March 2023 if the parties were unable to agree on the form of final orders. 3 By letter dated 24 March 2023, the Appellant provided draft Short Minutes of Order to the Respondent pursuant to direction to settle the terms of the orders. By further letter dated 24 March 2023, the Respondent advised the Appellant it was considering its appeal options and requested the Appellant obtain instructions in relation to providing an undertaking. By letter dated 28 March 2023, the Appellant advised the Respondent it would not agree to such undertaking. 4 The Respondent did not provide any response to the draft Short Minutes of Order sent to the Respondent on 24 March 2023, until 2.36pm on 29 March 2023. In that response, the Respondent proposed alternative draft Short Minutes of Order including that the orders be stayed until 19 April 2023. An affidavit of Marlie Caban supporting the proposed orders was provided later that day at 4.48pm on 29 March 2023. 5 On 30 March 2023 at the mention of this matter, the matter was stood over to 3 April 2023 to enable the parties to agree the form of an undertaking. On 31 March 2023, the Appellant made an offer of an undertaking supported by an affidavit from Mr Karl Robertson dated 31 March 2023. That offer was rejected and the parties were forced to appear once again before the Court the following Monday 3 April 2023. The Respondent's only evidence supporting its contentions was an unsworn affidavit of Mr Adam Costenoble provided on Sunday 2 April 2023, the day before the 3 April 2023 mention. On 3 April 2023 at the further mention, an amended undertaking was discussed between the parties to settle the matter. The form of the undertaking was finalised and orders made on the afternoon of 3 April 2023 finalising the proceedings. 6 Based on a media release dated 6 April 2023, Council decided to not appeal the decision of Moore J in the s 56A appeal. SUBMISSIONS 7 Despite bearing the onus for demonstrating the proper basis for a stay of the orders of Moore J, the Respondent made no formal application by way of notice of motion and supporting affidavit as required by rules 18.2 and 18.2 of the UCPR. 8 No attempt was made by the Respondent at any stage to identify the alleged error in the judgment of Moore J, being a relevant consideration for the Court in exercising its discretion on granting a stay. 9 The Appellant was only made aware of the basis of its stay application at 4.48pm on 29 March 2023 when it received the affidavit filed by Ms Marlie Caban. Ultimately that affidavit was not admitted into evidence. Notwithstanding the delays and late provision of evidence from Ms Caban and Mr Costenoble, the Appellant acted in good faith in agreeing to an undertaking thereby avoiding costs of a further hearing. 10 In annexure B of the affidavit of Mr Karl Robertson, it was confirmed that areas the Respondent agreed to permanently protect at the edges of the site were areas that could not be cleared in any event as other constraints applied to that land. 11 In effect, all that was gained by the Respondent was the undertaking from the Appellant to not clear two areas marked "retain" in the centre of the site until 19 April 2023. 12 Yet despite the extensive costs incurred by the parties in resolving the matter, only three days later the Respondent advised the Appellant it would not file an appeal. This meant the undertaking no longer had any effect. 13 It is submitted that had Council acted promptly on whether it wished to appeal, the entire debate over whether the orders should be stayed and the form of an undertaking could have been avoided. 14 Furthermore, it is submitted that the Respondent's failure to comply with rule 18 of the UCPR, the failure to demonstrate any error in His Honour's judgment, the inadmissible evidence of Ms Caban, the late evidence of Mr Costenoble, and the ultimate futility of seeking an undertaking that lasted barely three days, warrant the making of an order of costs in favour of the Appellant.

The Council's submissions

On 12 May 2023, brief submissions were filed on behalf of the Council resisting the proposition that I order that the Council pay the Company's costs of the stay application. It is also appropriate to reproduce the terms of the Council's submissions in full: 1 On 3 April 2023, the Court made orders finalising this appeal under s 56A(2)(b) of the Land and Environment Court Act 1979 in the Appellant's favour, subject to reserving determination of what order should be made regarding costs of the Respondent's stay application. That application was rendered inutile by the following undertaking noted by the Court in making these final orders: "1. the Appellant, Mr Daniel Pszczonka, have given an undertaking to the Court that: a. notwithstanding orders (1) to (4), the Appellant will ensure that no clearing by its agents, servants or invitees of vegetation occurs pursuant to Construction Certificate CFT-78801 or development consent T4-91-195 on Lot 2 in DP1091323 outside of the area marked with orange hatching on the plan attached and marked Annexure "B"; b. until 19 April 2023, notwithstanding orders (1) to (4), the Appellant will ensure that no clearing by its agents, servants or invitees of vegetation occurs pursuant to Construction Certificate CFT-78801 or development consent T4- 91-195 on Lot 2 in DP1091323 within the areas marked "RETAIN" and bound in red pen on the plan attached and marked Annexure 'C'. 2 The Court has a broad discretion in making a costs order. That discretion must be exercised judicially having regard to the circumstances of the case: Civil Procedure Act 2005 (NSW), s98(1)(a); Oshlack v Richmond River Council (1998) 193 CLR 72 at [134]. 3 Despite the Court's broad discretion, the usual rule is that costs follow the event unless it appears that some other costs order should be made: UCPR, r42.1. Despite these 56A appeal proceedings being in Class 1 of the Court's jurisdiction, r 42.1 continues to apply,1 and rule 3.7 of the Land and Environment Court Rules 2007 does not.2 Generally, the "event" refers to the event of the claim and may be understood as referring to the practical result of a particular claim: Sze Tu v Lowe [2015] NSWCA 91 at [39]. 4 In the Affidavit of Marlie Jade Caban affirmed on 29 March 2023, to which no objection was taken other than to paragraph 8 which was not read, deposed the correspondence between the parties requesting whether the Appellant would provide instructions to provide an undertaking to not commence any work pending the appeal period expiring. The Solicitor for the Appellant responded that the Appellant did not agree to provide any undertaking or consent to a stay. 5 Ultimately, the undertaking that the Appellant did not agree to, was provided on terms requested by Council on 3 April 2023. The purpose of the undertaking was to prevent irreversible vegetation clearing from being carried out while the Respondent obtained senior counsel's advice on appeal prospects. 6 The conduct of the Appellant in refusing to provide the Undertaking and to ultimately provide the Undertaking resulted in additional and unnecessary costs. The fact that no appeal was commenced against the Court's decision is immaterial, given the limited purpose of the requested stay. 7 This ultimate, delayed capitulation by the Applicant on the narrow and patently reasonable application of the Respondent for a stay until 19 April was the relevant "event" which costs of this application should follow. If the Court were to find that there was no relevant "event", and without engaging in a hypothetical trial of the stay application,3 the Respondent was the clear "winner" in this respect and should be awarded its associated costs.4 8 For these reasons, the Appellant should pay the Respondent's costs of the stay proceedings (including the costs of this costs application).

The Company's reply submissions

On 19 May 2023, brief reply submissions to the propositions advanced on behalf the Council were filed on behalf of the Company. These reply submissions were: 1 Contrary to the Respondent's submissions, the Appellant acted at all times to avoid additional and unnecessary costs based on the information it had received relating to the Respondent's application. As evidenced in the correspondence attached to the affidavit of Nicholas Brunton dated 30 March 2023 and the Appellant's earlier submissions on costs, the Appellant was not notified of any relevant basis for the Respondent's stay application until 2 April 2023, the day before the second mention on the application. 2 As a result, the Appellant had no reason to agree to the initial undertaking or stay. As an act of good faith to assist the Court and avoid both parties incurring further costs, the Appellant offered an undertaking on 31 March 2023 which was rejected. It was in no way unreasonable for the Appellant to defend against a claim where the Respondent bears the onus and the Appellant was not made aware of any reason it should be deprived of its successful outcome by the granting of a stay. 3 The Respondent's focus on the "event" is irrelevant for the Court. The normal rule that costs follow the event does not ordinarily apply where compromise is reached, except where one party has effectively capitulated or one party has acted unreasonably in bringing or defending the proceedings: Re The Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 at 624. 4 The undertaking by agreement reached between the parties was in no way a capitulation by the Appellant who acted at all times to assist the Court, better understand the Respondent's application and reach a constructive solution that substantively addressed the Respondent's concerns based on the ecological evidence ‑ all in order to avoid a further contested hearing. The Respondent acted wholly unreasonably through its late filing of evidence and irregular and insufficiently detailed application, ultimately achieving nothing except the intended result of the judgment which was not appealed. 5 The Respondent's reference to a "winner" is also inappropriate in circumstances where the matter did not proceed to a contested hearing on the merits and so the court cannot be certain which party would have succeeded without undertaking the inappropriate exercise of a hypothetical trial: Ferguson v Hyndman [2006] NSWSC 538. 6 For these reasons, in exercising its discretion, the Court should order the Respondent to pay the Appellant's costs of the stay application proceedings.

Consideration

This costs application can be dealt with in comparatively short compass. Conventionally, in appeals pursuant to s 56A of the Court Act, costs "follow the event". In Sze Tu v Lowe (No 2) [2015] NSWCA 91, Gleeson JA (Meagher and Barrett JJA concurring) 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.
This proposition applies not only to the primary appeal proceedings, but also to any subsequent procedural matters requiring determination (as is here the position with respect to the Council's stay application). For present purposes, the "event" (and its determination) was the Council seeking the short‑term stay of the granting to the Company of the construction certificate (to which I had determined it was entitled), coupled with the Council's subsequent determination not to appeal against my principal decision. This, in effect, amounted to capitulation by the Council and acceptance of the outcome of my principal decision.
Although s 98(1) of the Civil Procedure Act 2005 does permit me to "otherwise order" in circumstances where costs would ordinarily follow the event but there is good reason to depart from that position, no such good reason here arises. Indeed, as can be seen from the factual outline contained in the primary costs' submissions on behalf of the Company, the Company was (albeit, perhaps, reluctantly) prepared to cooperate in providing the Council with an appropriate factual operational framework for the provision of a construction certificate in a fashion which would not compromise vegetation values which the Council was otherwise seeking to preserve.
Under these circumstances, it is only appropriate that the Council be ordered to pay the Company's costs of the stay application and of the preparation of the costs' submissions in support of this costs application.

Orders

It follows, from what is set out above, that the further orders of the Court are: 1. The Respondent is to pay the Applicant's costs of the Respondent's stay application as agreed or assessed; and 2. The Respondent is to pay the Applicant's costs of the costs' application as agreed or assessed.

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: 30 May 2023

At a glance

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Judgment (9 paragraphs)

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Legislation Cited (1)

Cases Cited (5)