Barry Edward and Thelma June Harrington v Greenwood Grove Estate Pty Ltd

Judgment 1This is my second judgment in these proceedings. In the Court's principal judgment ( Harrington v Greenwood Grove Estate Pty Ltd [2011] NSWSC 833) the Court declined to grant the relief that the plaintiffs sought. The plaintiffs' proceedings were for injunctive relief, to restrain the defendant from advancing a 2011 development application in respect of parts of the Greenwood Grove Estate at Lennox Head on the north coast of New South Wales. 2In the principal judgment the Court found that the Court's action in contract would have succeeded and the injunctions sought would have been granted in consequence, but for the operation of parts of State Environmental Planning Policy (Affordable Rental Housing) 2009 (NSW) (" SEPP (Affordable Rental Housing) 2009 ") and the Ballina Local Environmental Plan 1987 ("the Ballina LEP "): Harrington v Greenwood Grove Estate Pty Ltd [2011] NSWSC 833 at [99], [111] and [142]. But the Court also found that the plaintiffs' causes of action under Trade Practices Act 1974 and in estoppel would have failed apart from the operation of SEPP (Affordable Rental Housing) 2009: Harrington v Greenwood Grove Estate Pty Ltd [2011] NSWSC 833 at [125] - [141]. 3Because the plaintiffs' action was dismissed and the defendant was successful, the defendant now seeks costs of the proceedings. But as was anticipated in my principal judgment ( Harrington v Greenwood Grove Estate Pty Ltd [2011] NSWSC 833, [143]) the plaintiffs have argued that the defendant only succeeded due to a late amendment to the defence. The defendant's plea relied upon SEPP (Affordable Rental Housing) 2 009, cl 9 and Ballina LEP, reg 29 was only added to the defence shortly before the trial on 9, 10 and 11 May 2011. 4The plaintiffs submit that the principles to be applied here have been stated in a number of recent English and Australian cases. In Beoco Limited v Alfa Laval Co Limited [1995] QB 137 at 154 the plaintiff had made a late amendment to its pleadings to include a claim for damages under a head of damage that had not been previously claimed. In the result the Court found this to be the only basis for which the plaintiff was entitled to succeed. The Court said:- "As a general rule, where a plaintiff makes a late amendment as here, which substantially alters the case the defendant has to meet and without which the action will fail, the defendant is entitled to costs of the action down to the date of the amendment". 5Beoco Limited v Alfa Laval Co Limited is a case involving a plaintiff who succeeds by a late amendment, not a defendant who succeeds the same way. Nevertheless, Beoco Limited v Alfa Laval Co Limited has been followed in New South Wales and referred to with apparent approval in a number of cases: Murrihy v Radio 2UE Sydney Pty Limited [2000] NSWSC 318 at [8] and [9]; Ciaglia v Ciaglia [2010] NSWSC 723 at [9] and [10]; David v Abdishou [2007] NSWSC 890 at [10] and Leading Edge Events Australia Pty Ltd v Kirite Kanawa (No.2) [2007] NSWSC 568 at [13] - [15]. 6A similar principle applies to the consequences of late amendments raise new grounds of defence which provide the only basis upon which a defendant succeeds. White J said in Bonic v Pacific General Security Limited [2009] NSWSC 1221 at [14]:- "A successful defendant may also be deprived of some or all of his costs if the grounds of defence upon which he succeeds are raised late (eg Capolingua v Phylum Pty Ltd (1991) 5 WAR 137; Monier Ltd v Metalwork Tiling Co of Aust Ltd (No 2) (1987) 43 SASR 588 )." 7In the present case the defendant's amendment to plead the SEPP (Affordable Rental Housing) 2009 and the Ballina LEP was not foreshadowed to the plaintiff prior to 12 April 2011, a little over three weeks before the hearing. This was surprisingly late in the pleadings. The proceedings were originally commenced in July 2010 by Summons but then the pleadings were ordered and pleadings closed on 16 September 2010. The parties put on evidence including expert reports based upon the defendants then Defence which did not plead either the SEPP (Affordable Rental Housing) 2009 or the Ballina LEP. On 23 November 2010 the proceedings were listed for hearing commencing 9 May 2011. On 12 April 2011 the defendant forwarded a motion to the plaintiffs primarily seeking dismissal of the proceedings under Uniform Civil Procedure Rules 2005, r 13.4. But in the alternative the motion sought leave to file an Amended Defence which for the first time pleaded Ballina LEP, cl 29. The final form of Amended Defence which included SEPP (Affordable Rental Housing) 2009, cl 9, was only proposed on 19 April 2011, 20 days before the hearing started. 8The plaintiff's submission is that in all the circumstances the Court should make no orders as to costs in the proceedings, such that each party should bear its own costs of conducting the action. The plaintiff's submission is persuasive and is not displaced by any of the defendant's contentions on the issue. 9First, the defendant has offered some reasons why the amendment was made so late, due to the unavailability of counsel in late 2010. But there is no real explanation for the delay that occurred in early 2011. 10Secondly, once the amendment was sought so late, the plaintiffs were put in a difficult position. They had already invested considerable monies in the action. If they had sought an adjournment and a vacation of the hearing date to further consider their position in light of the proposed amendment they may not have been successful. There was no assurance that the defendant would not have moved to obtain consent and commenced work on the development. Had the amendment been made earlier when the plaintiff's costs exposure was lower, the plaintiffs may have been in a better position to elect to discontinue the proceedings. This option was not realistically open at the time the amendment was made. 11Thirdly, the plaintiffs may well have taken a different view if the amendment had been made earlier. In a case where both sides were represented by experienced legal advisors and where the SEPP (Affordable Rental Housing) 2009 and Ballina LEP defences were ultimately so decisive, it is realistic to infer that the probabilities are that strong advice would have been given to the plaintiffs to discontinue the action, if that could be done without too great a waste in costs. 12What then is the proper form of the order to be made? Were the Court to make an order of the kind contemplated by Beoco Limited v Alfa Laval Co Limited , Murrihy v Radio 2UE Sydney Pty Limited and Bonic v Pacific General Security Limited the parties would potentially be put to the expense of an assessment of costs up until the time of the amendment and then another assessment of costs thereafter for the hearing. It seems to me that the Court can take a broad but fair view and save both sides the expense of further costs assessments. Normally the heaviest costs of proceedings are incurred during the hearing. But in this case considerable costs were incurred in retaining experts well before the amendments were made. 13Against this conclusion the defendant mounts a number of arguments, which in my view are not successful. Principally the plaintiffs say that they took a number of steps to reduce the issues and save the parties from incurring costs, which steps were rejected by the plaintiff. The defendants contend that from those events it may be inferred that an early amendment would have made no difference to the plaintiff's dedicated prosecution of the proceedings. The defendant points out it served a notice to admit facts, to which there was no response; the lack of opposition from the plaintiffs to the defendant's amendment to the statutory defence when it was proposed; and the plaintiffs' rejection of the defendant's offer to have the proceedings stayed pending determination of the defendant's development application. 14None of these considerations is a sound basis for inferring that the plaintiffs would not have taken advantage of an early amendment of the defence to consider their position and possibly withdraw the proceedings. The Notice to Admit Facts was a minor procedural event. The plaintiffs were in no position to oppose the defendant's amendments of the Defence which raised purely legal, not factual, issues. Finally, for the reasons earlier explained, the defendant's offer of a stay pending determination of the defendant's development application was unlikely to be attractive to the plaintiffs and is not an indicator of how the plaintiffs would have responded to a timely amendment of the Defence. 15Finally, the defendants say that they are not guilty of any disentitling conduct which is calculated to occasion unnecessary expense and that this is not one of the ordinary cases where the Court may properly depart from the usual order as to costs because it does not fall within the list of examples of a successful plaintiff's disentitling conduct compiled by McHugh J in Oshlack v Richmond River Council (1998) 193 CLR 72 at 96; see also Lollis v Loulatzis (No. 2) [2008] VSC 35 at [29] and Tomanovic v Global Mortgage Equity Corporation Pty Ltd (No. 2) [2011] NSWCA 256 at [97] - [98] per Campbell JA. McHugh J's examples in Oshlack were not exhaustive. There is a well developed jurisprudence in this area now based on cases such as Beoco Limited v Alfa Laval Co Limited , Murrihy v Radio 2UE Sydney Pty Limited and Bonic v Pacific General Security Limited . And indeed the defendant is not being deprived of its costs. It is entitled to a costs order and it will suffer a costs order against it. The Court is just taking the practical view that these costs orders balance out. 16The defendants also rely upon a settlement offer which the plaintiffs rejected. The offer put on 6 April 2011, was an offer of discontinuance of the proceedings on the basis that each party bear its own costs. This was not an offer of compromise. It was put approximately a week before the motion foreshadowing the defendants' amendments to the Defence was served. Nor does it assist the defendant in arguing that the plaintiff would not have responded to an earlier amendment of the Defence. 17Accordingly, the Court will make no order as to costs in these proceedings. The plaintiffs and the defendants will each bear their own costs of the proceedings.