BOSCAINI INV & ORS v CORP KENSINGTON & NORWOOD No. SCGRG-97-934 Judgment No. S327 [1999] SASC 327

In about July 1996, two parties informed the defendant, the Corporation of the City of Kensington and Norwood ("the Council"), of their intention to construct cinema complexes in Norwood. The complexes were to be very close to one another, on opposite sides of George Street, Norwood. One developer was the plaintiff, Boscaini Investments Pty Ltd ("Boscaini"). The other was a company called Tohspil Pty Ltd ("Tohspil"). The Boscaini proposal was to develop land at the corner of George Street and The Parade, Norwood. The Tohspil proposal concerned land in George Street behind the Norwood Town Hall.

On 1 November 1996 Boscaini lodged with the Council a formal application for development consent under the Development Act 1993 for its proposal. By letter dated 22 November 1996 the Council gave Boscaini notice of a number of concerns it had with the proposal. Those concerns included the adequacy of the proposed car parking. The Council was to have considered the application at its meeting on 16 December 1996. However, consideration was deferred to its meeting on 20 January 1997 because of a number of unresolved issues. The Council informed Boscaini of those issues by letter dated 18 December 1996. Thereafter, representatives of Boscaini met officers of the Council to discuss issues concerning the proposed development including the question of car parking. It appears that, in the course of those discussions, the question of the possible use by Boscaini of a car park in Webbe Street, Norwood was mentioned. By letter dated 20 January 1997, the Council indicated that it was unlikely that the car park would be available. The letter went on to state that, should a development of a site called the Growers Market occur, the car park would not be available.

In the meantime Tohspil had been advancing its proposals for its cinema complex and had been discussing them with officers of the Council. The Tohspil development was to be erected on the Growers Market site and involved use of the Webbe Street car park. On 18 November 1996 the solicitors for Tohspil wrote to the Council enclosing plans for its consideration. In that letter, Tohspil's solicitors asked if Tohspil should lodge its application for development consent under the Development Act with the Development Assessment Commission because of the Council's interest in the Webbe Street car park.

At its meeting on 20 January 1997 the Council considered the application by Boscaini. The agenda papers included a detailed report on the proposal. Among other things, the report asserted that insufficient space had been provided for car parking. The Council carried four resolutions concerning the proposal. The effect of the resolutions was

1. That the Council defer its consideration of the Boscaini application.

2. That, in light of the Council's involvement in the Growers Market site and its discussions with Tohspil for the development of that site as a cinema complex, the Council request the Minister for Housing and Urban Development to declare pursuant to s 34(1)(b)(iii) of the Development Act 1993 that the Development Assessment Commission be the planning authority to determine the Boscaini application.

3. That upon receipt of the Tohspil application the Council also request the Minister pursuant to s 34(1)(b)(iii) of the Development Act to declare that the Development Assessment Commission be the planning authority to determine that application.

Boscaini asserts that this was the first occasion on which the Council informed it that the Council had been involved in discussions with Tohspil. Certainly, the letters from the Council to Boscaini or its agents did not mention the Tohspil proposal.

In late January 1997 Tohspil lodged its application for development consent. Later, the Council wrote requesting the Minister to declare that the Boscaini application and the Tohspil application both be determined by the Development Assessment Commission. The Minister acceded to that request.

On 12 and 17 March 1997 the Council considered issues relating to the Tohspil application. In large part those issues concerned the use of the Webbe Street car park. In the result on 12 and 17 March the Council carried a number of resolutions concerning the use by Tohspil of the Webbe Street car park. Stripped to essentials, the Council resolved:

1. That it would undertake the construction of 50 additional car parking spaces. Tohspil was to contribute the sum of $350,000 towards the cost of construction. The Council was to contribute $50,000.

2. That the Council would grant exclusive use of the 50 car parking spaces for use by the patrons of the complex proposed by Tohspil.

3. That the additional car parking spaces would not be available for use by patrons of any other cinema complex.

4. That the Council's agreement with Tohspil be contingent upon the obtaining of all necessary consents and upon "the actual construction of the proposed cinemas".

5. That the Council grant permission to Tohspil to include the Webbe Street car park site in its development application for use as car parking.

6. That the Chief Executive Officer of the Council be authorised to advise the Minister of the incorporation of the Webbe Street car park as part of the development application.

7. That the Development Assessment Commission be advised that the Council supported the proposal by Tohspil subject to minor alterations.

The full terms of the resolution are set out in the papers filed in this application. On 17 March 1997 the Council wrote to the Development Assessment Commission asking that both applications be considered at the same time. It later wrote to the Commission advising that it supported the Tohspil proposal.

The Development Assessment Commission at different meetings considered the respective applications by Boscaini and Tohspil. It granted consent to both. On 12 June 1997 a delegate of the Commission granted development consent to the Boscaini application and the Commission confirmed the grant of consent at a meeting on 14 October 1997. On 8 July 1997 the Commission granted development consent for the Tohspil application.

In the meantime on 3 July 1997 Boscaini had issued this application for judicial review. It sought a variety of orders including orders

* that the Council holds the land on which the Webbe Street car park is constructed subject to a charitable trust to use the land as a public car park;

* setting aside agreements relating to the Webbe Street car park;

* setting aside the resolutions made on 12 and 17 March relating to the Webbe Street car park; and

* an order in the nature of certiorari to quash the resolutions on the ground that they were tainted with bias, were made for an improper purpose, were inconsistent with the objects of local government, and were passed without giving Boscaini an opportunity to be heard.

In the affidavits in support of the application Boscaini alleged, among other things, that the Council had delayed its consideration of the Boscaini application because it was supporting the Tohspil proposal. It also alleged a conflict of interest.

On 5 August 1997 Boscaini issued a second application for judicial review. It is the action number 1169 of 1997. It sought orders in the nature of certiorari quashing the decision of the Development Assessment Commission made on 8 July 1997 granting development consent to the application by Tohspil. It also sought a declaration that the decision was invalid. Tohspil was later joined as a party to the proceedings. On 20 August 1998 Tohspil consented to an order quashing the decision of the Commission.

On 8 August 1997 the Council issued an application for judicial review challenging the grant of development consent by the Development Assessment Commission to the Boscaini application. It is the action number 1203 of 1997. The application was made on several grounds including that the development was substantially at variance with the Development Plan for this area. The affidavits in support show that the Council continued to believe that the Boscaini proposal made inadequate provision for car parking. The application was heard by the Full Court which dismissed the application on 12 February 1998. Thus, from 12 February 1998 Boscaini knew that it had a valid grant of development consent and could proceed with its proposal.

The parties proceeded to get this application ready for trial. By this time, the Full Court had by its decision published on 12 February 1998 upheld the development consent granted to Boscaini and Tohspil had consented to an order quashing its grant of development consent. A date was fixed for the hearing of this application. It was 21 September 1998. On 18 September 1998 the Court was informed that the Council had rescinded its resolutions of 12 and 17 March 1997. Given that the application sought set aside those resolutions, the rescission of the resolutions removed all issues for determination. By consent, the hearing date was vacated. The plaintiff withdrew its application subject to the question of costs.

Mr Walsh QC submitted that Boscaini had succeeded in this application in that it had achieved what it set out to obtain, namely, the rescission of the resolutions the subject of these proceedings. He submitted that, although no final order had been made by the court, it was proper for Boscaini to recover its costs. Mr Roder, for the Council, submitted that it was not possible to make an order for that would require the court to assess the prospects of the plaintiff's success in the application. Furthermore, he submitted, the assertion of the existence of a charitable trust was entirely misconceived and the plaintiff would have failed on that issue.

The court has a discretion whether to order costs and that discretion must be exercised judicially. There is no ready answer to the question whether an order for costs should be made in circumstances such as these. Several decisions illustrate the relevant principles. As will be seen, much will depend on the facts and circumstances of each individual case.

In cases where the issues have become moot, the applicant has effectively achieved its goals, and it is reasonable to conclude that it succeeded because the proceedings were commenced and it had reasonable prospects of success, the applicant might recover its costs. (In this discussion, a reference to parties as applicant and respondent, also signifies plaintiff and defendant.) An instance is R v Gold Coast City Council; ex parte Raysun Pty Ltd [1971] QWN 13. In that case the applicant granted an order nisi calling upon the respondent to show cause why a writ of mandamus should not issue to compel the Council to determine an application before it for approval of road and drainage plans. After the order nisi had been granted, the Council considered the application and granted it. The Full Court held that it was not necessary to determine the merits of the matter as a condition precedent to an order for costs. The court concluded that the prosecutor had reasonable grounds to complain of the Council's failure to consider its application and had an arguable case to support the issue of a writ of mandamus. The prosecutor was granted costs up to the time it was informed of the Council's decision to grant the application. Plainly the Court was influenced by the fact that the prosecutor's actions were justified and that it had reasonable prospects of success. It was reasonable to conclude that the Council's decision had been prompted by the order nisi.

The decision in Liddle v Kooralbyn Pty Ltd (unreported, Supreme Court of Queensland, 9 October 1987, Ryan J) is an instance of a case where the merits appear to have been clearly with the plaintiff. The decision is referred to in South East Queensland Electricity Board v Australian Telecommunications Commission (unreported, Federal Court of Australia, 10 February 1989, Pincus J, a note of which appears in CLS 1989 FED 11). It appears that in Liddle, the plaintiff recovered his costs because the defendants had acted unlawfully in that they had sold land without according the plaintiff the right of first refusal to which the plaintiff was contractually entitled. There seemed to be no real dispute that the plaintiff had that entitlement.

In South East Queensland Electricity Board (supra) the fact that the applicant had achieved its purpose and had acted reasonably in bringing the proceedings and had a fairly strong case which appeared to be on its face to be "more promising" than that of the respondent was sufficient to justify an order that the applicant recover 80 per cent of its costs. In that case the respondent reversed its decision refusing the applicant's request that the applicant be authorised to maintain its PABX system. The respondent contended that it had reversed its decision "to accommodate an imminent change in the law". Pincus J accepted that contention but was prepared to have regard to the merits to resolve the issue as to costs. He took the view that the Court should where possible assist the parties in determining issues of costs without requiring a trial to determine who would have won. He said:

"Although the parties have agreed that I should determine it on the submissions made to me, there is in my view no certain basis on which to determine the question of liability for costs. On possible solution is simply to make no order as to costs, on the ground that it is not perfectly clear which side, if either, should pay them. As a matter of legal policy, however, that appears to be an unsatisfactory way of disposing of the matter; the Queensland parties' submissions are at one in urging upon me the view that litigants should not be forced to go on, or discouraged from settling their differences, by an inability to resolve a dispute as to costs. I agree; if a piece of litigation has become academic, except as to the issue of costs, it appears that the Court should co-operate as far as it reasonably can, in disposing of the question of costs at the parties' request, without requiring a trial to determine who would have won."

Pincus J also noted that a distinction must be drawn between those cases where a decision-maker simply changes his mind, having reconsidered the facts and those cases where the decision-maker is obliged to reach a new and opposite conclusion by a change in external circumstances. He said that in the former case, but not necessarily in the latter, the decision-maker would ordinarily pay the costs of incomplete proceedings. In his view, the instant cases fell between the two categories he had identified.

An instance of external circumstances affecting litigation is Parap Hotel Pty Ltd v Northern Territory Planning Authority [1993] NTSC 37; (1993) 112 FLR 336. In that case the plaintiffs sought leave to discontinue proceedings challenging the grant of a development consent. Some time after the proceedings had been issued, the planning authority indicated to the Court that it would request the relevant Minister to direct an inquiry and furnish a report to the Minister pursuant to the planning legislation of the Northern Territory. The plaintiffs informed the Court that they believed this to be an appropriate course likely to save court time and cost to the parties in resolving the dispute. By leave the proceedings were discontinued, the Court holding that there should be no order as to costs.

In other cases courts have concluded that it was impracticable to assess the prospects of success. In JT Stratford & Son Ltd v Lindley [1969] 1 WLR 1547 the plaintiffs who were barge owners and repairers had obtained an interim injunction restraining the defendants who were trade union officials from enforcing a black ban upon the plaintiffs' barges. The question whether an interlocutory injunction should be ordered was argued right up to the House of Lords where the order of the primary judge was upheld. The House of Lords made orders as to costs, namely, that the costs in the Court of Appeal and in the House of Lords be costs in the cause. An identical order had been made by the primary judge. Thus, all of the costs of the interlocutory proceedings were costs in the cause. Pleadings closed in November 1964. However, the action never came to trial. The defendants had made a late application to strike out the action. The plaintiffs applied for leave to discontinue. Lord Denning MR summarised the position in these terms (at 1553):

This action has never come for trial. No costs have ever been awarded in the action. Nobody has lost. Nobody has won. After the decision in the House, there were a few desultory steps. The pleadings were closed in November, 1964. But then the action went to sleep. In 1966 there were discussions as to what was to be done. Negotiations took place but they were of no avail. Neither side wanted to go on. But neither side wanted to pay the costs of the other side. In order to bring the matter to a head, the defendants, because of the long delay, took out a summons to dismiss the action for want of prosecution. They asked for all the costs to be paid by the plaintiffs to the defendants. The plaintiffs took out a cross summons. They asked for leave to discontinue the action upon the terms that the defendants should pay the plaintiff's costs, or such other order as might be proper. The two summonses came before the master and then to the judge. Now there is an appeal to this court."

In that case it was not possible to make an assessment as to the prospects of success. Lord Denning MR described the issues as "finely balanced". Winn LJ and Cross LJ said that it was "impractical to make any assessment of a theoretical prospects of success had the parties gone to trial". The Court of Appeal upheld the respective decisions of the master and the judge below that no order as to costs should be made.

In Austcorp Finance and Leasing Pty Ltd v GA Thomas (unreported, Supreme Court of Queensland, 25 July 1991), Master White refused to enquire into the merits and made no order as to costs. In her view, there were significant issues concerning the credit of the respective parties which made it impossible to make an assessment of a plaintiff's prospects of success. She was also influenced by the fact the plaintiff had not given the defendant an opportunity to return documents which had been claimed or to give appropriate undertakings as to other issues.

In Australian Securities Commission v Aust-Home Investments Ltd [1993] FCA 585; (1993) 116 ALR 523 Hill J referred to these authorities and extracted certain propositions. In that case, the Australian Securities Commission had, in the course of an investigation, obtained orders that receivers be appointed to the assets of several corporations and individuals then under investigation. When the investigation was complete, applications were made to determine who should bear the costs of the parties and the costs of the receivers. With one exception, which need not be noted, Hill J made no order as to costs. Hill J extracted the following principles from the cases (at 530).

"(1) Where neither party desires to proceed with litigation the court should be ready to facilitate the conclusion of the proceedings by making a cost order: Stratford and the SEQEB case. (2) It will rarely, if ever, be appropriate, where there has been no trial on the merits, for a court determining how the costs of the proceeding should be borne to endeavour to determine for itself the case on the merits or, as it might be put, to determine the outcome of a hypothetical trial: Stratford, supra. This will particularly be the case where a trial on the merits would involve complex factual matters where credit could be an issue. (3) In determining the question of costs it would be appropriate, however, for the court to determine whether the applicant acted reasonably in commencing the proceedings and whether the respondent acted reasonably in defending them (SEQEB). (4) In a particular case it might be appropriate for the court in its discretion to consider the conduct of a respondent prior to the commencement of the proceedings where such conduct may have precipitated the litigation: cf Sunday Times Newspaper Co Ltd v McIntosh [1933] NSWStRp 37; (1933) 33 SR (NSW) 371. (5) Where the proceedings terminate after interlocutory relief has been granted, the court may take into account the fact that that interlocutory relief has been granted: cf Re Asiatic Electric Co Pty Ltd (in liq) [1973] 1 NSWLR 603 at 606, a case which, however, depended upon the specific wording of the statute under consideration."

These propositions have been followed and applied in Booth v Helensvale Gold Club Ltd [1997] 2 Qd R 141 and in Gribbles Pathology Pty Ltd v Health Insurance Commission (1997) 80 FCR 283. In the latter case Finkelstein J added (at 287):

"For my own part I should wish to emphasise that in the absence of a hearing on the merits it is difficult to see how any order, other than an order that each party bear its own costs, can be made except in special circumstances. To do otherwise would require some prediction of the outcome of the case. It seems to me that the third proposition stated by Hill J was intended to cover the situation where the Court was in fact able to form a clear view about the merits of a case without a trial. So, if a claim is patently hopeless that would be a good reason to make an order for costs against the claimant. Likewise if a defence was bound to fail that would be good reason for awarding costs in favour of the claimant. But I venture to suggest that there will be very few cases where the issues will be sufficiently clear, in the absence of a hearing, for an order for costs to be made in favour of a party."

I immediately acknowledge the assistance of Hill J but suggest that proposition (3) is of limited assistance. The fact that a party has not conducted himself reasonably may disentitle him to costs. But, beyond that, the reasonableness of the conduct of the parties is not likely to assist in determining whether the applicant should recover his costs. The real question is whether the applicant had reasonable prospects of success. It seems preferable, therefore, to express proposition (3) in different terms.

Depending on circumstances, where the applicant has acted reasonably in commencing proceedings, has an arguable case, and it is reasonable to conclude that the respondent has acted in consequence of the commencement of proceedings, the court may be prepared to make an order as to costs in favour of the applicant.

Hill J has qualified the terms of proposition (5). In light of the decision in Stratford, I would add the further qualification that the grant of interlocutory relief is not conclusive and will be of no force in cases where it is not possible to assess the prospects of success. It is appropriate to add a sixth proposition, namely, that the court will not make an order where the subject matter of the action has ceased to exist through the lawful action of a person who is not a party to the proceedings: Parap Hotel.

With these principles in mind, I turn to consider Boscaini's application for costs. It is desirable that the court should assist, if possible, to facilitate the conclusion of proceedings by making an appropriate order as to costs. But the court has no duty to do so and usually will make an order only where it is possible to form a clear view of the merits of the case. It must then be noted that Boscaini acted reasonably in commencing these proceedings.

However, there are a number of reasons why it is not possible to determine the likely prospects of success of the application. First, the allegation that the Council's decision was made for an improper purpose is very likely to involve issues of credit. Mr Walsh QC submitted that an examination of the documents showed unequivocally that the Council delayed the Boscaini proposal for the purpose of promoting its interest in the Tohspil proposal. But the documents show that the Council was concerned as to the adequacy of car parking and that it was not the only planning authority which had that concern. The issue of car parking exercised the attention of the Development Assessment Commission. It deferred its consideration pending the receipt of further information from Boscaini, which ultimately did amend its proposals to reduce the demand for car parking. The question of delay could not have been resolved only on the documents. It would have been necessary for witnesses to be called and it would have involved issues of credit. There would have been conflicting evidence from Boscaini and Council witnesses. It would have been desirable for the Council to have informed Boscaini at an early stage of the interest in the Tohspil application. But its failure to do so does not prove that it deliberately delayed the Boscaini application. Also relevant is the fact that the agenda papers for the Council meeting on 20 January 1997 include a recommendation of the Boscaini proposal, suggesting that Council officers at least supported it. Thus, there are real difficulties in assessing the prospects of success. Furthermore, there is no inherent vice in the Council having an interest in the planning and development. The vice is not declaring that interest. The Council recognised that it had a conflict of interest and referred both applications for development consent to the Development Assessment Commission for determination and both were granted. Thirdly, the allegation that the Webbe Street car park is subject to a charitable trust has its difficulties. Those difficulties were acknowledged by counsel for Boscaini. The challenge to the resolutions would have been more likely to succeed if it had been grounded on the provisions of the Local Government Act and the powers of Council in relation to car parks constructed with public funding. But that was not a ground of the application. More significantly, the allegations involved the detailed consideration of a large number of documents and the issues were relatively complex. All of these factors continue to render it impossible to determine whether Boscaini would have succeeded. There are issues of credit and the issues are complex. To make any order as to costs would be to presume the outcome. It is not possible, therefore, to make any order as to costs.

There is a further reason for making no order as to costs. On one view the Council's resolution rescinding the resolutions of 12 and 17 March 1997 was unnecessary since the conditions precedent to those resolutions were that Tohspil obtain a grant of development consent and construct the cinema complex. As Tohspil had on 20 August 1998 consented to an order quashing the grant of development consent, it could not proceed with its proposal. The conditions precedent to the Council's resolution could not be satisfied unless Tohspil applied for and obtained a fresh grant of development consent. Whilst that was of course possible, it was from a practical standpoint wholly unrealistic. The rescission of the resolutions did not result in any greater certainty since it is always open to the Council to reconsider the matter and make the same resolutions at a later date. No doubt, in large part, the decision of Tohspil not to proceed with its proposed development would have been an important, admittedly not the only, reason for the Council's decision to rescind the resolutions of 12 and 17 March 1997. What is significant is that Tohspil's consent to the order quashing its grant of development consent was the act of a third party which had significant consequences for this application.

For all of these reasons I do not think it is proper to make any order as to costs. The application by the plaintiff for costs is, therefore, dismissed.