Broken Hill City Council v Tumanic

The Respondents Have Received Notice of the Application to Discontinue and Seek Costs 44The council relied on the following evidence to demonstrate that both Ms Bower and Mr Tumanic had been served, not only with the summons initiating the proceedings, but also the notice of motion seeking discontinuance and an order for costs, together with the affidavits in support of the motion. That evidence is as follows: (a)two affidavits of Mr Kenneth Shipp sworn 9 February 2012, proving personal service of the summons on Ms Bower and Mr Tumanic; (b)an express post letter to Ms Courtney Bower serving the affidavit of Mr Geoffrey Laan; (c)an affidavit of service of Mr Shaun Courtney sworn 4 June 2012, proving personal service on Mr Tumanic of the affidavit of Mr Geoffrey Laan; (d)an affidavit of service of Mr Peter Coles sworn 18 June 2012, proving service on Ms Bower of the notice of motion and affidavit of Ms Jacinta Reid; (e)a letter dated 26 June 2012 from the council's solicitors to Ms Bower, advising her of the date of the hearing of the notice of motion; and (f)an affidavit of Mr Shaun Courtney sworn 12 July 2012, proving personal service on Mr Tumanic of the affidavit of Ms Jacinta Reid and a letter advising him of the date of the hearing of the notice of motion. 45On the basis of the correspondence to and from Mr Comino, and the evidence above, I am satisfied that Mr Tumanic was aware of these proceedings and was aware of the council's notice of motion seeking leave to discontinue and, most importantly, an order for costs against him. 46I am also satisfied, on the evidence before me, that Ms Courtney Bower has been served with the summons, the notice of motion and supporting affidavits, and is either aware, or at the very least ought reasonably to be aware, of the hearing date of the notice of motion. 47Notwithstanding this notice, neither respondent appeared at the hearing of the application, and accordingly, the Court proceeded to deal with it on an ex parte basis. Leave to Discontinue is Granted 48Given that the landlord has re-entered the premises, the kebab shop is no longer in operation and the respondents no longer trade from, or in any way occupy, the premises, there is little utility in the council continuing with the proceedings. 49To do so would incur unnecessary additional costs and be an inefficient use of Court resources. In short, it would be neither "just, quick" nor "cheap" to pursue the summons (s 56 of the Civil Procedure Act 2005 ("the CPA")). 50Accordingly, leave to discontinue the proceedings is granted. The Respondents Must Pay the Council's Costs of the Discontinued Proceedings and of the Motion 51In Eather v Mosman Municipal Council [2012] NSWLEC 92 I set out the principles applicable in any exercise of the Court's discretion to award costs in Class 4 proceedings concomitant upon the discontinuance of the proceedings by one party (at [23]-[31]): 23 Costs in discontinued Class 4 proceedings in this Court are determined pursuant to s 98 of Civil Procedure Act 2005 and the application of r 42.19 of the Uniform Civil Procedure Rules 2005 ("UCPR"). 24 Rule 42.19 of the UCPR relevantly provides as follows: 42.19 Proceedings discontinued (1) This rule applies to proceedings that are discontinued by the plaintiff, as referred to in rule 12.1. (2) Unless the court orders otherwise or the notice referred to in rule 12.1 (2) otherwise provides, the plaintiff must pay such of the defendant's costs as, at the date on which the notice of discontinuance was filed, had been incurred by the defendant in relation to each claim in respect of which the proceedings have been discontinued. 25 It is trite law that orders for costs are designed to compensate for expenses reasonably incurred and not to punish a particular party (Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534). 26 In Baulderstone Hornibrook Engineering Pty Limited v Gordian Runoff Limited (No 2) [2009] NSWCA 12 Allsop P noted the following in relation to costs applications (at [5]): 5. Three things need be borne in mind in a judgment such as this on costs: the desirability of avoiding unnecessary recitation of cases (abounding as they are in this area); the desirability of not restating, in different terms, approaches to the broad discretion that have been well settled; and the desirability of dealing with the arguments without over-elaboration, if this is possible. 27 His Honour's observations are equally apposite here. 28 Generally costs will follow the event in Class 4 proceedings. But where, as in the present case, the proceedings are discontinued absent a determination on the merits, and thus an 'event', the issue of costs becomes complex. Thus, in ONE.TEL Ltd v Deputy Commissioner of Taxation [2000] FCA 270; (2000) 101 FCR 548 Burchett J said (at [6]): 6. In my opinion, it is important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event or settlement so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the Court's discretion otherwise than by an award of costs to the successful party. It is the latter type of case which more often creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs. In Ex Parte Lai Qin, McHugh J was careful to state (at 624) that the principles with which he was concerned were those that "govern an application for costs when a party elects not to pursue an action because he or she has achieved the relief sought in the action either by settlement or by extra-curial means". ... 29 In Kiama Council v Grant [2006] NSWLEC 96; (2006) 143 LGERA 441 Preston J drew together some of the relevant guiding legal principles governing the position at that time and said (at [80]): 80. The principles that emerge from these cases are that in a civil enforcement or judicial review case where there has been no hearing on the merits: (a) where one party effectively surrenders to the other party by: (i) discontinuing without the consent of the other party; or (ii) giving undertakings to the Court or submitting to the Court making orders against the party substantially in the terms or to the effect claimed by the other party; the proper exercise of the costs discretion will ordinarily be to make the usual order as to costs, unless there is disentitling conduct on the part of the other party; and (b) where some supervening event or settlement so removes or modifies the subject of the dispute that no issue remains except that of costs, the proper exercise of the costs discretion will ordinarily be to make no order as to costs unless: (i) one of the parties has acted so unreasonably that the other party should obtain the costs of the action; or (ii) even if both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried so that the party should obtain the costs of the action. 30 In Kiama, however, no reference was made to r 42.19 of the UCPR because it was not applicable. The decision must therefore be read with this in mind. 31 It has been said that r 42.19 does not give rise to a "presumption" that costs will be ordered against the discontinuing party (Fordyce v Fordham [2006] NSWCA 274; (2006) 67 NSWLR 497; Prodromos Anastasi Foukkare v Angreb Pty Limited [2006] NSWCA 335 (at [65]); Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32 (at [53]). 52Of course, these observations were made in the context of an application for the discontinuing party to pay the costs of the proceedings. No such application is made in the present case. 53In Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622 McHugh J stated (at 624-625, footnotes omitted): In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation. Thus, for example, in R v Gold Coast City Council; Ex parte Raysun Pty Ltd, the Full Court of the Supreme Court of Queensland gave a prosecutor seeking mandamus the costs of the proceedings up to the date when the respondent council notified the prosecutor that it would give the prosecutor the relief that it sought. The Full Court said that the prosecutor had reasonable ground for complaint in respect of the attitude taken by the respondent in failing to consider the application by the prosecutor for approval of road and drainage plans. Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. This is perhaps the best explanation of the unreported decision of Pincus J in South East Queensland Electricity Board v Australian Telecommunications Commission where his Honour ordered the respondent to pay 80 per cent of the applicant's taxed costs even though his Honour found that both parties had acted reasonably in respect of the litigation. But such cases are likely to be rare. 54In the present case, the supervening event was the re-entry by the owner of the premises and the consequential permanent cessation of trading of kebab shop. As a consequence, there was no determination on the merits. 55The council submitted that, there being no disentitling conduct by it in the conduct of the proceedings, notwithstanding r 42.19 of the Uniform Civil Procedure Rules 2005 it is entitled to a costs order in its favour because of the unreasonable behaviour of the respondents by refusing to make genuine attempts to engage with it in order to resolve any of the issues it had with the operation of the kebab shop and by refusing to take any part in the proceedings, both of which in turn caused delay and unnecessary costs to be incurred. 56I accept the submissions of the council. By ignoring, or alternatively deflecting, all entreaties by the council to resolve the concerns it had with the breaches of the development consent, the respondents compelled the council to commence litigation. Further, by electing not to participate in the proceedings, the proceedings became avoidably protracted resulting in multiple appearances and the preparation of evidence that was ultimately rendered otiose. In so doing the council incurred costs, costs that could have been avoided, or at the very least minimised, had the respondents been engaged in the litigation. 57The conduct of the respondents has been sufficiently unreasonable that, in my opinion, the proper exercise of the Court's costs discretion is to award the council its costs of the proceedings. 58A similar result follows in relation to the costs of the motion. Moreover, the council has been wholly successful on the motion and is, in any event, entitled to its costs in this regard. The Council's Costs are to be Payable as Agreed or as Assessed 59The council seeks an order that the costs of both the proceedings and the motion be payable fixed in sum of $19,035.90. 60An itemised schedule of costs incurred by the council was annexed to Ms Reid's affidavit. 61The council argued that an award of fixed costs was preferable because otherwise further delay and costs would result in having those costs assessed, particularly in circumstances where the respondents were, given their conduct to date, unlikely to participate in the assessment process. 62The power to award a specified gross sum instead of assessed costs is contained in s 98(4)(a) of the CPA: 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. ... (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) costs up to, or from, a specified stage of the proceedings, or (b) a specified proportion of the assessed costs, or (c) a specified gross sum instead of assessed costs, or (d) such proportion of the assessed costs as does not exceed a specified amount. 63In Puruse Pty Limited v Council of the City of Sydney [2009] NSWLEC 163; (2009) 169 LGERA 85 I summarised the principles applicable to the Court's discretion to make an award of costs fixed in an specific sum (at [83]-[84]): 83 The principles applicable in exercising the discretion to make an award of costs fixed in a specific sum are set out in the decision of Harrison J in Hamod v State of New South Wales (No 13) [2009] NSWSC 756 at [3]-[4], citing Einstein J in Idoport Pty Limited v National Australia Bank Limited [2007] NSWSC 23 at [9]: 9 For present purposes it seems convenient to commence with a recitation of the principles which inform the exercise of the discretion: i. the purpose of the rule is to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation: Beach Petroleum NL v Johnson (1995) 57 FCR 119, Von Doussa J page 265: [following Purchase J in Leary v Leary [1987] 1 All ER 261 who described the purpose of the rule allowing the fixing of a gross sum as "the avoidance of expense, delay and aggravation involved in protracted litigation arising out of taxation" (All ER page 265)]; ii. the touchstone requires that the Court be confident that the approach taken to estimate costs is logical, fair and reasonable: Beach Petroleum at [16]; iii. the fairness parameter includes the Court having sufficient confidence in arriving at an appropriate sum on the materials available: Harrison v Schipp (2002) 54 NSWLR 738, per Giles JA at para [22]; [following (Wentworth v Wentworth (CA, 21 February 1996, unreported, per Clarke JA) and adopted in Sony Entertainment v Smith (2005) 215 ALR 788; [2005] FCA 228; BC200500963 at para [199]; iv. a gross sum assessment, by its very nature, does not envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place: Harrison v Schipp at para [22]; v. the gross sum "can only be fixed broadly having regard to the information before the Court": Beach Petroleum at 124; [In Hadid v Lenfest Communications Inc [2000] FCA 628 at [35] it was said that the evidence enabled fixing a gross sum "only if I apply a much broader brush than would be applied on taxation, but that ... is what the rule contemplates".] vi. nevertheless the power to award a gross sum must be exercised judicially, and after giving the parties an adequate opportunity to make submissions on the matter: Leary v Leary [1987] 1 WLR 72 at 76, and Beach Petroleum NL v Johnson (No.2) (1995) 57 FCR 119 at 120'; vii. In terms of the necessity for the approach taken to be logical, fair and reasonable, Von Doussa J in Beach Petroleum NL & Anor v Johnson & Ors (No 2) (1995) '57 FCR 119, put the matter as follows, at paras [16]: 'On the one hand the Court must be astute to prevent prejudice to the respondents by overestimating the costs, and on the other hand must be astute not to cause an injustice to the successful party by an arbitrary "fail safe" discount on the cost estimates submitted to the Court: Leary v Leary at 265.' 84 These principles were endorsed by this Court in SDA Australia Pty Ltd v Ashfield Municipal Council [2009] NSWLEC 123 at [16] per Lloyd J. In that case his Honour said (at [12]-[16]): 12 Mr Clay relies upon a number of authorities, in particular the judgment of Palmer J in Sherborne Estate (No 2): Vanvalen v Neaves [2005] NSWSC 1003; (2005) 65 NSWLR 268 in which his Honour outlined some of the principles that apply when a court is considering whether to exercise its power under s 98(4). 13 Palmer J notes, at [40], that one of the justifications for exercising that power is to give effect to the overriding purpose facilitating the just, quick and cheap resolution of the real issues in dispute as mandated by s 56 of the Civil Procedure Act. His Honour continued to state, at [41], however, that the power under section 98(4) must be exercised judicially. That is, the exercise of the power must have a proper factual foundation and must be explicable according to legal principle. 14 His Honour went on to say, at [42], that the court's decision under s 98(4) would have to be an informed one; that is, founded on a consideration of the costs actually incurred, the circumstances at the time at which they were incurred, whether they were reasonable in those circumstances and what would have been a reasonable amount to have incurred. 15 In that particular case, Palmer J noted that there was no evidence before the Court sufficient to enable the Court to make any logical, fair and reasonable estimate of what would be an appropriate gross sum to incorporate in the costs order. 16 Mr Clay also refers me to the judgment of Einstein J in Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23 in which his Honour also set out, at [9], a number of principles relevant to the exercise of the discretion to make an order under s 98(4)(c) of the Civil Procedure Act. Those principles include, inter alia (i) that the court has to be confident that the approach taken to estimate costs is logical, fair and reasonable; and (ii) the courts must have sufficient confidence in arriving at an appropriate sum of materials available. 64These principles were applied in Wollahra Municipal Council v Tilley [2010] NSWLEC 75 (at [25]). 65There is no doubt that the order sought by the council would avoid the "expense, delay and aggravation" involved in the assessment process. There is also no doubt that, in failing to appear, the respondents' conduct has unnecessarily contributed to the costs of the proceedings (Microsoft Corp v Jiang [2003] FCA 101; (2003) 58 IPR 445). 66But I do not have, on the information before the Court, sufficient confidence that the sum of $19,035.90 is either appropriate or that it would be logical, fair or reasonable to award costs fixed in this sum. First, the schedule details costs incurred from 3 August 2011 to 16 March 2012. Thus some of the costs included in the schedule pre-date the filing of the summons on 8 February 2012. Second, no underlying material, such as bills of costs issued to the council were provided with the schedule. Third, the quantum of costs sought appears to have been calculated on a solicitor-client, and not a party-party, basis. Fourth, there is no evidence that the likelihood of formal assessment would disadvantage the council because of some inability of either respondent to pay the costs in any event (Harrison v Schipp [2002] NSWCA 213; (2002) 54 NSWLR 738 at [28]-[29]). Fifth, the length and complexity of the assessment process is, in my opinion, unlikely to be burdensome. And sixth, a costs award of approximately $19,000 is, having regard to the lack of complexity of the proceedings, not so insignificant that to insist on assessed costs being payable would be disproportionate to the ultimate result. 67For these reasons, I decline to make an order that the council's costs be payable in a fixed sum. Orders 68The formal orders of the Court are as follows: (1) leave is granted to the council to discontinue the proceedings; (2) the respondents are to pay the council's costs of the proceedings as agreed or assessed; (3) the respondents are to pay the council's costs of the motion as agreed or assessed; and (4) the exhibits are to be returned.

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