Canterbury City Council v Mihalopoulos

Evidence of Ms Amanda Mihalopoulos 7In her affidavit affirmed 13 December 2010, Ms Mihalopoulos states that she owns the dwelling and property the subject of the first Mihalopoulos decision. She states that she lived at the dwelling from January 2005 until the dwelling was demolished in December 2007. 8She states that while she discussed with Mr Mihalopoulos the layout of the house and furnishings, she was neither involved in the design of the house, nor its construction. She did, however, attend the site on a number of occasions and discussed with Mr Mihalopoulos where various rooms should be located. 9Ms Mihalopoulos states that she became aware there was a problem with the council in late 2008 and at that time she was also aware that Mr Mihalopoulos was having a dispute with the adjoining neighbour, Mr Bill Kazaglis. Her understanding was that there was a problem with the eastern boundary pathway and that the brick fence was supposed to be timber. 10Ms Mihalopoulos states, however, that she was never involved in any of the development surveys or meetings with council. Having said this, she accepts that she co-signed the application to modify the development consent dated 9 November 2007. She did not, however, sign the applications to modify the development consent in July 2008, on 9 February or on 9 October 2009, which, had they been approved, would have rectified the works the subject of the proceedings (they were refused). 11She states that nearly all correspondence concerning the dispute with the council was between the council and Mr Mihalopoulos. In fact the first time that Ms Mihalopoulos became formally aware of the dispute was on 18 August 2010 when she received a letter from the council requiring undertakings as to rectification. 12In early September 2009 she moved back into the newly constructed dwelling at the property. However, a month later she ceased living at the property because of a breakdown in the marital relationship. She now lives in Inverell and has not been to the property since she left it. An AVO has been made against Mr Mihalopoulos. 13There are currently proceedings in the Family Court of Australia and the property, as the former matrimonial home, is the subject of those proceedings. In those proceedings Ms Mihalopoulos does not seek a transfer of the property, but seeks its sale. 14Finally, Ms Mihalopoulos states that her financial position is such that she could not afford to carry out the rectification works required by the council at the time, nor can she presently afford to pay any costs order made against her. 15The evidence of Ms Mihalopoulos was not challenged in any way by the first respondent. I accept it in its entirety.

Submissions of Ms Mihalopoulos 16Ms Mihalopoulos submits that it was her husband, Mr Mihalopoulos, who at all material times had control over the construction of the new dwelling at the property, who was at all material times communicating with the council in this respect and at all material times in whose power it was to comply with the council's request to rectify the unapproved development. 17Further, Ms Mihalopoulos states that she has not lived at the property since 2009, long before the summons was issued. 18Accordingly, in these circumstances, she submitted, it was appropriate to vary the earlier costs order so that Mr Mihalopoulos bore the burden of paying the council's costs of the civil enforcement proceedings.

Evidence and Submissions of Mr Mihalopoulos 19Save for a title search showing that the dwelling the subject of the unlawful development was owned in a one third to two thirds share, with Mr Mihalopoulos owning the lesser proportion, Mr Mihalopoulos did not adduce any evidence in support of his submission that either the costs ought to be apportioned in amounts representing the unequal ownership of the dwelling, or that the original costs order made by the Court ought to be maintained. 20It was Mr Mihalopoulos' submission that Ms Mihalopoulos was on notice by a letter from the council dated 18 August 2010, that unless the works were rectified, proceedings would be commenced, and therefore, could have taken steps to ensure that proceedings were not commenced by the council. 21He also submitted that it was her late submitting appearance that, in effect, meant that the council had no option but to institute and continue proceedings against both respondents. 22On either basis no variation should be entertained to the Court's original order or, in the alternative, costs should be apportioned.

The Council 23As stated above, the council agrees to an order that Mr Mihalopoulos pays its costs in their entirety. This is because it now accepts that Ms Mihalopoulos was not involved in the carrying out of the unlawful works and had no real opportunity to participate in any of the negotiations with it either prior, or subsequent, to the summons being filed. 24The council states that had it been aware of the evidence of Ms Mihalopoulos prior to the filing of her affidavit, it would not have proceeded against her and would have only pursued the first respondent.

Consideration 25It is convenient to dispense with two issues raised during the course of submissions. First, and contrary to the submissions of the first respondent, there is no basis to award costs proportionate to the respective ownership of each party in the dwelling the subject of the proceedings. When costs are awarded on an apportioned basis, the apportionment typically reflects the relative merits and success of a party's position in the proceedings. Mr Mihalopoulos cannot, on the evidence before the Court, claim that his conduct either gave rise to the proceedings, or during the proceedings, was such that he should carry some lesser costs burden than that of his estranged wife, given that she was not in any relevant way involved in the unlawful development. 26Second, notwithstanding the wide discretion the Court has to award costs (s 98 of the Civil Procedure Act 2005), absent special circumstances, impecuniosity is not a sufficient reason alone to deprive a successful party of its costs (see Kennedy v NSW Minister for Planning [2010] NSWLEC 269 at [16]-[18] per Biscoe J and the authorities referred to thereat). 27In my view, and while acknowledging the distressing circumstances that Ms Mihalopoulos now finds herself in, her present inability to meet a costs order is, by itself, not a sufficient basis to vary the costs order earlier made. 28However, the evidence now before the Court that she had no participation in, and was not responsible for, the unlawful development the subject of the proceedings, does in my opinion, provide a sufficient reason to vary the original costs order. 29The fact is that it was Mr Mihalopoulos who carried out the unlawful works to the dwelling and it was Mr Mihalopoulos who did not, when requested to do so by the council, rectify these works. Given Ms Mihalopoulos' circumstances at the time, it cannot seriously be maintained that she was in any better or equal position to do so. 30True it is that Ms Mihalopoulos ought to have filed her submitting appearance in a more timely fashion, but the delay in doing so made no practical outcome to the conduct of the proceedings, given the failure of Mr Mihalopoulos to appear at the hearing or, had he so chosen, to consent to the relief sought by the council in the summons, thereby minimising the council's costs. It was his decision, not that of Ms Mihalopoulos, to do nothing from the time that the council sought rectification of the works to the conclusion of the hearing, which necessitated the summons being filed and the hearing having to proceed to finality. It was his actions, and not those of Ms Mihalopoulos, that caused the council to incur costs for which they are entitled to be compensated ( Latoudis v Casey [1990] HCA 95; (1990) 170 CLR 534 at 566-567). 31In these circumstances it is therefore appropriate that the earlier costs order made by the Court be varied as proposed by both the council and Ms Mihalopoulos. 32In so doing, it should be noted the Court is not punishing Mr Mihalopoulos for his conduct, but is merely awarding costs in favour of the successful party in the proceedings, namely, the council, payable by the party who caused them to be incurred, namely, Mr Mihalopoulos.

Conclusion and Orders 33The orders of the Court are therefore: (1) the costs order made on 30 November 2010 is vacated; (2) the first respondent is ordered to pay the costs of the applicant of the proceedings; (3) the first respondent is to pay the applicant's and second respondent's costs of the motion; and (4) the exhibits on the motion are returned.

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