Care and Anor v Canterbury City Council

Land and Environment Court (NSW)|2001-06-21|Before: McEwen AJ

This matter comes before the Court pursuant to the applicant's Notice of Motion dated 8 May 2001 seeking an order for costs against the Council in respect of the hearing which was conducted by Commissioner Nott on 10 April 2001. Those proceedings concerned the effectiveness of an order given by the respondent Council under section 121B of the Environmental Planning and Assessment Act 1979, addressed to the applicants in respect of premises in Canterbury Road, Roselands. The notice had a brief history and background which I ought to refer to before turning to the issue before the Court now.

The applicants are the proprietor of a business known as Domus Lighting and are the proprietors of premises at 1216-1224 Canterbury Road. Prior to 1999 the applicants used part of those premises for their own retail purposes. In August of 1999 the respondents granted a lease to Rima Collections Pty Limited of the premises described as a show room at 1224 Canterbury Road, Roselands, which I understand from other evidence to be the whole of the premises 1216-1224 Canterbury Road. At the time of granting that lease the applicants conducted a light retailing business either from those premises or the adjacent premises 1214 Canterbury Road. After the grant of the lease to Rima Collections, Rima moved into occupation of 1216-1224 and commenced operating as a shoe retailer. I infer that at about that time the applicants moved their business to 1214 Canterbury Road. Sale of footwear or shoe retailing from the premises 1216-1224 is prohibited under the relevant Council instrument.

On 25 February 1999 Council wrote giving notice under section 121H of the EP&A Act to both the applicants Mr and Mrs Care and to the manager of Rima Shoes. Those letters expressed the Council's intention to issue an order in the terms of an annexed draft order under s 121B. Those draft orders indicated that an order would be made to the recipient of the letter requesting them to cease using the premises "at 1224 Canterbury Road Punchbowl for the purpose of manufacture, warehouse and distribution or retailing of footwear". The reason given for the order was that the premises were being used "for a purpose for which development consent is required but has not been obtained".

In response to that letter Mr and Mrs Care wrote to the Council on 3 March 1999 and asked the Council not to proceed to issue an order because a development application had already been lodged with the Council in relation to the prospective or the actual use of retailing footwear. On 18 August 1999 solicitors for Mr and Mrs Care wrote to the Council concerning the use of the premises by Rima Collections; the question of rezoning of the land had by then been agitated with the Council for some time. The premises at 1216-1224 Canterbury Road had been the subject of an application for the zoning to be changed to permit the use for shoe retailing.

When the solicitors for Mr and Mrs Care wrote on 18 August 1999 to the Council, they indicated that the Cares had a belief that there had been an application to Council prior to the taking of possession by Rima Collections for use as shoe retailing, and that the Cares regarded the tenants as responsible for any compliance with Council's requirements as to the use.

There is then a significant gap in activities until 14 August 2000. On that day Council's strategic planner Mr Hewetson recorded in an internal memorandum the terms of discussion he had had with a Mr Battino, a solicitor representing Mr Care. At that point in time the Council had already indicated that it would entertain an application for rezoning of the subject site if Mr Care were prepared to amalgamate the premises at 1214 Canterbury Road with the subject premises. The motivation for this was a need to augment the car parking available to the operator Rima Collections for its shoe retailing operation.

Mr Hewetson in his memorandum records that he advised Mr Battino of the precarious situation in relation to Rima's application for development consent. He noted that the activity of Rima was being operated without consent, and that the consent would not issue until the premises had been rezoned. Clearly at that time the Council was well and truly alive to the fact that the Cares as lessors had no role to play in the actual operation of the shoe retailing activity by Rima.

There was tendered in evidence a further memorandum from Mr Hewetson of 1 September 2000 which recorded an attendance by him on a Leslie Aboud, a solicitor acting for Rima. Mr Aboud was apparently pursuing information as to what was required and also asking why the Council had taken such a "hard line" on Rima. Mr Hewetson set out the information he provided to Mr Aboud concerning the rezoning application and as to what was needed to be done to regularise the situation.

On 9 October 2000 Mr Victor Care wrote to the Council and raised a variety of matters going to the rezoning of the premises and its continued use by Rima. In particular, he noted that prior to the lease being granted to Rima he had been assured that appropriate enquiries had been made of the Council, and assurances given that development consent in relation to the further conduct of the business of the premises was either "in place or would be granted by the Council". Mr Care said that he was not privy to those conversations. He noted that the matter has been on foot for a number of years and the difficulties which would be confronted if Rima were required to cease business at the location, and he sought further time to enable the appropriate steps to be taken for the rezoning.

However, on 16 October 2000, Council issued notices to the applicants Mr and Mrs Care under section 121B of the EP&A Act. The order was "Council orders you to cease the subject premises for the purpose of shoe manufacture wholesale, retail and warehousing". The reason given for the order was that the premises were being used "for a purpose for which development consent is required and has not been obtained". The applicants then appealed to this Court by an application made the 14 November 2000. However it seems that despite the usual attendances at callovers, and directions being given as to the preparation of the matter, a statement of issues was not filed by the applicants until 4 April 2001, six calendar days before the hearing which was commenced and determined by Commissioner Nott on 10 April 2001.

It was not until the Statement of Issues was received by the Council, that it had any idea what argument was going to be raised to challenge the validity of the notice which it had issued on 16 October 2000. Relevantly in the Statement of Issues the first question raised was the legal capacity of the present applicants to enter the subject land, given the fact that they had granted a lease to Rima Collections for four years with a four year option. Secondly, it raised the question of whether or not an order under section 121B ought to have been served on Rima Collections, or on both Rima Collections and themselves the present applicants. It also raised a question of whether the notices were fair and reasonable in the circumstances, but ultimately this was not pursued.

When the matter came before Commissioner Nott, the identified challenge to the basis of the notice was pursued by the applicants. In particular, the Commissioner noted the issue raised was whether or not orders should have been served on the lessee of the applicants, or both the applicants and the lessee. The Commissioner referred to the notice and to the need, (I read from par 19 of his judgment), to find "…someone who can be ordered to cease using premises for a purpose specific to the order". He goes on, In the present case the owners have never commenced to use the premises for the sale of footwear. The owners are not currently using the premises for that purpose and if the owners are not using the premises for the purpose of the sale of footwear, then query whether it is appropriate that the notices be given to the owners.
He echoes this observation in par 23 of his judgment where he notes that the applicants who are the owners are not using the land for the purpose stated, and that receipt of rent, does not constitute a use of land.

The rationale for the Commissioner allowing the appeal is found in par 28 of his judgment. He notes that the making of the order as sought by the Council had the potential for consequences upon the possessory rights of the tenant Rima, and observes that there was an opportunity for a denial of natural justice or procedural fairness if this was done without the lessee being heard from. He otherwise did not deal with the validity of the notice other than to make the observations I have referred to in par 19 of his judgment.

It is no function of the Court in determining the question of costs in relation to those proceedings, to make any finding as to whether the notice was valid or not. The only question is whether the applicants ought have their costs of the appearance before the Commissioner.

In support of the claim for costs Mr Campbell for the applicants took the Court to the usual construction of section 69 of the Land and Environment Court Act 1979, and the question of discretion. In his submission he eschewed reliance on the Practice Direction. The reason, in his submission why these proceedings did not deal with a planning or building matter but rather, whilst being in Class 1, dealt with an aspect of the Court's enforcement of what otherwise would be or could be a punitive notice. He referred the Court to the Chief Judge's decision in Outdoor Australia v Auburn Council (1996) 89 LGRA 365. In that decision her Honour set out the rationale for the making of the Practice Direction and its relevance when dealing with discreet questions of law. The decision was sighted by Mr Justice Talbot in his decision in James Mansfield v Wyong Shire Council [2000] NSWLEC 260 and adopted by him.

Relevantly, his Honour when dealing with her Honour's decision said this in par 11, I respectively adopt Her Honour's reasoning in Outdoor Australia at 369 that the distinction between determination of merit issues on discretionary planning grounds and determinations of questions of pure law was not the foundation for the Practice Direction, but rather that parties be free to seek review of planning decisions by council without the threat of a cost order if unsuccessful.

It was that principle to which Mr Campbell referred me to in his submissions. In that context he submitted that, this not being a planning decision which is being reviewed, the ordinary rules should apply of costs following the event. He emphasised that the course taken by the Council was not only wrong in law, but the Council knew it was wrong and was on notice it was wrong and yet persisted. The difficulty with that submission is that the Council only knew some two or three working days before the hearing, the basis of the challenge to be mounted by the applicants. The answer to that no doubt is however, that it was a fairly discreet point, and even on the morning of the hearing 10 April 2001 could have been given proper consideration.

On behalf of the Council Ms Doheny submitted that the Practice Direction ought apply and did apply to this matter. These submissions were put before I had available the decision of the Court of Appeal in Maurici v Chief Commissioner of State Revenue [2001] NSWCA 78 handed down by the Court of Appeal yesterday 20 June. The effect of that decision is to rule that the Practice Direction which has been adopted and implemented by this Court for some 15 or 16 years, is invalid and is not to be given weight or paid regard to. Nonetheless, as I said earlier the principles adopted by the Practice Direction appear to me still to be relevant, that is the Court in the exercise of its discretion needs to be satisfied in matters of a planning and building nature that the circumstances are exceptional to warrant the award of costs for the reason identified by Mr Justice Talbot.

On behalf of the Council it was submitted that whilst it may have been preferable to give notice to the occupier and operator Rima, absence of notice to the operator did not invalidate the notice given to the present applicants. It was submitted by Ms Doheny that there were good and valid reasons for the issue of the notices to the applicants. It was suggested that the applicants were persons in a position of power to cause the unauthorised and illegal use to cease. However, no case was cited where an analogous situation had been upheld as being valid. The difficulty with the submission is that the notice issued under s 121B is a statutory animal and is circumscribed by the words of the section as to what it can contain and what effect it can have and how it operates.
The notice as issued directed the applicants themselves to cease the illegal use. Insofar as they were not the "users" they could not do that. This was known to the Council before the notice issued. There was a substantial argument available that the notice was therefore defective.

Ms Doheny referred me to a number of decisions concerning the application of the Practice Direction and the policy in relation to costing awarded in Class 1 matters. Although this is a Class 1 matter I do not regard it as falling into the ordinary matters dealt with in Class 1 insofar as it is not a building or planning appeal, further we are dealing with a notice given under a statute, the effects of which can be far reaching and serious.

It was submitted by Ms Doheny that the issuing of the notice was in the circumstances which obtained at the time, not capricious, nor without foundation. I do not accept that submission in terms. I accept it was not capricious, but looking at the facts of the matter it is certainly open to serious argument and doubt as to whether or not a proper foundation was available to the Council in issuing the notice. Even if it was available to the Council to do so, the fact that the Council allowed the matter to proceed in the known circumstances to it at the hearing before the Commissioner, without rectifying what the Commissioner found to be a serious defect (namely the failure to notify and give opportunity to the tenant to be heard on a matter which would impact upon the tenant's rights) was a serious omission on its part.

It is to be remembered that the granting of costs is not a punitive matter but compensatory. The question is whether or not a person brought to court unnecessarily or for reasons which are not sustained, ought be indemnified for what they have incurred in coming to court and meeting an argument, either found to have no foundation or substance, or otherwise rejected. The circumstances of the issuing of the notice were in my opinion out of the ordinary, and were indeed exceptional. The Council was well alive to the fact that Rima was the operator of the premises, it was alive also for a lengthy period of time as to the relationship between Rima and the applicants, and there was on foot for a lengthy period a rezoning application which seemed to confront difficulties due to a requirement by Council to amalgamate the subject site with further lands. All those circumstances however, suggest that whilst the issuing of the notice was not capricious it was seriously opened to doubt, and those doubts were clearly signalled to the Council when the Statement of Issues was received, albeit a number of days before the hearing.

In the circumstances of the finding of the Commissioner it was obvious that the hearing could not proceed for the reasons he referred to in his judgment. Those reasons of course were known to the Council before the matter started and indeed those matters were alive to the Council's knowledge from correspondence conversations by Council's officers with the applicants and the applicants' representatives going back 18 months or two years before the matter came to court. With hindsight it is easy to see that at the time the notices were issued on 16 October 2000, the Council's position was not carefully thought through, or perhaps even thought through at all. If it was, there were a number of matters it would have considered. The first thing it would have considered was whether or not the applicants were amenable to orders in relation to the use of the subject premises given it was not the applicants who were using the premises. Next, it would have turned its mind to who the third party occupier was, and what rights it might have had in relation to that occupation and whether in those circumstances it ought to have been given notice, or joined to the present proceedings.

The Council should have considered whether or not orders could be made against the present applicants in their circumstances which, as I have said, would have impacted on third parties who were not to be heard from. Orders under section 121B can have a catastrophic effect and consequence upon the business and lives of persons affected by them, and for that reason the operation of notices given under the section would be construed strictly. In all the circumstances, I find that the argument relating to exceptional circumstances is made out and that there is good reason why the applicants should not have to carry their own costs. I order that the applicants' costs of these proceedings including the motion today be met by the respondent.

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.

CITATION : Care and Anor v Canterbury City Council [2001] NSWLEC 169 APPLICANTS Care and Anor PARTIES : RESPONDENT Canterbury City Council FILE NUMBER(S) : 11079 of 2000 CORAM: McEwen AJ KEY ISSUES: Costs :- class 1 proceedings - order under s 121B of the Environmental Planning and Assessment Act 1979 Environmental Planning and Assessment Act 1979, s 121B, LEGISLATION CITED: s 121H Land and Environment Court Act 1979, s 69 James Mansfield v Wyong Shire Council [2000] NSWLEC 260; CASES CITED: Maurici v Chief Commissioner of State Revenue [2001] NSWCA 78; Outdoor Australia v Auburn Council (1996) 89 LGRA 365 DATES OF HEARING: 21/06/2001 EX TEMPORE JUDGMENT DATE : 06/21/2001

At a glance

Court

Decision date

Before

Source

Judgment (25 paragraphs)

Parties

Cases Cited (3)

Cited By (2)