City of Botany Bay v New South Wales Land and Housing Corporation

EXTEMPORE Judgment 1His Honour : This is an application for indemnity costs. 2The substantive proceedings involved a challenge by the Council to a Part 5 approval granted by the respondent corporation to itself on 12 February 2010 for a " social housing " project within Council's area. They were commenced on 23 March 2010, and came on for hearing on 11-12 August 2010. 3In a judgment delivered on 24 August 2010 ([2010] NSWLEC 160), I dismissed the Council's amended summons (dated 21 May 2010), and reserved the question of costs, saying, in [94]: " Having been unsuccessful in its challenges the Council should expect to be ordered to pay the respondent's costs. However, as I have not yet heard the parties on that question I will formally reserve it. It should be capable of agreement, subject to the right to have costs assessed ". 4An appeal has been lodged, but the corporation filed a Notice of Motion ('NOM') on 3 November 2010 seeking a costs order against the Council - on a party-party basis up to and including 6 August 2010, and on an indemnity basis after that date. 5Since the NOM was filed the Council has formally agreed to pay the corporation's costs, but only on a party-party basis, and it has continued to resist any indemnity costs order. 6Many of the circumstances surrounding the project and the proceedings were set out at length in my judgment, and need not be repeated, save to note that a major issue of controversy falling within the court's jurisdiction was how aircraft noise was dealt with. Another issue in the background, and outside jurisdiction, was the so-called " political " issue of taking the approval process out of Council's control. 7The significance of the date 6 August 2010 is that on that date, ie within the week prior to the commencement of the hearing, the solicitors for the Corporation wrote to the Council's solicitors an " open" letter, pointing out that the development was " almost complete ", and submitting: " It is beyond any genuine contemplation that the Land and Environment Court will restrain the further carrying out of the development at this late stage particularly having regard to the public interest that is served in the completion of the development and housing disadvantaged people and their dependents. We require the council to state precisely what declarations and consequential orders it seeks having regard to the facts and circumstances which now exist. The Land and Environment Court will not grant declarations in respect of questions which are purely hypothetical or that are then not reflected in any kind of utilitarian consequential relief. We require the council to immediately specify with precision the relief that it seeks. If there is no utility in these proceedings (and we strongly believe there is no such utility) we invite your client now to discontinue the proceedings. If your client does so we will seek instructions in relation to whether or not our client is prepared to pay its costs. If your client persists with this litigation we will contend that: a it does so vexatiously, b there is no utility in the proceedings being heard and determined, and c the proceedings constitute an abuse of process. If we are forced to make that argument we will be seeking an order that your client pay our client's costs of the proceedings on an indemnity basis". 8The corporation's solicitors point out that there was no response from the Council to that letter, and, on 2 September, after the judgment, they wrote again, seeking an order for costs in the same terms as the NOM now before the court. 9On 23 September the Council's solicitors advised the Corporation's solicitors of (1) Council's instructions to launch the current appeal, and of (2) the orders it may seek, if successful, in respect of the questions of acoustic assessment and possible remedial measures. 10Effectively that letter of 23 September sought to negotiate a solution to the ongoing conflict between the parties on acoustic issues, such that the appeal could be averted. The letter suggested also that " the question of costs can also be resolved through the appeal process ". That last proposal was repeated on 11 November, and appears to have generated a separate controversy of some substance between the parties. 11The Council's Notice of Appeal was filed the day before the present NOM. 12On 11 November 2010 the Council's solicitors submitted to the Corporation's solicitors that there was no basis for any order for indemnity costs - adopting some terminology from leading authorities on indemnity costs, they contended that the letter of 6 August was more " an invitation to treat " than a settlement " offer open to acceptance ", and also an invitation to capitulate involving no " real element of compromise ". 13The letter conceded that Council should pay party-party costs, but curiously qualified the concession with the expression "but for the appeal process ". The Council also indicated that if the Corporation did not withdraw its claim for indemnity costs, the Council would seek an order for its costs on the present motion. 14The Corporation's solicitors responded the same day declining to do any acoustic testing, and seeking an early hearing of the NOM on costs. On 12 November the Council wrote back, agreeing to pay party-party costs, but the " appeal process " qualification was not repeated. 15On 22 November the court fixed the hearing of the NOM for today. 16I noted in my principal judgment (at [51]) that the Corporation's solicitors contended from the outset that the Council's claims had no basis, and, in fairness, I should now repeat my comment (in [80]) that I was " in some doubt as to what Council [was] actually seeking to achieve in these proceedings ". 17Questions of utility and discretion would clearly arise for argument and decision if the Council's challenge succeeded. The Council's position was then and remains now that it could not be specific on relief until it knew which of its challenges was successful. 18In [82] I noted the wide-ranging issues of concern to Council in bringing the proceedings, and in [83] I noted the Corporation's " need to comply strictly with the law ". 19Both the parties to these proceedings are public bodies with duties to act in what they respectively see to be in the public interest. The proceedings were conducted by well-respected legal teams, and, in acknowledging the urgency in determining the challenge, the court worked intensively for twelve days to prepare its decision. In the end, the Council's challenges all failed, but clearly the court did not see them as totally without merit justifying argument. The discussion in pars [84]-[91] shows the complexity of the consideration required, but the Council's concern remains such that it wishes to continue the conflict over aircraft noise despite its loss before me. 20Complex arguments regarding where the cost burdens of litigation should fall frequently arise before the Judges of this court. The principles which must inform the exercise of the costs discretion, especially where indemnity costs are sought, are well-established and well-known, but each case turns on its own facts. 21Mr Hale took the court to the landmark Federal Court decisions in Fountain Selected Meats (Sales) Pty Ltd v International produce Merchants Pty Ltd and Others (1988) 81 ALR 397, and Colgate-Palmolive Company and Another v Cussons Pty Limited (1993) 46 FCR 225. Pain J recently discussed the principles in Glaser v Poole (No.2) [2010] NSWLEC 232. I discussed the principles at some length, and applied them, in, for example, Ray Fitzpatrick Pty Ltd v Minister for Planning (No.5) ("Ray Fitzpatrick (No.5)") [2008] NSWLEC 183 (see pars [31]-[43], [48]-[50], and especially [79]); Monaghan v Holroyd City Council; Holroyd City Council v Monaghan and Others [2009] NSWLEC 112 (see pars [79]-[83]); and Vis Visitor Investment Services Pty Ltd v Hawkesbury City Council and Anor (No.2) [2010] NSWLEC 252 (see pars [14]-[32]). 22I frequently review those cases and statements of principle, and see no need to depart from them. In this present matter I can find no " fraud " or other " disentitling conduct ", " plainly unreasonable conduct " or " relevant delinquency " on Council's part. No " real and genuine compromise " was offered by the Corporation and unreasonably rejected by the Council (see Fitzpatrick (No.5) at [79], and Santow JA in Leichhardt Municipal Council v Green [2004] NSWCA 341). Picking up on the Corporation's contentions in the letter of 6 August, I cannot conclude that these proceedings were vexatious, or totalling lacking utility, or an abuse of process. 23In that situation an order for indemnity costs against the Council would be " punitive" , and not truly " compensatory ", as required by Latoudis v Casey (1990) 170 CLR 534, and no appropriate grounds have been made out. 24Indeed, the established authorities indicate that the motion for indemnity costs in the circumstances of this case was never likely to succeed. 25I turn then to the costs on the motion. Both sides seek an order in their favour, but it appears to me that the Corporation should pay the Council's costs of it. 26The Corporation sought indemnity costs early after the judgment and Council has never conceded any such entitlement. Council deliberated on the possibility of appeal and suggested that the question of costs be dealt with in conjunction with either that appeal or an agreed regime of acoustic testing which might obviate the need for the appeal. Council regrettably failed, prior to 12 November, to concede that it should pay costs at all, even though Mr Hale acknowledged today that, having lost before me, it was always assumed that party-party costs should follow the event. 27The Corporation's NOM was not fixed for hearing until ten days after the 12 November concession, but no grounds consistent with any established authority were advanced for an indemnity costs order, and it would be open to the court to conclude that the remainder of the NOM had no real prospects of success at any stage, and should have been reconsidered after 12 November. In the event, it did not succeed. It is just, fair and reasonable, in all those circumstances, that the Corporation should pay the Council's costs on the motion on a party-party (but not an indemnity) basis. 28Given the concession made by the Council on the question of costs, I make the following orders: (1)The Applicant is to pay the Respondent's costs of the substantive proceedings on a party-party basis. (2)The Respondent's NOM dated 3 November 2010 is otherwise dismissed. (3)The Respondent is ordered to pay the Applicant's costs on the NOM on a party-party basis.