Cobden-Jones & Anor v Woollahra Municipal Council & Ors

FOURTH RESPONDENT Rhonda Lynette Blackshaw FILE NUMBER(S) : 40052 of 2001 CORAM: Pain J KEY ISSUES: Costs :- multiple respondents - whether only one set of costs should be awarded - whether liability of respondent to pay costs is a matter for the Court to consider in awarding costs or whether it is a matter for the costs assessment officer Land and Environment Court Act 1979 s 69 LEGISLATION CITED: Land and Environment Court Rules 1996 Supreme Court Rules 1970 Pt 52A r 11 Angor Pty Ltd v Ilich Motor Company Pty Ltd (1992) 37 FCR 65; Baiada & Ors v Waste Recycling and Processing Service of New South Wales [1999] NSWCA 139; CASES CITED: Broberg v Cessnock City Council & Ors (Bignold J, NSWLEC, 27 February 1996, unreported); Cachia v Hanes (1994) 179 CLR 403; Hamill v Byron Shire Council (1998) 98 LGERA 400; Oshlack v Richmond River Council (1998) 198 CLR 72 DATES OF HEARING: 13/09/2002 DATE OF JUDGMENT: 11/29/2002

APPLICANT Mr PW Larkin (barrister) with Ms LM Byrne (barrister) SOLICITORS Spiegel & Associates

LEGAL REPRESENTATIVES: FIRST RESPONDENT no appearance

SECOND, THIRD AND FOURTH RESPONDENT Mr M Ashhurst SOLICITORS Blackshaw Lindsay

JUDGMENT: IN THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES 40052 0f 2002

29 November 2002 ALISON COBDEN-JONES and MARTIN JEREMY WATTS Applicants v WOOLLAHRA MUNICIPAL COUNCIL First Respondent ERCOLE PALAZZETTI PTY LIMITED (ACN 002 549 199) Second Respondent WILLIAM DUNLEATH BLACKSHAW Third Respondent RHONDA LYNETTE BLACKSHAW Fourth Respondent

Judgment Introduction 1 The Second, Third and Fourth Respondents have brought a Notice of Motion seeking their costs of these proceedings up until 23 November 2001, the costs of the Notice of Motion seeking costs, and their costs for 7 May 2002. 2 Leave was given to file in Court an affidavit of Ms Spiegel, the Applicants' solicitor, dated 13 September 2002 at the costs hearing. A substantial number of some 170 pages of documents were annexed to her affidavit. The documents annexed were copies of documents produced pursuant to several notices to produce issued to the First, Third and Fourth Respondents by the Applicants and documents produced pursuant to a subpoena to produce documents served on Multiplex Constructions (NSW) Pty Ltd (Multiplex) by the Applicants. 3 The Second Respondent made the development application in issue as the architect for the Third and Fourth Respondents, who are the owners of the property. Multiplex is apparently the intended builder for the project. 4 In this matter it is of assistance to briefly set out a chronology of the proceedings as follows (the reference to document numbers are to documents annexed to Ms Spiegel's affidavit): (1) On 9 April 2001 the Applicant filed Class 4 proceedings seeking relief against the First and Second Respondents. (2) On 9 May 2001 Clayton Utz filed a Notice of Appearance for the Second Respondent. (3) On 10 May 2001 Multiplex appointed Clayton Utz to act for the Second Respondent in these proceedings. Multiplex undertook to pay the costs of Clayton Utz. (document 90) (4) On 6 August 2001 the Second Respondent filed a Defence. (5) On 10 August 2001 the Third and Fourth Respondents were joined on the Applicants' motion by consent. (6) On 15 August 2001 Clayton Utz filed Notices of Appearance for the Third and Fourth Respondents. (7) On 21 August 2001 Clayton Utz accepted instructions by letter to advise the Third and Fourth Respondents in relation to the proceedings. (document 29) (8) On 21 November 2001 the Third and Fourth Respondents give instructions to Clayton Utz to file a submitting appearance save as to costs. (document 146) (9) On 23 November 2001 submitting appearances were prepared by Clayton Utz. (10) On 26 November 2001 submitting appearances were filed for the Second, Third and Fourth Respondents. (11) On 10 - 14 December 2001 the matter was heard by Sheahan J. (12) On 14 January 2002 Sheahan J delivered judgment in the matter in favour of the Respondents.

5 There has already been an agreement between the Applicants and the First Respondent in relation to the payment of costs, and consent orders were made by the Court giving effect to that agreement on 7 May 2002, with the order largely in favour of the First Respondent. The Second, Third and Fourth Respondents were represented in Court by counsel on that day (all three being represented by the same counsel) and their counsel sought to make an application for costs. However, as the Second, Third and Fourth Respondents had not filed a Notice of Motion seeking costs, the Court declined to hear an application for costs until a Notice of Motion had been filed.

6 The Respondents argued that the basis for awarding costs was Pt 52A r 11 of the Supreme Court Rules 1970 which provides that, inter alia, costs follow the event. 7 The Applicants argued that Pt 52A r 11 of the Supreme Court Rules 1970 does not apply, as these Rules were not adopted by the Land and Environment Court Rules 1996 (the Court Rules). The relevant provision regulating costs is s 69 of the Land and Environment Court Act 1979 (the Court Act). That section provides broad powers to the Court in costs matters. While the Applicants were unsuccessful in the proceedings, the Applicants submitted it does not follow that costs should follow the event in relation to all the Respondents. The Applicants also referred the Court to Oshlack v Richmond River Council (1998) 198 CLR 72 in support of the proposition that the discretion to award costs under s 69 of the Court Act is wide.

8 The Applicants are clearly correct that s 69 of the Court Act is the applicable provision in these circumstances. This provides the Court with wide discretion to determine costs matters. While the general practice of the Court in Class 4 proceedings is that costs "follow the event", the issue of costs must nevertheless be determined on the facts and circumstances of each case.

Applicants' arguments 9 Where there is another party (in this case the First Respondent) which actively defended the matter and where the other Respondents choose to be separately represented, it should not necessarily follow that the Applicants must be liable for their costs. On the basis of the decision of Bignold J in Broberg v Cessnock City Council & Ors (Bignold J, NSWLEC, 27 February 1996, unreported), the Applicants submitted there should be no order as to costs in relation to the Second, Third or Fourth Respondents

10 If this primary submission is not accepted, the Applicants submitted that documents produced by the Second Respondent and Multiplex showed that Multiplex, not a party in these proceedings, instructed Clayton Utz to act for the Second Respondent and undertook to pay the costs of Clayton Utz on behalf of the Second Respondent. The Applicants submitted that there should be no order in relation to the Second Respondent because it has incurred no costs. To the extent any legal costs were incurred they were paid for by a stranger to the proceedings, namely Multiplex, and no liability to pay legal costs has arisen for the Second Respondent based on the documents produced and attached to Ms Spiegel's affidavit.

11 In relation to the Third and Fourth Respondents, the Applicants submit that Clayton Utz purported to consent to the joinder of the Third and Fourth Respondents on the instructions of Multiplex. Following the joinder of the Third and Fourth Respondents Clayton Utz accepted instructions to advise the Third and Fourth Respondents in relation to the proceedings. The Applicants argued Multiplex was also intending to pay the costs of the Third and Fourth Respondents, although I note that there is no specific agreement to that effect in any of the documents produced. The Applicants submit that the Third and Fourth Respondents have no liability to pay Clayton Utz, but the work was to be performed on the existing Clayton Utz file pursuant to the engagement made by Multiplex. Alternatively, on 16 October 2001 Clayton Utz proposed that they be engaged by the Third and Fourth Respondents on the footing that they will be able to "continue to act in this matter and address our accounts to you" but the Applicants submit there is no evidence that the Third and Fourth Respondents actually entered into a retainer for costs and services with Clayton Utz. 12 The Applicants relied on the decisions of Cachia v Hanes (1994) 179 CLR 403 and Angor Pty Ltd v Ilich Motor Company Pty Ltd (1992) 37 FCR 65 in support of their submissions.

13 The Applicants also relied on a Court of Appeal decision of Baiada & Ors v Waste Recycling and Processing Service of New South Wales [1999] NSWCA 139 where at [55] Mason P (with whom Sheller JA agreed) stated: Where…relevant facts are peculiarly in the knowledge of a defendant or where the defendant has the greater means to produce evidence relating to those facts, then provided the plaintiff establishes sufficient evidence from which the negative proposition may be inferred, the defendant carries…an evidential burden. The Applicants argued that on the basis of Baiada the failure to produce a retainer or fee agreement from Clayton Utz or documents showing the payment of costs of Clayton Utz by the Second, Third or Fourth Respondents suggested there was no liability for costs. In these circumstances no order for costs ought to be made.

14 The Applicants submit that if the Court does not accept the above submissions then, in relation to the Third and Fourth Respondents, although an appearance was filed on 10 August it appears that there was an offer to enter into a retainer with legal representatives in mid-October 2001, so that legal costs were only incurred from the date the retainer was accepted until the submitting appearances were ready to be filed on 23 November 2001. If there is an order for costs in relation to the Third and Fourth Respondents it should only be for the period from mid-October until 23 November 2001.

Respondents' argument 15 Counsel for the Respondents argued that the Applicants' argument relying on Broberg, that costs should not be awarded because separate representation was not required, must fail based on the decision in Broberg in which the usual practice of the Court to award costs to multiple respondents was recognised and followed (reluctantly, I should note, by Bignold J). Furthermore, there was documentation in the annexures to Ms Spiegel's affidavit criticising the First Respondent's legal representation and exploring why separate representation was desirable. This suggests it was reasonable and appropriate to have that separate representation.

16 Secondly, the Respondents submitted that the Applicants were asking the Court to carry out the job of a costs assessing officer, namely determining the extent of legal costs. This is not an appropriate role for the Court. The cases of Cachia v Haines and Angor relied on by the Applicants were in fact appeals from taxation officers' rulings. A similar course should be followed here. That is, the Court should determine if costs are payable by the Applicants. It is then up to an assessing officer to review the actual amount of costs, if any, to be paid.

17 In Angor, the principle that costs are awarded by way of indemnity permits recovery of costs by a successful party who is under a legal liability to his solicitors to pay them, even if the likelihood of having to do so is remote, was approved. The Respondents argued that it is irrelevant that the Respondents may be indemnified for their costs in this case.

18 Further the Respondents said it was inappropriate to deal with the issues as the Applicants argued because the Court lacked all relevant evidence. Simply relying on documents produced pursuant to notices to produce and subpoenas was insufficient to prove the matters the Applicants were arguing. The material produced also does not cover every eventuality in relation to costs which an assessment officer must consider.

Finding Multiple defendants 19 The Applicants' primary submission was that as the First Respondent had actively defended the matter, and the Second, Third and Fourth Respondents chose to be separately represented, the Applicants should only have to pay one set of costs.

20 The Court has wide discretion to award costs and in multiple party matters has, on occasion, awarded only one set of costs where it considered this appropriate; Hamill v Byron Shire Council (1998) 98 LGERA 400. Whether I should adopt this course needs to be considered in light of the conduct of these proceedings. 21 The Applicants chose to commence their case against the First and Second Respondents. Only the First Respondent contested the hearing. The Second Respondent filed a defence but did not appear to play an active role in the matter in terms of the filing of evidence, ultimately filing a notice of submitting appearance on 26 November 2001. It appears the Third and Fourth Respondents were joined, albeit by consent, on the Applicants' motion on 10 August 2001. The Third and Fourth Respondents filed a notice of submitting appearance on 26 November 2001 without apparently playing an active role in the proceedings in terms of the filing of evidence.

22 These facts are different to those in Hamill where proceedings were commenced against only one respondent and the second respondent sought to join in the matter. In the circumstances of that case only one set of costs was awarded. I note that in Broberg an award of costs was made by Bignold J in favour of more than one respondent because, amongst other matters, the second and third respondents were sued by the applicant, their separate legal representation was not challenged or questioned and their separate legal representation did not prolong the hearing. (Bignold J also took into account that at the hearing their counsel also advanced an important argument relevant to the issues before him, which is not a circumstance relevant to these proceedings).

23 In this case the Applicants have commenced proceedings against more than one respondent. Those respondents would have had to assess the appropriate level of their involvement in the proceedings and are entitled to seek legal representation to that end. In this case that resulted in the filing of a notice of submitting appearance save as to costs by the Second, Third and Fourth Respondents not long before the hearing. Further, there is no indication that the Applicants objected at the time to the fact that the Second, Third and Fourth Respondents had separate representation (see Broberg). I do not therefore accept the Applicants' primary submission. 24 As I have not accepted the Applicants' primary submission, I will now consider whether I should make no order for costs based on the Applicants' submission that the Second, Third and Fourth Respondents have no legal liability to pay any costs.

Legal liability to pay costs Second Respondent 25 In relation to the Second Respondent the material produced pursuant to the Notice to Produce suggests that Multiplex had agreed to pay its costs. Document 90 is a letter dated 10 May 2001 from Multiplex director Karen Pedersen to the Second Respondent in which she states that "Multiplex will pay the legal costs incurred by Clayton Utz in acting for you in these proceedings." This is confirmed by the letter from Clayton Utz to Ercole Palazzeti Pty Ltd dated 10 May 2001 (document 115). 26 Whether this information truly reflects the situation in relation to the Second Respondent is less clear when documents annexed to Ms Speigel's affidavit at 170 and 171 are considered. This is a matter best dealt with by an assessing officer, in my view. I am not therefore prepared to accept the Applicants' submissions in this matter.

Third and Fourth Respondents 27 Contrary to the Applicant's assertions, the material attached to the affidavit of Ms Spiegel suggests that the Third and Fourth Respondents are liable for their legal costs rather than Multiplex (see particularly p 22, 39, 40 and 46). The issue as to whether there is an enforceable retainer agreement for costs and services under which Clayton Utz can recover its costs from the Third and Fourth Respondents, there being no signed copy of such a retainer apparently produced pursuant to a notice to produce, is, in my opinion, not a matter for the Court but a matter for the assessing officer if this matter proceeds to assessment. I am not therefore prepared to accept the Applicants' submissions in this matter. Conclusion 28 I have rejected all of the Applicants' submissions and it seems to me that it is appropriate the Respondents receive a costs order in some form in their favour in these circumstances. It is the case that the Second and Third and Fourth Respondents are interchangeable in the sense that as project architect and site owners respectively, their interests are identical for the purposes of these Class 4 proceedings. They were also all represented by the same firm of solicitors. I therefore consider only one set of costs should be made in relation to the Second Respondent, and the Third and Fourth Respondents. This may not have much practical significance as I note that, according to document 170, Clayton Utz had only one file in this matter on which all work was done for the Second, Third and Fourth Respondents, as well as Multiplex. This will need to be considered by the assessing officer if there is no agreement reached on costs. 29 I consider that an appropriate order is that the Applicants be ordered to pay the costs of the Second Respondent from the commencement of the proceedings on 9 April 2001 until the day before the date at which the Third and Fourth Respondents were joined, namely 9 August 2001. The Applicants should be ordered to pay the costs of the Third and Fourth Respondents from 10 August 2001 until 23 November 2001. 30 I note that in relation to the Third and Fourth Respondents, the Applicants argued in the alternative that their liability for costs did not arise until mid-October when a retainer with Clayton Utz was possibly entered into. I note that although I have made the order for costs in favour of these Respondents to begin from 10 August 2001, obviously the matter as to whether the Third and Fourth Respondents were liable to pay costs to their solicitors from a later date can be determined by an assessor. 31 The Second, Third and Fourth Respondents also seek orders that the Applicants pay the costs of their motion seeking costs and their costs for 7 May 2002. I consider it appropriate that the Applicants pay the costs of the Second, Third and Fourth Respondents' notice of motion seeking costs, these Respondents being largely successful on the costs issue. However, I do not consider it appropriate that the Applicants pay the Second, Third and Fourth Respondents' costs of 7 May 2002. As I have noted at par 5, the Court made consent orders in relation to costs as between the Applicants and First Respondent on that day. Although the Second, Third and Fourth Respondents were represented in Court that day and made an application for costs, the Court declined to hear such an application until a Notice of Motion had been filed. I therefore consider it appropriate that as between the Applicants and the Second, Third and Fourth Respondents each pay its own costs of 7 May 2002.

Orders Accordingly, the Court orders that:

1. The Applicants pay the costs, as agreed or assessed, of the: (i) Second Respondent from 9 April 2001 to 9 August 2001. (ii) Third and Fourth Respondents from 10 August 2001 to 23 November 2001. (iii) Second, Third and Fourth Respondents' notice of motion seeking costs heard on 13 September 2002. 2. As between the Applicants and Second, Third and Fourth Respondents, each party pay its own costs of 7 May 2002.

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