Council of the City of Sydney v Wilson Parking Australia Pty Ltd and Anor

Land and Environment Court (NSW)|2015-05-21|Before: Beech-Jones AJ

ex tempore Judgment (revised from transcript)

On 26 March 2015 the Court published its principal judgment in these proceedings; Council of the City of Sydney v Wilson Parking Australia Pty Ltd and Anor [2015] NSWLEC 42 ("Wilson (No 1)"). The Court upheld the applicant's, the Council of the City of Sydney (the "Council") claim for injunctive relief to prevent the first respondent, Wilson Parking Australia Pty Ltd ("Wilson"), from conducting a car park at the premises it leases from the second respondent at 4-6 York Street, Sydney ("the premises").
The Court stayed the operation of those injunctions up to and including 23 April 2015. The Court also stated that it was minded to make an order that Wilson pay the Council's costs of the proceedings and indicated that it would so order unless liberty to apply was exercised within 21 days.
On 15 April 2015, Wilson filed a notice of motion seeking a cost order to the effect that it be ordered to pay 70% of the Council's costs of the proceedings and the Council pay 30% of its costs of the proceedings.
On 24 April 2015, Wilson filed a notice of motion seeking an order extending the stay of the injunctive relief pending an appeal from Wilson (No 1). By agreement between the parties, the existing stay was extended until 5:00pm today to facilitate the hearing of Wilson's notice of motion.
I will deal with each of Wilson's applications in turn. This judgment should be read together with Wilson (No 1).

Costs

Wilson contended that the form of costs order that it seeks is warranted because the Council sought injunctive relief on two separate bases but was only successful in respect of one (see Wilson (No 1), at [4] to [7]). In particular, Wilson contends that the Council failed to obtain orders enforcing the undertaking given by Wilson through its then solicitors on 8 May 2012 to cease using the premises as a car park if its second Class 1 appeal was unsuccessful (Wilson (No 1) at [29]).
Wilson relied on the discussion concerning costs orders in relation to parties who succeed in respect of some claims but not others undertaken by Gleeson JA in Sze Tu v Lowe(No 2) [2015] NSWCA 91 at [38] to [41] ("Sze"). In particular, Wilson relies upon the proposition that, "[t]he party that is successful overall may be deprived of part of its costs, or ordered to pay the costs of a discrete issue" on which it was unsuccessful and that this was not limited to cases where it was "unreasonable for the successful party to raise the issue on which it failed" (Sze at [40] citing Rosniak v Government Insurance Office (1997) 41 NSWLR 608 at 615D).
Senior counsel for the Council, Mr Kirk SC, accepted the application of these principles, but also submitted that overall a costs order must "reflect a broad evaluative judgment of what justice requires" (see Gray v Richards (No 2) [2014] 315 ALR 1 at [2]). He contended that the undertaking issue that was litigated in Wilson (No 1) was not dominant or severable and, even if it was, the costs order sought by Wilson dramatically overstated the relative proportion of time and cost involved in litigating that issue.
Further, Mr Kirk SC contended that notwithstanding the statement in Sze based on Rosniak just noted, it was still relevant to consider the reasonableness of a successful plaintiff's action in litigating the unsuccessful issue (see Gray at [3]), as part of the "broad evaluative judgment" that must be exercised. He submitted in this case that aspect had particular force because, not only was it not unreasonable for the Council to seek an injunction based on Wilson's undertaking, it would have been remiss for it not to have.
Finally, Mr Kirk SC submitted that no order in the form sought by Wilson should be made. Instead he submitted that, if the Court was minded to consider a costs order based upon each party's relative success, the better course was to simply reduce the costs payable to his client to minimise the costs of the assessment process while also having regard to the likelihood that Wilson's costs were higher than the Council's.
The relevant principles applicable to this area of discourse contemplate a departure from the usual order or rule that costs follow the event if the successful party unsuccessfully pursued a claim or issue that was "dominant or separable" (see Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [308]). In my view, the Council's claim concerning the enforcement of the undertaking was not a dominant issue but it clearly was a separable issue. Subject to three matters, a costs order reflecting the Council's relative success on that claim compared to the existing use rights claim is warranted.
First, I do not consider that any further apportionment of the sub-issues won and lost in relation to the undertaking issue is justified given that the overall exercise being undertaken is an amelioration of the order to be made in favour of a successful applicant and, subject to the next point, it was that applicant who chose to litigate on this issue (see Griffith v The Australian Broadcasting Corporation (No 2) [2011] NSWCA 145 at [19] and Sze at [41]).
Second, if I had determined the costs of proceedings that have been solely based upon a claim for enforcement of the undertaking, I would have made no order as to costs rather than an order that the Council pay Wilson's costs. From the Council's perspective it was entitled to be indignant at the refusal to comply with its undertaking and to, in effect, feel compelled to seek to enforce it. Wilson's departure from its own undertaking, proffered through solicitors, occasioned the Council incurring the cost of these proceedings (see Wilson (No 1) at [77]). In these circumstances a "broadly evaluative judgment" warrants the conclusion that Wilson's departure from its own undertaking would have warranted in such separate proceedings an order that there be no order as to costs.
Thirdly Wilson's solicitor provided an affidavit estimating that the costs referable to the undertaking issue were 30% of the overall costs of the proceedings. One advantage that solicitor had in making that assessment is knowledge of the preparatory work undertaken by Wilson and its legal team in preparing that part of the case, some of which is outlined in the affidavit. However, the Court also has the advantage of having considered closely the course of the hearing of the proceeding. If the Court was to consider it based upon the hearing then its assessment of the proportion of costs referable to the undertaking issue compared to the existing use rights issue, would have been 10 to 15% compared to 85 to 90%. Certainly, if the proceedings had only concerned the undertaking issue they would have concluded within a day rather than three days, involved a vastly reduced amount of documentary evidence and much smaller written submissions.
Allowing some deference to Wilson's solicitors' assessment the costs order that I will make will reflect a 75/25% assessment of the costs involved in the litigating of the existing use rights issue compared to the undertaking issue, (including so much of the case as concerned Council's unsuccessful claim that Wilson was subject to an estoppel of the kind stated in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 from raising its existing use offence).
Accordingly, the Court will order Wilson to pay 75% of the Council's costs in the proceedings.

Stay

The parties accepted that the relevant principles governing the granting of a stay pending appeal were summarised in the following passage from Kalifair Pty Ltd v Digi-Tech Australia Ltd [2002] 55 NSWLR 737 ("Digi-Tech") at [18]: "Thus the relevant principles are analogous to those which govern the grant of interlocutory relief before trial to protect the status quo. The appellant must show that the appeal raises serious issues for the determination of the appellate court, and that there is a real risk that he will suffer prejudice or damage, if a stay is not granted, which will not be redressed by a successful appeal. This requirement will be satisfied if the appeal will be rendered abortive or nugatory unless a stay is granted. If these pre-conditions are established the Court will then consider the balance of convenience."
The first matter is to determine whether the appeal raises serious issues for the determination of the appellate court.
The relevant part of the judgment which is the subject of appeal is that part of Wilson (No 1) which rejected Wilson's contention that it had established an existing use right of a kind that enabled it to conduct a commercial car park at the premises. The Court found that Wilson failed to do so because it did not establish that the use of the premises by Mr Dalziel as a car park from September 1946 was not prohibited under subclause 6(1) of Interim Development Ordinance 105 (Wilson (No 1) at [186] and [194]).
The Court also found that Wilson failed to establish any relevant form of existing use as at 16 July 1971 so as to engage the existing use provisions of clause 32 of the County of Cumberland Planning Scheme Ordinance and subclause 26(1) of the City of Sydney Planning Scheme Ordinance (Wilson (No 1) at [207]). That finding was made by reference to the existing use right that had been identified by the Court, mainly "non-dedicated car parking". However, the finding was also made by reference to an existing use right characterised in the manner that had been submitted by Wilson (Wilson (No 1) at [207]). Further, the Court found that the same position applied in the period after 1971 (Wilson (No 1) at [209] to [210]).
The Court also found that, even if such an existing use right had been established, there was an unauthorised intensification or enlargement by the use of the area of the premises that had previously been used by the Bank of New South Wales for cash cars (Wilson (No 1) at [209] to [217]), and that any existing use rights for car parking on the roof of an electrical substation at the premises did not survive the construction of that substation in 1975 (Wilson (No 1) at [229]).
Wilson filed a notice of appeal on 13 May 2015. Its grounds of appeal appear to challenge most but not all of these findings. Nevertheless it can be expected that as the appeal progresses any such deficiencies in its notice of appeal will be addressed.
The written submissions in support of the stay application do not appear to engage with the reasoning in Wilson (No 1). Nevertheless I am proceeding on the basis that Wilson's appeal is reasonably arguable, that is that there are "serious issues for the determination of the appellate court" (Digi-Tech at [18]). None of the matters determined in Wilson (No 1) turned upon any distinctive advantage enjoyed by me as a trial Judge. Instead, a brief reading of Wilson (No 1) reveals that the decision turned upon questions of characterisation and the interrelationship between common law principles concerning existing uses and a complex statutory scheme. There are certainly matters of substance to be debated on appeal.
Next it is necessary to consider the prejudice or damage that is said will be suffered but not redressed by a successful appeal, and the question of whether the appeal will render the subject matter of the proceedings "abortive or nugatory unless a stay is granted" (Digi-Tech at [18]).
Wilson has operated the car park at the premises since September 2008. It provides car parking for a maximum of 15 cars. A full time attendant is employed at the car park. The car park has been profitable from some time shortly after it commenced. By the middle of 2014, it was earning approximately $22,000 net income per month. In oral evidence on this application Wilson's general manager stated that the net income had now risen to $28,000 per month. The rental of the premises is $8,000 a month.
In an affidavit sworn in support of the application, the general manager stated as follows: "20. Whilst I cannot say with absolute certainty, my observation is that the car parking business on the subject site is dependent on regular users who park at the same locations as a matter of habit. If the subject site was to be closed for any more than, say, 2 or 3 weeks, there would be a loss of the existing customer base such that there would be a period of months before trade would return to the existing levels. 21. It is my belief that, if Wilson Parking's use on the land was required to cease for a period of any more than 2 or 3 weeks, it would cause Wilson Parking to terminate the lease. This is because the costs of maintaining a lease over an empty site in anticipation of re-establishing the car park would be economically unviable. 22. For these reasons, I believe that in the event that Wilson Parking is not given a stay of the Court's orders, our lease would come to an end, Wilson Parking would vacate the premises and it would be uncertain that a new lease could be obtained. Therefore, if a stay of the orders was not granted until the determination of the appeal, the appeal would be of no practical utility and abandoned."
There was some debate about the deponent's ability to assert what he said in [20] of the above extract. Having heard his evidence, I accept that it had a proper foundation. In relation to [21] to [22], Wilson's general manager explained the decision to surrender the lease was one that was to be made by Wilson's chief executive officer, but that would be made on his recommendation. The deponent confirmed that leaving aside rent, the holding costs of the premises would be minimal if they were not used as a car park but left vacant. He stated that the car park attendant could be redeployed elsewhere in Wilson's operations.
Three further matters should be noted. First, Wilson's most recent financial report confirmed that it is a large commercial business. For the financial year ended 30 June 2014, it recorded a profit before tax of $32,544,615 and had net assets of $136,511,415.
Second, to this time, Wilson has incurred in excess of $250,000 in defending these proceedings. The general manager stated that he had been advised that it is likely that it will incur a further $200,000 if it pursues its appeal but fails and is ordered to pay the Council's costs.
Third, for the purpose of this application I am assuming that the resolution of any appeal will take approximately six to nine months, and that, consistent with [20] of the affidavit extracted above, if Wilson succeeds in the appeal it will be a further three months before the car park can return to full profitability.
Subject to one matter, in those circumstances, it can be determined that if Wilson is denied a stay but pursues its appeal then it is likely to incur holding costs for a vacant site of somewhere between $48,000 and $72,000 until the resolution of the appeal, together with a commensurate loss of profits. If it succeeds in the appeal, then after a period of some three months it can expect to resume a business that is at the current level of profitability.
The one matter of exception is the evidence of the general manager that if Wilson is denied a stay it would surrender the lease. It was not directly put to the general manager that this aspect of his evidence should be rejected. However, it was submitted by Mr Kirk SC that if such a decision was made it would be commercially irrational given the likely capacity of a car park to return to profitability even if it shut down, and the amount that Wilson has spent to date and is willing to spend to keep it open.
For the purposes of this application it suffices to state that, if following the refusal of any stay, Wilson chooses to close the car park because it is not prepared to incur holding costs of approximately $8,000 a month, then that would not be an instance of the refusal of a stay rendering the appeal "abortive or nugatory", as discussed in Digi-Tech at [18]. A party with the means and capacity to incur a modest level of holding costs pending an appeal which, if successful, will lead to the resumption of a profitable business, cannot force a stay by declaring it will abandon the business if a stay is not granted. It follows that, in terms of the prejudice that would be occasioned if the stay were not granted, I am satisfied that it consists of the holding costs and loss of profits that I have referred to earlier.
In terms of the prejudice that would be occasioned if the stay were granted, it was not suggested that the Council would suffer any financial loss or economic harm from a continuation of the business via a stay. However, the Council points to the public interest in the vindication of the relevant planning regime as a matter which is to be afforded significant weight in the exercise of the Court's discretion of whether or not to grant a stay. The Council relied upon D'Anastasi v Environment Protection Authority and Anor (No 2) [2010] NSWLEC 268 at [20] to [32]. I will return to address that contention.
The raising of this argument by the Council led to a debate in the respective parties' affidavits about the relative benefits and detriments of the continuation of a private car park at the premises. This included an assertion in one of the Council's affidavits that "each additional day [of use by Wilson] beyond the current orders of the Court offends the city's policy". Similarly, an affidavit filed on behalf of Wilson points to the various public benefits that are said to arise from the operation of a private car park in York Street. Reference was also made to a recent inquiry by a State Government transport body about the possible use of the car park as a place for off street parking for trade vehicles, which would be necessitated in the event of the construction of a light rail in the area, as that will apparently eliminate on-street parking.
At least so far as this application is concerned, this is a Court of law not of policy. The relevant public interest is expressed through the planning instruments that apply and the legislative context in which they are found. This Court has already determined that the pursuit of a private car park at the premises is not a development that can be pursued under the planning regime (Wilson Parking Australia 1992 Pty Ltd v Council of City of Sydney [2012] NSWLEC 1319, "Wilson Parking 2012"; see Wilson (No 1) at [30]). Thus the relevant public interest in the enforcement of the planning regime as established by law is embodied in the decision in Wilson Parking 2012.
Whether the public interest in the enforcement of a planning regime is simply a matter to be weighed in the balance of convenience for or against the grant of a stay, or is a matter that warrants a greater weight and is not to be subsumed in the determination of the balance of convenience, is not straightforward. In New South Wales Bar Association v Stevens [2003] NSWCA 95 at [83] and [104], the Court of Appeal adopted the latter approach in the context of a finding of professional misconduct against a barrister and the obvious need to protect the interests of the public that would be imperilled by such a person practising law.
In the context of a planning control where there is no immediate public concern from the operation of a car park, the position is less clear. I will assume in Wilson's favour that the position in Stevens is not apposite to this matter and instead, the public interest is simply a matter to be weighed in the assessment of the balance of convenience. Nevertheless, I will refuse a stay beyond a short period that is necessary to enable Wilson to apply to the Court of Appeal.
On the Court's findings, it has been over six years since Wilson commenced operating a car park contrary to law. It is over three years since it gave an undertaking to cease operations if its second Class 1 appeal was denied (see Wilson (No 1) at [29]), and over a year since it failed to comply with that undertaking. The time has arrived for the public interest and enforcement of the planning controls to be vindicated. Against that, a refusal of a stay will occasion Wilson a modest level of financial prejudice which it can readily absorb if it chooses to. If it succeeds in its appeal, it can return to the operation of the car park unless it chooses to surrender the lease in the meantime.
Accordingly, the application for a stay pending appeal will be refused, except that I will extend the existing stay until 5:00pm on Tuesday 2 June 2015. This will enable Wilson to apply to the Court of Appeal for a stay if it so chooses and it will enable it to do so after it receives these reasons for judgment reduced to written form.

Orders

Accordingly the Court orders: 1. The first respondent pays 75% of the applicant's costs of these proceedings. 2. The first respondent's notice of motion filed 15 April 2015 be otherwise dismissed. 3. Orders 2 and 3 made on 26 March 2015 be stayed up to and including 5pm on 2 June 2015. 4. The first respondent's notice of motion filed 24 April 2015 be otherwise dismissed.
For the sake of clarity, I indicate that the costs of today are subsumed into Order 1.

Amendments 29 May 2015 - [7] Amend spelling of Justice Gleeson. 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. Decision last updated: 29 May 2015

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Judgment (5 paragraphs)

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Cases Cited (10)