186 CLR 622
Ralph Lauren 57 Pty Ltd v Byron Shire Council [2014] NSWCA 107
Source
Original judgment source is linked above.
Catchwords
ex parte Lai Qin [1997] HCA 6186 CLR 622
Ralph Lauren 57 Pty Ltd v Byron Shire Council [2014] NSWCA 107
Judgment (7 paragraphs)
[1]
Background
The facts and events related in the following paragraphs are taken from the affidavits read and documents tendered by the parties. None of the deponents to those affidavits were called in the hearing before me.
The respective properties of Mr Dowling and Mr and Mrs Haralambides each enjoy water frontage to Tarban Creek, a tributary of the Parramatta River west of Sydney Harbour. Tarban Creek lies to the south of each property with the property of Mr Dowling to the east of the property owned by Mr and Mrs Haralambides.
In July 2013 Mr Haralambides contacted Mr Dowling to indicate that he and his wife proposed to carry out renovations to the existing dwelling on the Property. A meeting was arranged and plans of the building work then proposed were shown to Mr Dowling. As a spa pool was located towards the south-western corner of Mr Dowling's property, he was concerned to peruse the plans then shown to him with some care so as to ensure that the renovations proposed by Mr and Mrs Haralambides did not have the potential to provide any or any additional impact upon the privacy of the spa pool area on his property. Being satisfied that no such impact was apparent from the plans then shown to him, Mr Dowling indicated at the meeting that he would raise no objection to the alterations and additions shown in those plans.
On 6 August 2013, Complying Development Certificate 420/13 was issued for alterations and additions to the dwelling on the property of Mr and Mrs Haralambides (the CDC). The CDC was issued by Ken Smith of the firm Rapid Inspect, Mr Smith being an accredited certifier within the meaning of the Environmental Planning and Assessment Act 1979 (NSW) (the EPA Act). The CDC was issued in purported reliance on the provisions of State Environmental Planning Policy (Exempt and Complying Development Codes) 2008 (the SEPP), the assumption being that the work met the requirement of the General Housing Code under Pt 3 of that SEPP.
Building work began on the Property early in February 2014. One of the early actions of the builder undertaking that work was to demolish the walls of the upper floor on the Haralambides dwelling. As the demolition of those walls did not accord with Mr Dowling's recollection of the plans that he had been shown by Mr Haralambides, a meeting was arranged between the two in order further to discuss the intended work.
That meeting took place on 8 February 2014 at Mr Dowling's home. Mr Haralambides brought with him the plans stamped by the accredited certifier and showed them to Mr Dowling. That was the first occasion upon which Mr Dowling came to appreciate that approval had been given by the issue of the CDC. On perusing the plans he told Mr Haralambides that they differed from the plans he had been shown in August 2013. In particular, he noted that a proposed first floor balcony extended along the southern elevation of the building with a return along the eastern elevation so that the latter section of balcony appeared directly above the spa and yard area of Mr Dowling's property.
When Mr Dowling protested that the balcony had not been drawn on the plans that he was first shown, his statement was challenged by Mr Haralambides. While Mr Dowling stated that he was happy for the Haralambides dwelling to be renovated and modernised, he had serious issues with the balcony extension, particularly its eastern extension which impinged upon his privacy. As a consequence, he requested a copy of the plans to enable them to be discussed with his architect. Mr Haralambides declined to provide the plans, stating that a copy could be obtained through Hunters Hill Council (the Council). The exchange then became somewhat heated, as a result of which Mr Haralambides left.
Following that meeting, Mr Dowling engaged Stephen Grech, an architect, to provide advice. Mr Grech was instructed to contact the Council both to relay the concerns expressed by Mr Dowling and also to obtain a copy of the plans that were the subject of the CDC. Mr Dowling states that he took that course in order to avoid any further confrontation with Mr Haralambides and in an endeavour to have his concerns resolved by negotiation between Mr Grech and both the architect and certifier retained by Mr Haralambides.
On 10 February 2014, Mr Grech ascertained from the Council that Mr Smith of Rapid Inspect was the Principal Certifying Authority for the building work at the Property. He contacted the office of Mr Smith by telephone but was advised by a person at the office named Alice that Mr Smith was overseas and would not return until 17 February 2014.
The following day, Mr Grech sent an email to the office of Mr Smith, requesting a copy of the complying development certificate documents including an amended certificate that, according to the information supplied to him by the Council, was "not accepted" by it. No immediate response was received by Mr Grech to that email.
The plans held by the Council and apparently provided to it by Mr Smith were inspected by Mr Grech on 12 and again on 13 February 2014. Copies of some of these plans were then provided to Mr Grech. According to his assessment of the plans, the floor plan that was the subject of the CDC issued on 6 August 2013 did not show a first floor balcony on the southern end of the building although the elevations did depict the balcony. That inconsistency had been corrected by an amended CDC dated 14 November 2013.
The plans inspected by Mr Grech at the Council also showed the existing upper level eastern and western wall of the dwelling as being retained, albeit that a different window configuration was shown. Other anomalies or inconsistencies with the plans were identified by Mr Grech.
By an email sent to Mr Smith on 17 February 2014, Mr Grech asked that Mr Smith telephone him in order to discuss the "inconsistencies" identified by Mr Grech in the plans that he had inspected at the offices of the Council. That email was followed by a more detailed email sent to Mr Smith on 19 February in which Mr Grech sought to detail the "anomalies" to which his earlier email had referred. In the latter email, Mr Grech also identified matters arising from the plans indicating to him that the proposed alterations and additions on the Property did not meet the standards stipulated in the General Housing Code under the SEPP, with the consequence that they could not be authorised by the issue of a complying development certificate.
A response, by email, was sent by Mr Smith to Mr Grech on 20 February 2014. In that email, Mr Smith stated:
"We are currently working through the issues.
The owner has been verbally requested to cease works and an inspection of the site carried out yesterday. As it stands now the owner of the land will be required to liaise with Council regarding the formalisation of the first floor removal which does not form part of his current approval."
The request by Mr Smith to cease work was not heeded by Mr Haralambides. Early on the morning of 21 February, Mr Dowling observed that building work was being undertaken at the Property. During the course of that morning, Mr Grech, at the request of Mr Dowling, reported to both Mr Smith and to the Council that work was continuing despite Mr Smith's request that work cease. Mr Smith responded promptly by stating that "the owner" had been advised in writing to cease work. Mr Smith also stated:
"The works that have been carried out onsite are outside my scope of engagement as such the matter must be addressed by Council, it is the owners responsibility to take this up with Council.
Written advice will be provided to Council."
The Property was inspected by an officer of the Council that same day. Following that inspection, the Council wrote to Mr Smith, recording that building work was being carried out at the time of that officer's inspection despite the request from Mr Smith that work cease. The letter also records that the inspecting officer requested "all tradespeople onsite" to stop work. Apparently as a consequence of that request, building work did then stop.
On 24 February 2014, Mr Haralambides and his then solicitor met with officers of the Council concerning building work at the Property. According to the information subsequently given to Mr Grech by one of those Council officers, Mr Haralambides had given an undertaking to the Council that he would not proceed with any further building work for the present other than to take delivery of items that had already been ordered, as well as attending to fencing of the site in order to ensure site safety. When, on enquiry made by him, this information was relayed to Mr Grech, the Council officer stated that "the ball is now in the owner's court".
On 3 March 2014 Mr Grech received a telephone call from Kon Vourtzoumis, the architect engaged by Mr and Mrs Haralambides for their building alterations and additions. The purpose of the telephone call was to understand and discuss the concerns of Mr Dowling with the alterations and additions proposed for the dwelling. In an email sent later that day by Mr Grech to Mr Vourtzoumis, the concerns expressed by Mr Dowling were stated, including the apparent amendment to the plans so as to provide for the first floor balcony both on the southern elevation and extending that balcony to the east, impacting upon Mr Dowling's property. The email also stated that Mr Grech would continue to assist in resolving the issues, while relaying the concern of Mr Dowling that there had not been an earlier response when concerns had been raised.
On 10 March 2014 Mr Vourtzoumis forwarded a copy of amended architectural plans and elevations to Mr Grech, indicating that those plans were intended to address the concerns raised by Mr Dowling. The amended plans showed the eastern side of the first floor balcony had been reduced so as to align with the eastern wall of the first floor. The plans showed a privacy screen at the eastern end of the balcony, 2.1m in height to be constructed of vertically oriented and angled louvre blades. The accompanying email from Mr Vourtzoumis also explained that existing elements of the building shown on the original plans to be retained had been removed because, on an engineer's inspection, they were shown to be inadequate to support the alterations and additions that the plans otherwise shown as being proposed. The email further stated that Mr Haralambides was presently negotiating with the Council and Mr Smith to recommence works and to do so in accordance with "the original CDC approval".
Mr Grech responded by email on 14 March 2014. He stated that the plans provided to him did not show sufficient detail to enable them to be assessed. The further detail required was outlined. His email also indicated what were identified as being "fundamental concerns" with the private certifier's assessment of the application as evidenced by a number of specific matters raised by Mr Grech in his email of 19 February 2014 to Mr Smith and which had never been addressed in any response from Mr Smith. The email from Mr Grech concludes by indicating that Mr Dowling would prefer an independent authority, such as "Council" to be responsible for assessing any amendment to the proposal.
On the morning of 26 March 2014, Mr Dowling observed that building work was being carried out on the Property. He contacted Mr Grech who, in turn, reported that observation by email to the officer of the Council with whom he had previously dealt. He enquired as to whether there had been "any change to the status quo" at the Property. The officer responded by email later that day, indicating that to the knowledge of the Council "no works were to be carried out on the property until further notice and that the issues raised have been resolved". The email from the Council indicated that the matter "will be investigated". The evidence does not reveal whether any investigation on behalf of the Council was then carried out.
The email response then given by the Council was consistent with a letter written to the Council by the solicitors then acting for Mr and Mrs Haralambides on 13 March 2014. In that letter the solicitors stated that Mr and Mrs Haralambides would "not undertake any further works on the premises until such time as he [sic] resolves the outstanding issues referred in our discussion with his neighbours and also his Prescribed Certifying Authority [sic]".
Mr Dowling states that work then "slowed" until it later recommenced "with full force". On 23 April, he noticed work being undertaken on the Property involving the reinstatement of wall framing panels.
Prior to that date, Peter Boyce of Peter J Boyce & Associates, an accredited building certifier, had been approached by Mr and Mrs Haralambides to assume the role of principal certifying authority for the building works on the Property. Their explanation for approaching Mr Boyce was that they had been unable to contact Mr Smith concerning the written request made by him that work should cease. The history of controversy surrounding the proposed alterations and additions to their dwelling was apparently explained to Mr Boyce who advised that they needed to seek legal advice in relation to the walls that had been demolished but not identified as such by the CDC.
Subsequently, Mr Boyce was provided with an advice from Ian Woodward Solicitor, as a consequence of which Mr Boyce issued an amended CDC on 15 April 2014. Following the issue of the modified CDC, building work resumed on the Property.
When Mr Dowling's observation of work occurring on 23 April was reported to Mr Grech, he contacted Mr Boyce by email on 24 April. In that email Mr Grech expressed concern regarding the safety of the site, particularly as it pertained to the common boundary between the Property and the Dowling property. Reference was made to damage occasioned to the boundary wall on 24 February and the potential risk of damage to property by reason of scaffolding presently erected on that boundary. That concern was reflected in a further email sent to Mr Boyce on 28 April attaching a photograph of what is said to be a scaffolding screen that had fallen onto the Dowling property, causing damage to a timber bench.
On 29 April Mr Grech again contacted Mr Boyce by email and also had a telephone discussion with him. It was then that Mr Grech learned that Mr Boyce had issued a further modified CDC on 15 April. His email briefly outlined the result of his earlier dealing with Mr Smith, including the issue by the latter of a stop work letter, and indicated that a number of matters raised with Mr Smith concerning the issue of the CDC had not been answered. A copy of the email from Mr Grech to Mr Smith dated 19 February in which those matters were particularised was provided to Mr Boyce, with a request that the latter respond to the outstanding matters. Those matters included the appropriateness of the CDC, in the circumstance, to authorise the proposed building work.
In the meantime, Mr Dowling had contacted his present solicitor, seeking advice and assistance in relation to the building works being undertaken on the Property. The intervention of Mr Dowling's solicitor resulted in a meeting being appointed on the following day, involving not only that solicitor and Mr Grech but also Mr Boyce.
The meeting took place in the morning of 30 April 2014. The work that had been carried out on the Property was inspected and that work examined in the context of the plans that were the subject of the modified CDC granted by Mr Boyce. In the course of that meeting Mr Boyce stated that he would direct the owner to amend the eastern extension of the balcony and to do no more work on the balcony until the issue of its redesign was resolved.
In the course of that meeting a question arose as to the presence in the location of the proposed balcony of a beam that appeared to be an important component in constructing that balcony. According to Mr Grech, Mr Boyce indicated that he would direct the owner to remove that beam. According to the evidence of Mr Boyce, he described a beam as being "propped up" next to the location of the proposed balcony and that any works on the proposed balcony could not commence until the beam was removed from its props and relocated into position.
Early in the afternoon of that same day Mr Boyce advised Mr Grech by email that Mr Haralambides had agreed to do no further work on the balcony until he (Mr Boyce) confirmed that the matter had been resolved. Mr Boyce further stated that the deck "will be trimmed back in line with the house wall" with a privacy screen at the eastern end of the deck 2100mm high "with vertical aluminium flat bar system at 45º towards the rear".
After that email was received by Mr Grech, Mr Dowling observed further building work being carried out on the Property, including what he believed to be was work related to the balcony. That work appeared to involve the installation or fixing of a beam that had been the subject of discussion earlier that day. He photographed the beam in place as he observed it and sent the photographs to Mr Grech, asserting that work was being carried out on the balcony, contrary to the assurance given earlier in the day that no further work on that part of the building would be carried out.
Mr Grech viewed the photograph sent to him by Mr Dowling and formed the opinion that the beam was intended to support the balcony on the eastern side of the Haralambides dwelling. As a consequence, he sent an email to Mr Boyce stating that works were being carried out on the balcony, contrary to the statement made in the earlier email from Mr Boyce that no such work would be carried out. Later that evening Mr Boyce replied by stating that the beam was intended to provide support for the ground floor roof as well as supporting a post intended to support the upper floor roof. He denied that any work was being undertaken in relation to the balcony.
Notwithstanding that denial, it was, at least in part, later contradicted. In a letter from Mr Haralambides' former solicitor dated 2 June 2014 to the solicitor acting for Mr Dowling, it was stated that the beam had a dual purpose, one of which was "supporting the proposed balcony".
In addition to the actions of Mr Grech on 30 April, letters were also sent that day by Mr Dowling's solicitor both to Mr Boyce and to Mr Haralambides. The letter asserted that the CDC that had been issued and modified both by Mr Smith and by Mr Boyce did not relate to "complying development" as the work did not meet the standards for such development stated in the SEPP. The particular basis upon which that assertion was made was stated. The letter also referred to the stop work "order" issued in February 2014 (by Mr Smith) and noted that the "order" had not been lifted. As a consequence it was asserted that the works being undertaken contravened the EPA Act.
The letter from Mr Dowling's solicitors to Mr Boyce requested that he immediately issue orders under s 109L and s 121B of the EPA Act, requiring, amongst other matters, the cessation of all works on the Property and the demolition of other works that had been carried out including "the balcony that has been constructed on the eastern side of the property". The letter to Mr Haralambides was in similar terms except that it required him to cease work and identified the specific works that he should demolish, including the balcony work.
By further email from Mr Grech to Mr Boyce sent on 1 May 2014, Mr Grech maintained his opinion that the steel beam photographed the previous day by Mr Dowling appeared to form part of the balcony construction, although he acknowledged that in the absence of drawings he was unable to comment upon "the function of this structure other than to note its proximity to the offending timber member". He also raised a number of matters concerning the plans and issue of a complying development certificate when there appeared to be standards that were not met and which were required to be met if such a certificate was issued for residential building work. Responses to questions in this regard raised both with Mr Boyce and his predecessor, Mr Smith, were sought.
On 1 May 2014, the Council also wrote to Mr Boyce concerning the modified CDC issued by him. Issues raised in a letter sent to the Council by Mr Dowling's solicitor were said to constitute "serious allegations" as to whether the alterations and additions met the requirements of the SEPP. The Council's letter then stated that it "is concerned with the validity of your certificate as it was issued after the commencement of Council's Local Environmental Plan 2012". The letter asserted that there was a foreshore building line imposed by the 2012 LEP and, as well, the Property was classified as "Riverfront Area". As the Property was so affected by those provisions of the LEP, attention was drawn to the provisions of the SEPP which appeared to exclude land so affected from application of the General Housing Code.
By reason of the matters raised in that letter, the Council asked that Mr Boyce "clarify" the following:
"1. The validity of your CDC making reference to, the Parts and Clauses of the Codes SEPP used in your assessment, and the concerns raised by Hunt and Hunt Lawyers.
2. Whether the work being undertaken on the site is being carried out in accordance with the CDC."
The letter sought a response to these matters by 9 May 2014. The evidence does not disclose any response to the Council's letter.
The summons commencing the present proceedings was filed on 2 May 2014.
[2]
Events following the commencement of proceedings
By letter dated 2 May 2014, solicitors acting for Mr Haralambides responded to the letter of 30 April 2014 written to him by the solicitors acting for Mr Dowling. That letter was received by Mr Dowling's solicitors on 5 May 2014. The solicitors acting for Mr Haralambides denied that his development was not "complying development"; asserted that "all works" were pursuant to the State policy; denied that any stop work order had been issued by any relevant authority, including a certifying authority and stated that any proceedings commenced on behalf of Mr Dowling would be defended.
The summons issued on behalf of Mr Dowling was returnable before Court on 9 May 2014. On that date directions were made in the form of short minutes of order signed by the solicitors acting for the parties. Those directions required that the defendants serve their lay evidence in chief, together with additional documents and points of defence by 23 May 2014 with further directions made for the subsequent service of any affidavits in reply by the applicant and a direction as to the joint conferencing of experts retained by the parties. The first step required by those directions, namely the step to be taken by the respondents, was never taken.
In a telephone discussion between solicitors on 8 May, the solicitor then acting for Mr Haralambides maintained, somewhat forcefully, that the CDC was valid. He repeated the position he had stated in this regard in a discussion between the same solicitors on 12 May.
On 14 May 2014 Mr Boyce issued a notice to Mr and Mrs Haralambides under s 121H of the EPA Act, stating his intention to give a notice under s 121B of that Act, requiring the cessation of building work at the Property. The terms of the notice indicated that work was to cease "as the Complying Development Certificate may have been issued not strictly in compliance with the State Environmental Planning Policy of 2008". In the alternative, it was stated that an application may be made to the Council "for a Development Approval for Council's consideration [sic]". The evidence does not indicate that any building work was carried out after this date.
That notice was followed by an order given by the Council on 19 May 2014. The order was said to be given in accordance with order No 19 in the Table to s 121B(1) of the EPA Act. The order stated that building work was being carried out in contravention of the Act and that Mr Haralambides, to whom the order was addressed, was required to cease carrying out "all building work at the subject premises". The reasons stated for the order recite the history of CDCs that were issued, the applicable planning instruments at the time at which both the original certificate was given and at the time at which the modifications of that certificate took place, with the reasons ultimately contending that building work was only able to be carried out "pursuant to development consent granted by the Council pursuant to the EP&A Act".
The order given by the Council on 19 May 2014 was preceded by a letter from its solicitors on 15 May 2014 to the solicitors then acting for Mr Haralambides. In their letter, the Council's solicitors indicated their awareness that the present proceedings had been commenced, reciting the history of granting an amending CDC for work at the Property and the applicable planning instrument at the time of each grant. By their letter, the Council's solicitors indicated that there were issues as to the validity of the CDC and invited the solicitors for Mr Haralambides to provide any information "or arguments" in relation to the validity of the CDC. Again, the evidence does not disclose whether there was a response to that letter.
The parties agreed to attend a conciliation conference on 22 May 2014. This conference was convened by the Council and both Council officers and the Council's solicitor were present at that meeting. Although the evidence discloses the prospect of Mr Haralambides submitting a development application to the Council for work yet to be done as well as an application for a building certificate under s 149(a) of the EPA Act for building work already undertaken, agreement was not then reached as to the detail which would result in a resolution of the proceedings.
No doubt in anticipation of the settlement discussions to take place on 22 May, on 21 May the solicitors acting for Mr Dowling wrote to the solicitors acting for Mr Haralambides offering to settle the proceedings. That offer was expressed to be one made in accordance with the principles of Calderbank v Calderbank [1975] 3 All ER 333 proposing that Mr Dowling discontinue the present proceedings on the basis that an undertaking be provided by Mr Haralambides not to carry out any works on the Property that required development consent without first obtaining that consent and also agreeing to pay Mr Dowling's costs "as agreed or as assessed".
Following the settlement discussions that took place on 22 May, plans and documents showing the existing dwelling on the Property together with those plans that were the subject of each of the modifications made to the CDC were sought from Mr Haralambides through his solicitors. They were said to be required by Mr Dowling to enable him and those advising him to assess the impact of proposals that had been the subject of discussion.
The plans and documents sought were not provided initially and so their production was the subject of a direction from the Court when the proceedings were listed for directions on 18 July 2014. At the request of the parties, the proceedings were then stood over to 1 August 2014 for further directions.
There was a further meeting between the parties and representatives of the Council in an endeavour to resolve the dispute on 31 July 2014. While Mr Haralambides proposed to further amend his plans so as to reduce the extent of building proximate to the south-eastern corner of the Property, he also proposed that the Council be the Principal Certifying Authority for the modified CDC that was required. It appears that the Council was unwilling to accept that role, apparently because of the opinion it held, expressed by it in the correspondence to which I have earlier referred, as to the legality of a complying development certificate to authorise the building work yet to be undertaken.
When the proceedings were before the Court on 1 August, the parties jointly requested that there be a further adjournment for one week on the basis that they were in discussion with a view to resolving the proceedings.
Shortly thereafter, Mr Haralambides retained the services of his present solicitors. Upon being retained, they sought a further adjournment for one week in order to acquaint themselves with the matter. That course was not opposed by Mr Dowling.
Having familiarised themselves with the proceedings and their background, the present solicitors acting for Mr Haralambides advised both Mr Dowling's solicitors and those acting for the Council that a development application would be made to the Council for consent to carry out building alterations and additions yet to be carried out and that an application for a building certificate relating to work already carried out would also be made. They further indicated that upon development consent being granted, they would accept a condition that the CDC be surrendered.
Mr Dowling agreed to that course. As a consequence, he consented to a direction made by the Court on 15 August 2014 for the dates by which those applications were to be made to the Council and otherwise to the adjournment of the proceedings for a sufficient time to enable the Council to deal with those applications.
The Council refused both applications made to it by Mr Haralambides. He appealed to this Court from those decisions under s 97 of the EPA Act. Following agreement reached with the Council at a conference convened under s 34 of the Land and Environment Court Act 1979 (NSW) his appeals were upheld on 8 May 2015 when development consent was granted for work to be carried out in accordance with further amended plans that had been provided to the Court. Pursuant to Condition 5 of the consent then granted, the CDC, as modified, was surrendered by Mr Haralambides on 26 May 2015.
Following surrender of the CDC, the solicitors acting for Mr Haralambides invited Mr Dowling to discontinue the present proceedings. They correctly observed that as the proceedings challenged the validity of the CDC, its surrender had effectively removed the subject matter of the proceedings, with the consequence that there was no utility in their further prosecution. The letter inviting discontinuance stated that consent would be given to that course on the basis that each party bear its own costs.
Mr Dowling, through his solicitors, promptly accepted that discontinuance was appropriate for the reasons stated on behalf of Mr Haralambides. However, his solicitors contended that an order for costs of the proceedings in his favour should be made, having regard to the circumstances giving rise to commencement of the proceedings. The impasse thus reflected in the correspondence gave rise to the present motion for leave to discontinue the proceedings.
[3]
Relevant principles
I have earlier quoted the provisions of r 42.19(2) of the UCPR. There is no issue between the parties that the subrule identifies the default position as to the payment of costs when proceedings are discontinued. However, Mr Haralambides accepts that the Court may decide, in the exercise of its discretion, to depart from the default costs order provided by the subrule. For his part, Mr Dowling accepts that he must demonstrate "some sound positive ground or good reason for departing from the ordinary course" (Australiawide Airlines Ltd v Aspirion Pty Ltd [2006] NSWCA 365 at [54]).
The application of the rule was considered by the Court of Appeal in Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32. There, Basten JA said at [70]:
" … the discontinuing plaintiff must be the moving party on an application for an alternative costs order. If it is necessary to establish a factual basis for such an order, the plaintiff will bear the onus of proving the relevant facts. Similarly, if it is necessary to draw particular inferences from primary facts, the plaintiff will also bear the burden. Finally, the plaintiff will bear the burden of persuading the court that some other order is appropriate".
The applicable principles for application of the rule were later discussed by Preston CJ in LEC (Beazley P and Ward JA agreeing) in Ralph Lauren 57 Pty Ltd v Byron Shire Council [2014] NSWCA 107; 199 LGERA 424. As his Honour observed at [23], the "mere fact" that a discontinuing applicant may have achieved practical success, in that the result that pertains at the time of discontinuance is that sought in the proceedings, does not "by itself and without some extra circumstance," ordinarily justify the making of a costs order in favour of the discontinuing plaintiff.
Later in his reasons in Ralph Lauren his Honour addressed the circumstance that an extra-curial supervening event caused by a defendant has, in a practical sense, addressed the subject matter of the proceedings, thereby rendering their continued prosecution inutile. That describes the circumstance in the present case, as it was the surrender of the CDC by Mr and Mrs Haralambides, consequent upon obtaining development consent, that addressed the subject of Mr Dowling's proceedings. In circumstances of that kind, his Honour said at [31]:
"Notwithstanding that the defendant's action caused the proceeding to become futile, unless there was some unreasonableness in the defendant so acting, the proper exercise of the costs discretion may still be to make no order as to the costs of the proceeding."
As would be evident from the fact that the making of an "otherwise order" under the rule involves the exercise of a discretion, the facts or circumstances that will demonstrate "unreasonableness" on the part of a defendant or those that will demonstrate the "extra circumstance" beyond practical success are not, as a matter of principle, capable of precise specification. Basten JA observed in Australiawide Airlines at [65] that while an entitlement to bring proceedings in the exercise of a statutory right so to do would not, of itself, be sufficient to avoid the default order, demonstration of an additional factor "such as that conduct of the defendant led to the reasonable belief [by the plaintiff] that litigation would be necessary to enforce its right" may be sufficient to avoid the default order. Implicit in that observation is that the conduct of a defendant leading to the commencement of litigation is relevant to be considered when exercising the available discretion. So much has otherwise been acknowledged in the decided cases (Foukkare v Angreb Pty Ltd [2006] NSWCA 335 at [66]).
Both parties referred to the decision of McHugh J in Minister for Immigration and Ethnic Affairs; ex parte Lai Qin [1997] HCA 6; 186 CLR 622. His Honour's judgment at 625 is the source of the principle that where both parties have acted reasonably in commencing and defending proceedings and did so until such time as the continued prosecution of those proceedings became futile, the proper exercise of the cost discretion will usually result in the Court making no order as to costs. That statement of general principle must be understood in the context of other observations made by his Honour earlier in the judgment. At 624 his Honour said:
"In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties … . In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation."
[4]
The applicant's submissions
Mr Dowling first submits that he did not act precipitously in commencing the present proceedings. He attempted to exhaust the process of negotiation before so doing. Recognising that the sensitivity of the issue with Mr Haralambides may have impeded the process of resolution, Mr Dowling retained Mr Grech to negotiate a resolution, appreciating that this may more readily be achieved by discussion between professionals rather than on a direct neighbour to neighbour basis. That process involving Mr Grech was allowed to run between February 2014 and May 2014 before the present proceedings were commenced.
Apart from the fact that Mr Dowling engaged Mr Grech, on a professional basis, to negotiate a resolution of the dispute, the background against which the present proceedings were commenced must be considered. First, the floor plans depicting the proposed alterations shown to Mr Dowling did not disclose the existence of a balcony on the southern and eastern elevation of the dwelling.
Secondly, shortly after work commenced in February 2014, the building work then observed by Mr Dowling was not work that was consistent with the plans he recalled seeing. His appreciation that this was so is borne out by the observations and stated actions of Mr Smith, the then building certifier.
Thirdly, Mr Haralambides did not comply with undertakings given or directions made to stop work prior to the commencement of proceedings. An oral request to stop work was originally made by Mr Smith at sometime prior to 20 February 2014. When work was observed to be ongoing, notwithstanding that request, on 21 February Mr Smith made that request in writing. Those requests were not observed, at least initially.
Inspection of the Property by a Council officer on 21 February confirmed that work was continuing at that time. However, as a result of the request then made by that officer, work did cease for a time.
On or about 27 February, an undertaking was given that all building work on the Property would cease subject to Mr Haralambides taking delivery of pre-ordered items. Notwithstanding that undertaking, building work was being carried out on 26 March. Neither Mr Grech nor the Council was advised that this would occur. Moreover, not only was this work being carried out contrary to the undertaking given to the Council on about 27 February, it was inconsistent with the letter dated 13 March from the solicitor then acting for Mr Haralambides to the Council that no further work would be undertaken pending resolution of "issues" with Mr Dowling and with Mr Smith as the (then) Principal Certifying Authority.
On 23 April, building work was again observed to be taking place on the Property. No indication had been given to Mr Grech, Mr Dowling or the Council that building work would resume in earnest.
As a result of the onsite meeting on 30 April, involving Mr Grech, Mr Dowling's present solicitor and Mr Boyce, the then newly-appointed Principal Certifying Authority, agreed to direct Mr Haralambides to do no more work on the proposed balcony addition to the dwelling on the Property. That direction was, later that day, confirmed as having been accepted by Mr Haralambides. Nonetheless work was observed being undertaken during the afternoon of that day in the area of the proposed balcony including the placement of a steel beam. One of the purposes served by that beam was to provide support for the balcony, as was later confirmed by the solicitors then acting for Mr Haralambides.
Fourthly, on 30 April 2014, the solicitors acting for Mr Dowling wrote to Mr Haralambides, asserting that the CDC was invalid and that further works could not be undertaken without first obtaining a development consent under the EPA Act. The letter sought confirmation that no further work would be done relying upon the CDC. That letter was provided electronically to Mr Dowling who, in turn, delivered it to the Property that evening. At the time at which proceedings were commenced on 2 May 2014, no response had been received to that letter from or on behalf of Mr Haralambides.
Those events, so it is submitted, justified Mr Dowling commencing proceedings when he did. By so doing Mr Dowling ultimately achieved practical success which, having regard to the conduct of Mr Haralambides prior to commencement of proceedings was very unlikely to be achieved otherwise. That is demonstrated by the fact that it was not until August 2014 that an application for development consent and an application for a building certificate were proffered and accepted to be the subject of direction by the Court. The proposed development application was to include an undertaking to surrender the CDC.
While Mr Dowling was content to take the reasonable approach of allowing the development application process to take its course both before the Council and, following the latter's refusal of that development application, by the Court in Class 1 proceedings, it was not until the Court made an order granting development consent in the latter proceedings and the subsequent surrender of the CDC by Mr Haralambides that the present proceedings ceased to have practical utility.
Had Mr Haralambides embarked upon the course that he ultimately took between February and May 2014 when the subject matter of the proceedings had been made known to him and his advisers, commencement of the proceedings would have been unnecessary.
In the circumstances identified, Mr Dowling acted reasonably in commencing proceedings when he did. Conversely, Mr Haralambides did not act reasonably in maintaining the position that he took both prior to and, for a time, after the proceedings were commenced before embarking upon the course that resulted in practical success for Mr Dowling. In those circumstances it is appropriate to make an order for costs in favour of Mr Dowling.
[5]
Submissions of the first and second respondent
Mr and Mrs Haralambides submit that at all times they acted reasonably in their dispute with Mr Dowling. They were entitled to rely upon the CDC authorising the work they proposed to carry out until such time as that CDC was determined by the Court to be invalid. At no time have they conceded its invalidity. However, they elected to seek development consent and a building certificate instead of contesting the proceedings instituted by Mr Dowling. It would be wrong to characterise their actions in taking that course as a capitulation to the challenge made by Mr Dowling to the CDC.
Further, Mr and Mrs Haralambides endeavoured to accommodate the real concerns of Mr Dowling prior to the proceedings being commenced. They did this through their architect who conducted negotiations for amendment of their plans with Mr Grech.
Moreover, when they met for settlement discussions with Mr Dowling on 22 May 2014 the dispute was "capable of resolution" but was frustrated by the quantum of legal costs claimed by Mr Dowling's solicitor as a condition of settlement.
The assertion by Mr Dowling that building work being undertaken on 30 April 2014 was, contrary to the undertaking given by Mr and Mrs Haralambides, being directed to the proposed southern balcony is incorrect. Mr Boyce informed Mr Grech that this was the case in the evening of 30 April and that the steel beam that was observed being installed was to support the upper floor roof.
The grant of development consent by the Court in May 2015 was truly a supervening event, not a capitulation on the part of Mr Dowling. Consistently with the decided cases, the fact that the supervening event was instigated by Mr and Mrs Haralambides is not a circumstance that, of itself, supports the making of an order for costs in favour of Mr Dowling. Their conduct in dealing with Mr Dowling both prior to and after commencement of proceedings was reasonable.
Moreover, the Court would not try a hypothetical case. In the absence of a full hearing, the Court could not determine who would win and award costs on that basis. Even if the matter did proceed to trial and a breach of the EPA Act established, broad discretionary considerations would be brought to bear in determining any final order. As a consequence, it cannot be assumed in determining the present application that an order would have been made in favour of Mr Dowling should the matter have proceeded to trial.
[6]
Consideration
Substantially for the reasons advanced by Mr Dowling, I have concluded that he should have an order for payment of his costs of the proceedings. The fact that Mr and Mrs Haralambides sought and ultimately obtained the grant of development consent, conditionally upon the surrender of the CDC, had the practical consequence that Mr Dowling succeeded in obtaining the result that his proceedings sought to achieve.
I accept that without "some extra circumstance", the fact that practical success has been obtained at the instigation of Mr and Mrs Haralambides would not, of itself, be sufficient to justify the making of the order proposed by me (Ralph Lauren at [31]). However, my assessment of the evidence earlier outlined satisfies me that it was reasonable for Mr Dowling to believe that the only means by which he could secure performance of the entitlement he asserted, namely to have the building work proposed by Mr Dowling authorised by the grant of development consent under s 80 of the EPA Act, was by commencing the present proceedings (Australiawide Airlines at [65]).
I do not accept that the conduct of Mr and Mrs Haralambides leading up to and immediately following the commencement of proceedings on 2 May 2014 was, in the circumstances, reasonable. Although the practical focus of Mr Dowling and his architect, Mr Grech, was upon the proposed southern balcony and its eastern extension close to Mr Dowling's property, Mr Grech had signalled as early as mid-February that reliance upon a CDC for the proposed building work was in question. Moreover, the action of Mr Smith, the original Principal Certifying Authority, in requiring that works stop, followed by the request to the same effect from the Council, supports the doubt then expressed as to the lawfulness of the CDC to authorise the work being carried out on the Property.
Notwithstanding the written request from Mr Smith to stop work, building work continued until an officer of the Council visited the Property and reiterated that request.
I have earlier recorded that the latter request was closely followed by a visit to the Council by both Mr Haralambides and his then solicitor. I have also recorded the undertaking then given that no further building work would take place pending resolution of issues with both Mr Dowling and Mr Smith, an undertaking subsequently confirmed in writing by the solicitor. Yet, without resolution of the dispute and without notice to either Mr Dowling or the Council, building work on the property was resumed on 26 March. There is no evidence that at that time Mr Smith had withdrawn his request that work stop nor had there been any modification of the CDC by Mr Boyce. It is true that during that period discussions were taking place between Mr Grech and Mr Vourtzoumis. However, no-one suggests that the "issue" between the parties had been resolved.
While the level of work diminished for some weeks after 26 March, substantial work was observed to resume on 23 April. Although a modified CDC had by that time been issued by Mr Boyce, matters first raised in February by Mr Grech as to the validity of the CDC as issued and the use of a complying development certificate to authorise the building work were issues that remained unanswered by or on behalf of Mr Dowling. The resumption of significant work and the absence of response resulted in the meeting at the property on 30 April involving Mr Boyce, Mr Grech and Mr Dowling's solicitor.
Again, an undertaking was given at that meeting that no work relating to the proposed balcony would be undertaken. While there is a dispute as to whether the building work undertaken later on that day was directed to the proposed balcony, there were reasonable grounds for Mr Dowling to believe that it was so directed. The installation of the beam then installed was, according to the engineering plans obtained by Mr Grech, a component of the balcony structure, a fact subsequently confirmed by the former solicitors acting for Mr Haralambides, albeit that the beam is said also to serve structural support for an awning.
Reference has earlier been made to the letters sent on 30 April by Mr Dowling's solicitors both to Mr Boyce and to Mr Haralambides not only requesting the cessation of work but indicating the legal basis upon which the CDC was said to be invalid. Those letters were followed on 1 May by a letter from the Council to Mr Boyce referring both to the "serious allegations" raised on Mr Dowling's behalf and also stating the concern that the Council itself held as to the validity of the CDC. There was no immediate response to this correspondence, yet work was continuing.
In short, as at 2 May 2014 when the proceedings were commenced, serious questions had been raised as to the validity of the CDC to authorise building work on the property not only on behalf of Mr Dowling but also by the Council. Those questions had not been addressed in any communication directed to the Council, to Mr Dowling or to those acting on his behalf. Related to that circumstance is the fact that requests from both Mr Smith and the Council to stop all building work had not been observed, in that work resumed after those requests had been made without any assertion that the requests had been withdrawn or varied. Further, an undertaking given to Mr Dowling through Mr Grech, first that all work would stop and then that balcony work would not be undertaken until issues between the parties had been resolved, were undertakings that were not observed.
These are the circumstances that, to my mind, rendered it reasonable for Mr Dowling to commence the present proceedings. Recourse to the Court was, in the circumstances, the only reasonable basis upon which he was likely to establish and enforce the breach of the law that he asserted.
Events immediately following the commencement of the proceedings did nothing to undermine the reasonableness of his action in taking that course. When the summons was first returned, the solicitors acting for Mr and Mrs Haramalabides acceded, without demur, to a direction that they should file their evidence in response to that filed on behalf of the applicant. The denial of any legal wrongdoing implicit in accepting that direction was made explicit in both correspondence and telephone discussions then exchanged between the solicitors for the parties.
However, that stance was, at least in a practical sense, undermined by the actions of both Mr Boyce and the Council. The former gave notice of his intention to issue a stop work order on the basis that the validity of the CDC was doubted. About the same time the solicitors for the Council by correspondence directed to the solicitors acting for Mr and Mrs Haralambides questioned the validity of the CDC followed by an order from the Council itself under s 121B of the EPA Act directing that work stop because development contemplated at the property could only be carried out under a development consent granted pursuant to the EPA Act.
The combination of those events in early to mid-May 2014 not only resulted in building work coming to a halt but were events that immediately preceded the conciliation conference convened by the Council on 22 May 2014. The course of negotiation then commenced continued until early August 2014 when, upon retaining their present solicitors, Mr and Mrs Haralambides agreed to make the development application and building certificate application I have earlier identified. That course of action on their part seemed inevitable given the action taken by Mr Boyce, the Council and Mr Dowling, all founded upon the claimed invalidity of the CDC.
In my assessment of the evidence, it is tolerably clear that the commencement of the present proceedings was significant in precipitating the events leading to the course of action taken by Mr and Mrs Haralambides. Once that course was signalled, Mr Dowling acted reasonably in his conduct of the proceedings by accommodating both adjournments to allow the process of negotiation to continue but also to accept lengthy adjournments to enable Mr and Mrs Haralambides to pursue to finality the applications that they agreed to make under the EPA Act. Thus, it may be seen that he acted reasonably not only leading up to the commencement of the proceedings but after those proceedings had commenced until such time as a practical resolution had been achieved.
Contrary to the submission made on behalf of Mr and Mrs Haralambides, I am not persuaded that the quantification of legal costs, the payment of which was said to be a condition of accepting an offer of settlement made on 22 May, should weigh against the making of a costs order in favour of Mr Dowling. There are two reasons for so concluding. First, the evidence led by Mr and Mrs Haralambides is internally inconsistent as to when this conversation took place. Mr Haralambides states in an affidavit that was read that the conversation took place on 22 May. However, in an affidavit sworn on 11 September 2015 by Simon Konstantinidis, the former solicitor retained by Mr Haralambides, he states that the conversation took place on 31 July. The inconsistency in dates is not explained in the evidence. Correspondence annexed to the affidavit of Mr Konstantinidis tends to support the July date. That is important because agreement was reached shortly thereafter with the present solicitor acting for Mr and Mrs Haralambides that they would proceed with the applications to the Council earlier discussed. Second, the claim for costs clearly did not impede the course of action agreed to be taken in an endeavour to resolve the proceedings.
Each party contended that, if successful, they should have an order for costs for the present notice of motion in their favour. As Mr Dowling has been successful, he should have his costs of the motion.
The orders that I make are as follows:
1. Pursuant to r 12.1(1)(b) of the Uniform Civil Procedure Rules 2005 I give leave to the applicant to file a notice of discontinuance in respect of the whole of these proceedings.
2. Direct that the applicant file a notice of discontinuance in the Registry within 7 days.
3. Order that the respondents pay the applicant's costs of these proceedings.
4. Order that the respondents pay the applicant's costs of the notice of motion dated 20 July 2015.
5. Exhibits may be returned.
[7]
Amendments
06 November 2015 - Cases added to front cover sheet
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Decision last updated: 06 November 2015
Rule 12.1 of the Uniform Civil Procedure Rules 2005 (the UCPR) enables an applicant in proceedings before this Court to discontinue proceedings by filing a notice of discontinuance either with the consent of each active party or with the leave of the Court. The Notice of Discontinuance is required to state the terms, if any, upon which discontinuance is agreed by the respondents.
In the present case, Mr and Mrs Haralambides have not agreed to the terms sought by Mr Dowling that his costs be paid by them. As a consequence, leave to discontinue is required: r 12.1(1)(b).
Important to be noticed in the context of the present dispute are the provisions of r 42.19 of the UCPR. That rule is expressed to apply to the circumstance, as here, where an applicant seeks to discontinue the proceedings. Subrule (2) of that rule provides:
"(2) Unless the court orders otherwise or the notice referred to in rule 12.1(2) otherwise provides, the plaintiff must pay such of the defendant's costs as, at the date on which the notice of discontinuance was filed, had been incurred by the defendant in relation to each claim in respect of which the proceedings have been discontinued."
As will be apparent, Mr Dowling asks that the Court "orders otherwise" as provided by r 42.19(2). In essence, he contends that this should be so because Mr and Mrs Haralambides have, in effect, surrendered to the claim that founded his proceedings.
In supporting their competing contentions, the parties filed a total of eight affidavits between them and tendered three lever arch folders of documents. Regrettably, this was in stark contrast to the evidence filed in the proceedings proper which, apart from the summons and the notice of appearance filed on behalf of the respondents, comprised a single affidavit in support of the summons sworn by Mr Dowling's solicitor and an affidavit sworn by the solicitor acting for Mr and Mrs Haralambides in support of an application for an extended adjournment of a directions hearing.
Given that the issue required for determination is one of costs, I propose to adopt the approach propounded by the Court of Appeal in Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd (No 2) [2009] NSWCA 12. In his judgment Allsop P (Beazley and Campbell JJA agreeing) said at [5]:
"5. Three things need to be borne in mind in a judgment such as this on costs: the desirability of avoiding unnecessary recitation of cases (abounding as they are in this area); the desirability of not restating, in different terms, approaches to the broad discretion that have been well settled; and the desirability of dealing with the arguments without over-elaboration, if this is possible."