Gales Holdings Pty Limited v Tweed Shire Council

Judgment 1EMMETT JA: On 18 November 2013, the Court made orders that the appeal be allowed in part and that the cross-appeal be allowed in part (see Gales Holdings Pty Limited v Tweed Shire Council [2013] NSWCA 382). These reasons use terms as defined in the principal judgment. 2The parties were directed to bring in short minutes of orders to give effect to the Court's reasons. The parties were also directed to file any submissions that they wished to make on the question of the costs of the proceedings at first instance and of the appeal. The parties have now complied with the directions and the Court has received short minutes. There is no dispute about the orders except in relation to costs. 3The primary judge delivered a separate ex tempore judgment on 13 March 2012 in relation to the costs of the trial. Her Honour observed that the damages claim in respect of the Wallum froglet habitat permeated the case in many ways and that it was the largest part of Gales' claim. That claim in relation to the Wallum froglet habitat failed. Her Honour accepted that the evidence of ecologists and part of the evidence of vegetation experts would have been unnecessary if Gales had not proceeded with its claim for damages. Her Honour concluded that it was appropriate to depart from the usual order that a successful plaintiff should recover all of its costs. Her Honour ordered that the Council pay 75 per cent of Gales' costs of the proceedings. 4The Council accepts that it might reasonably be suggested that the outcome of Gales' appeal and its cross-appeal did not alter the basis for the primary judge's costs order in relation to the extent of the evidence and trial time devoted to the issue concerning the Wallum froglet. However, the Council contends that the significant further adjustment to the extent of the relief obtained by Gales requires that the question of costs be revisited. 5The Council says that the damages of $150,000 recovered by Gales following the appeal represents about one and one-half per cent of the total damages claimed, being the sum of nearly $10 million. The sum Gales recovered is within the jurisdiction of the District Court. Under UCPR r 42.34, a costs order will not ordinarily be made in favour of a plaintiff who recovers less than $500,000. However, an order may be made where the Court is satisfied that it was appropriate to bring the proceedings in the Supreme Court. The Council contends that no proper basis existed for bringing the claims for relief in the Supreme Court. 6That contention must be rejected. As I have indicated, Gales' claim was for damages in the vicinity of $10 million. That sum is far in excess of the jurisdiction of the District Court. Gales' claims were at least arguable and the legal questions raised in relation to its claim for damages in respect of the Wallum froglet habitat were by no means straightforward. This is not a case where UCPR r 42.34 should be applied. 7The Council also contends that, apart from the operation of UCPR r 42.34, the Court should re-exercise the discretion exercised by the primary judge to deprive Gales of its costs, or part of its costs, to reflect the fact that the Council succeeded on issues occupying a significant proportion of the trial and to reflect the low quantum of the damages recovered compared to Gales' claim of $10 million damages. The Council contends that, in making a broad evaluative judgment as to the question of costs, there should be no order as to the costs of the proceedings at first instance. 8In the event, Gales has substantially succeeded in its nuisance claim and retained the injunctive relief ordered by the primary judge. The damages award of $600,000 in respect of which the Council achieved success in its cross-appeal related to the additional drainage required as a consequence of the inadequate capacity of the 1,200 mm pipe. That head of damage was set aside because it was common ground on the appeal that Gales' entitlement to it could not stand in view of the completion of the Blue Jay Circuit scheme. At the trial, there was no assurance that those works would be carried out. The award of damages was compensation for works that Gales would have been obliged to carry out to abate the nuisance if the Council had not completed that work. 9In the circumstances, the result is that Gales is not entitled to retain the damages since the Council has now carried out the work to abate the nuisance. I do not consider that that variation is a basis for interfering with the exercise of discretion by the primary judge. That conclusion is reinforced by the fact that, on appeal, Gales succeeded on an issue on which it was unsuccessful at first instance, namely, the question of when liability for nuisance first arose. That measure of success is not reflected in the damages, but reinforces the conclusion that there is no basis for departing from the assessment made by the primary judge that Gales should have 75 per cent of its costs of the proceedings at first instance. 10Overall, there were three substantial grounds of appeal. The first was that the primary judge erred in finding that Gales' toleration of the wetting up of the Land did not constitute nuisance until it was the subject of complaint. The second was that her Honour erred in finding that reasonable foreseeability was an essential element for the claim for damages where the nuisance was deliberate. The third was that her Honour erred in finding that the establishment of a viable population of Wallum froglets was not reasonably foreseeable so as to entitle Gales to damages for that consequence of the Council's nuisance. 11Gales succeeded on the first ground but failed on the other two, which were interrelated. The second ground was a purely legal question. The third involved considerable examination of the facts found by the primary judge and the evidence upon which those findings were based. 12In the cross-appeal, the Council disputed that there was any nuisance on its part. That question also required a detailed examination of the findings of fact made by the primary judge and the evidence upon which those findings were based. The Council was unsuccessful in that challenge. 13The Council also challenged the orders that it pay damages of $150,000 for the cost of abating inundation north of Turnock Street and damages in the sum of $600,000 relating to the work that was obviated by the completion of the Blue Jay Circuit scheme. The Council was unsuccessful in relation to the first award of damages. In relation to the second award, there was really no contest on the cross-appeal having regard to the changed circumstances that had occurred between the time of the trial and the appeal, as indicated above. While the order for damages was set aside, that was not because of any success on the part of the Council in its cross-appeal. 14The issues raised in the appeal and the cross-appeal would be difficult to separate in assessing an order for costs. In those circumstances, it is desirable to treat the costs of the appeal and the cross-appeal together and to apportion them. 15For the reasons indicated above, Gales has achieved a measure of success in both the appeal and the cross-appeal on the substantive question of the commission of nuisance. On the other hand, it has failed to achieve any measure of success in the quantum of damages that it claimed as a consequence of the Council's nuisance. In the circumstances, I consider that the appropriate order is that the Council pay 40 per cent of Gales' costs of the appeal and the cross-appeal. 16Accordingly, the orders I propose are as follows: (1)The appeal be allowed in part. (2)Vary order 1 of the orders made by the primary judge on 13 March 2012 by substituting "19 October 1999" for "4 May 2004". (3)The cross-appeal be allowed in part. (4)Set aside orders 2 and 3 made by the primary judge on 13 March 2012. (5)Gales Holdings Pty Limited (Gales) repay to Tweed Shire Council (the Council) the sum of $600,000.00. (6)Gales pay the Council interest on that sum of $600,000.00 at the rates set out in UCPR r 36.7(1) from the date that the Council paid that sum to Gales until the date of receipt by the Council of Gales' repayment in accordance with order 5 above. (7)The Council pay 40 per cent of Gales' costs of the appeal and the cross-appeal. 17LEEMING JA: I agree with Emmett JA. 18SACKVILLE AJA: I agree with Emmett JA.