Gorczynski v Perera & Dee & Ors

APPLICANT Mr B Larkin (Barrister) with Ms C Morris (Barrister)

SOLICITORS Windeyer Dibbs

FIRST and SECOND RESPONDENT Mr P Clay LEGAL REPRESENTATIVES: SOLICITORS Mallesons Stephen Jaques

THIRD RESPONDENT Mr B Preston SC with Ms H Irish (Barrister)

SOLICITORS Pike Pike & Fenwick

JUDGMENT: IN THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES 40208 of 2001, 40120 of 2000, 40012 of 2000, 30079 of 2000

6 Febraury 2003 PETER FRANCIS GORCZYNSKI Applicant v RAVINI NELUKA PERERA AND REBECCA PATRICA DEE First Respondent ANNANDALE SERVICES PTY LIMITED trading as RAY WHITE REAL ESTATE ANNANDALE Second Respondent LEICHHARDT COUNCIL Third Respondent Judgment [No. 1] [Costs]

1 Note: The Court is required to consider the costs of each of the above proceedings. Although the parties varied throughout the proceedings, the Court, for convenience will refer to the parties as they appeared in proceedings 40208/01, as listed above.

The original class 4 application in these proceedings filed 24 January 2000 challenged the validity of development consent No 334/98 authorising certain structures including a garage/workshop located at the rear of No. 80 ("the garage") which had previously been erected without consent on or about May 1997. This application also challenged the validity of two building certificates No.187/99 and No.269/99 and sought the demolition of encroachments onto the applicant's land. These proceedings have been dismissed save as to the issue of costs.

By class 3 application filed on 20 June 2000 the applicant sought demolition of the garage for reason that it encroached upon his land. The proceedings were instituted against the first and second respondent only and did not involve Leichhardt Council ("the council").

By class 4 application filed 14 August 2000 the applicant sought interlocutory orders restraining the council from assessing development application D2000/434 dated 6 June 2000 lodged by Annandale Services Pty Limited ("Annandale Services") seeking consent to use the whole of No. 80 for the purpose of a real estate agency. These proceedings did not involve the first respondents.

(d) Proceedings 40208/01 In respect of these class 4 proceedings judgment will be delivered simultaneously with this judgment. The Court has made an order in these proceedings as set out in the judgment.

Court's findings as to costs 2 The Court has been granted a broad discretion in relation to determining the issue of costs. Section 69(2) of the Land and Environment Court Act 1979 provides as follows:- 69(2) Subject to the rules and subject to any other Act: (a) costs are in the discretion of the Court, (b) the Court may determine by whom and to what extent costs are to be paid, and (c) the Court may order costs to be assessed on the basis set out in Division 6 of Part 11 of the Legal Profession Act 1987 or on an indemnity basis. 3 In order to determine the issue of costs in each of the proceedings the Court must consider the relief the applicant sought in the proceedings, the extent to which it was successful in obtaining that relief and the conduct of each party in relation to each proceeding.

Costs in Proceedings 40012/00 4 These proceedings did not reach a final hearing as all the issues between the parties, save the issue of costs, were resolved and accordingly the application was dismissed on 28 June 2002. The usual practice in exercising the discretion to award costs where litigation has commenced but not proceeded to final judgment was articulated by McHugh J in Re the Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex Parte Lai Qin (1997) 186 CLR 622 at 625 wherein His Honour said:- If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases. 5 His Honour also determined at 625 that the usual approach may not apply in circumstances where, although the Court is satisfied that both parties acted reasonably "…one party was almost certain to have succeeded if the matter had been fully tried.". However, His Honour warned at 624 that the court would not try a hypothetical action between the parties to determine who would have succeeded if the issues had been fully ventilated. His Honour commented that cases where one party is almost certain to have succeeded are likely to be rare. Challenges made by the applicant 6 Although several different challenges were made to consent No 334/98 in various amendments to the original class 4 application, three basic grounds of objection emerged. 7 First, the applicant claimed that due to encroachments of the garage onto his land, the development application related to his land and accordingly his consent was required for such development. The applicant bases this assertion upon s 77(1) of the Environmental Planning & Assessment Act 1979 (the "EP&A Act"). At the relevant date such Act provided that where the applicant was not the land owner upon which the development was proposed the owner's consent was required before an application for development could be made in respect of that land. No consent was given by the applicant. 8 The applicant's second challenge alleged that the council's decision to approve the application was unreasonable in accordance with the principle of unreasonableness in Associated Provincial Picture Houses Limited v Wednesbury Corporation [1948] 1 KB 223. 9 Thirdly the applicant claimed that the council failed to take into consideration relevant matters in making its decision. 10 The applicant's final challenge to the consent claimed that he was denied natural justice by the failure of council to inform him of the grant of consent, although a notification of the consent was published in the local newspapers. 11 The applicant also challenged the building certificates No. 187/99 and No. 269/99 issued by the council on the ground that his permission had not been obtained pursuant to s 149B of the EP&A Act. The applicant also challenged the issue of the building certificates as being so unreasonable that no reasonable council could have issued them. 12 The applicant alleged that certain building works on the No. 80 premises namely the garage were unlawful as they had been erected without consent. The scope of works challenged by the applicant increased in the successive amendments to the class 4 application and points of claim. 13 In order to determine the issues in relation to the alleged unlawful works, a referee, Mr Geoffrey Gleeson was appointed pursuant to Pt 72 of the Supreme Court Rules 1970 to inquire and report to the Court. Mr Gleeson prepared a report on 11 October 2000 addressing issues relating to the alleged unlawful structures. Despite the objections of the first respondents the Court adopted the report prepared by Mr Gleeson ("the Gleeson Report") on 27 April 2001. Accordingly the findings in the report became the findings of the Court. Such findings can be relied upon by the Court for the granting of relief (see Skinner & Edwards (Builders) Pty Limited v Australian Telecommunications Corporation (1992) 27 NSWLR 567 at 575 per Cole J).

Orders made 28 June 2002 14 Proceedings 40012/00 were dismissed by orders of the Court made on 28 June 2002. Those orders did not include any orders against the council. The orders noted an undertaking by the first respondents that they would refrain from carrying out any development in reliance upon consent No. 334/98. The orders also required the first respondents to carry out certain works including inter alia the demolition of various works namely a wall, planter box, concrete slab and effect alterations to the stormwater drainage system. Prior to the making of these orders the first respondents had already commenced demolition of the alleged unlawful structures. Costs as between applicant and council in relation to proceedings 40012/00 15 The orders made on 28 June 2002 were not made against the council and accordingly the applicant has received no relief against the council. The Court did not determine the issues relating to the power of the council to issue the development consent and the building certificates, nor whether there was any breach of natural justice. The council did not object to the adoption of the Gleeson Report. The findings of the Gleeson Report did not impact upon the issue of reasonableness of council's decision to grant the development consent and the building certificates. Accordingly this is a circumstance which falls within the scope of the principles of Lai Qin. 16 Mr Preston SC, who appears for the council, raised various arguments refuting each of the challenges made by the applicant attempting to show that each challenge was doomed to failure. The detail of his submissions demonstrates that the issues were complex and did not lend themselves to summary resolution. Accordingly the Court cannot attempt to speculate as to the merits of each of the challenges or their likelihood of success. The Court determines that it cannot be said that either the council or the applicant was almost certain to have succeeded on any of the issues raised to the council's grant of the consent and the building certificates. 17 The Court must also consider whether the each party acted reasonably in their conduct of the proceedings. Council argues that the applicant's conduct created delays and unnecessary expense. The council points to the applicant's failure to comply with the Court's directions of 18 April 2000 concerning the preparation of affidavit evidence and points of claim. 18 The council also alleges the applicant failed to settle the substantive issues in the proceedings although he was given the opportunity to do so. Various mediations were held between the parties and all failed. The council and the first respondents maintain that the final mediation of 13 June 2002 was unsuccessful due to the applicant's steadfast refusal to accept any settlement which did not guarantee all his costs being paid. The applicant claims that he did not make any such ultimatum and that in fact he only required some of his costs be paid in any settlement that was reached. The Court heard evidence from several persons present at the mediation held on 13 June 2002 including the applicant, his secretary Ms Lynette Murphy, Mr Phillip Clay who appeared for the first respondents, Mr Peter Jackson instructing solicitor for the council and Ms Margaret Lyons of the council. The Court is satisfied that opportunities were available for the issues to be resolved. The applicant was not however prepared to entertain any settlement unless the respondents agreed to pay his cost in full as a condition precedent to mediation discussions. 19 Finally the council claims that the applicant served evidence which was voluminous although ultimately not relied upon. Council provides the example of an affidavit sworn 15 August 2000 by the applicant which contained four volumes of annexure, none of which were relied upon. Council claims it has expended significant expense in addressing such superfluous evidence. The Court cannot draw any adverse inference against the applicant in this respect, as the proceedings were discontinued and the applicant may have relied upon the affidavit if the litigation proceeded to a hearing. 20 Despite consent 334/98 having been surrendered by the first respondents the applicant continued to challenge the validity of such consent. The applicant's original application and accompanying points of claim were amended five times during the preliminary stages of the litigation. The fact that the applicant changed legal representatives during the conduct of the proceedings may explain amendments to pleadings and the failure to comply with the Court's directions. Furthermore, the substantive proceedings were settled without the need for a fully contested hearing. Although the applicant's conduct of these proceedings was inefficient the Court determines that it was not so unreasonable as to entitle the council to an order for costs. 21 Accordingly the Court determines that in proceedings 40012 of 2000 with regards to the costs as between the council and the applicant, there be no order for costs with the intention that each party should bear their own costs. Costs as between applicant and first respondents in relation to proceedings 40012/00 22 The first respondents demolished a significant portion of the allegedly unlawful works on 22 March 2001. However, not all the works which were the subject of the challenge were demolished and these remaining works were dealt with in the consent orders made on 28 June 2002. 23 The first respondents submit that they conducted the demolition works in an attempt to avoid a contested litigation, and not as an admission of liability. However, the Court notes that the Gleeson Report prepared on 11 October 2000 found defects in the garage. The first respondents challenged the adoption of the report and were unsuccessful in their attempt to exclude it: see Gorczynski v Leichhardt Municipal Council & Ors [2001] NSWLEC 76. 24 Although these proceedings did not proceed to a final hearing on the merits, the orders made on 28 June 2002 and the adoption of the Gleeson Report have the combined effect that the applicant was successful in obtaining the orders it sought against the first respondents. Accordingly the ordinary rule that costs should follow the event will apply (see generally Oshlack v Richmond River Council (1998) 193 CLR 72). These costs will include the applicant's costs in relation to the appointment of the referee and of the Gleeson Report.

Costs in Proceedings 30079/00 25 These proceedings involved a claim by the applicant pursuant to the Encroachment of Buildings Act 1922 seeking demolition or compensation for encroaching works. The proceedings were made against the first respondents and did not involve the council. The issues were not determined upon their merits and accordingly the principles of Lai Qin will apply. 26 The applicant contends that the Court should be satisfied that his claim was almost certain to have succeeded. The evidence demonstrated that parts of the garage on the first and second respondent's property were encroaching upon the applicant's premises. However the parties disputed the nature and extent of these encroachments. The first respondents submit the encroachments were de minimus and that in such circumstances the Court would not have granted relief. 27 The terms of s 3 of the Encroachment of Buildings Act clearly indicates that the power to grant relief is a discretionary power vested in the Court, s 3 provides inter alia:- (3) The Court may grant or refuse the relief or any part thereof as it deems proper in the circumstances of the case, and in the exercise of this discretion may consider amongst other matters: Thus the mere fact that an encroachment exists does not inevitably lead to the conclusion that the applicant would have succeeded in his application for relief. Accordingly, the Court cannot be satisfied that the applicant was almost certain to have succeeded in the Lai Qin sense. 28 Furthermore neither party has conducted it self in such an unreasonable manner in relation to these proceedings that it should be made to bear the burden of the other party's costs. It follows that in relation to proceedings 30079 of 2000 the Court will make no order for costs with the intention that the applicant and the first respondents bear their own costs.

Costs in proceedings 40120/00 29 In these proceedings the applicant sought a declaration restraining Annandale Services, the former lessor of No. 80, from using such premises as a real estate agency. The applicant also requested the Court make interlocutory orders restraining the council from assessing the development application or granting consent for that use. 30 The applicant was unsuccessful in obtaining interlocutory relief and did not ultimately pursue his claim for final relief in these proceedings. His claim for final relief was made redundant because the council granted development for use of part of No. 80 as a real estate agency with development consent D/2001/254 which is subject to challenge in proceedings 40208 of 2001. Having determined in proceedings 40208 of 2001 that council's consent for use of the No. 80 as a real estate agency was valid the Court is satisfied that the use of the premises as a real estate agency would almost certainly have succeeded. 31 The applicant failed to obtain interlocutory relief and was almost certain to have failed in obtaining a declaration that the use of premises as a real estate agency was invalid. Accordingly the Court will order that the applicant pay the council's costs in proceedings 40120 of 2000. 32 However, the Court is not satisfied that the applicant would necessarily have failed in obtaining the orders it sought restraining Annandale Services from using No. 80 as a real estate agency since that company had not obtained consent to do so. Accordingly the Court will make an order that Annandale Services and the applicant bear their own costs in relation to proceedings 40120 of 2000.

Proceedings 40012/00 33 The Court orders that:

1. No order for costs be made as between the applicant and Leichhardt Council.
2. The first respondents (Ravini Neluka Perera and Rebecca Patricia Dee) pay the costs of the applicant including the costs incurred by the applicant regarding the reference.

Proceedings 30079/00 34 The Court orders that there be no order as to costs.

Proceedings 40120/00 35 The Court orders that the applicant pay the Leichhardt Council's costs in these proceedings. 36 The Court orders that there be no order as to costs as between the applicant and Annandale Services Pty Limited.

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