Gosford City Council v Verde Terra Pty Ltd

The motion by Bingo Group Pty Limited 11I have earlier recorded that Bingo Group sought an order that it be removed from the proceedings. That order was sought pursuant to the provisions of Pt 6, r 6.29 of the Uniform Civil Procedure Rules 2005 (UCPR). In substance, the first order sought in the Council's notice of motion filed on 19 March last accedes to Bingo Group's application, albeit that the Council seeks discontinuance of its proceedings against that company pursuant to Pt 12, r 12.1 of the UCPR. Mr I Hemmings, who appeared for Bingo Group, accepts that leave to discontinue the proceedings against his client is appropriate in sufficient discharge of the order that his client sought. As a consequence, I will give leave to the Council to discontinue its proceedings against Bingo Group, subject to complying with r 12.1 which requires that a notice of discontinuance be filed in the Registry. 12The consequence of granting that leave would ordinarily carry with it a liability on the part of the Council to pay the costs of Bingo Group: Pt 42, r 42.19(2) of the UCPR. Such a consequence follows "[u]nless the court orders otherwise". Mr Hemmings, on behalf of his client, seeks an "otherwise" order. In the circumstances that he identifies, he submits that the Council should be ordered to pay his client's costs on an indemnity basis. That application is opposed by Mr P Tomasetti SC who appeared on behalf of the Council. 13I have already referred to my earlier judgment in Gosford City Council v Verde Terra Pty Ltd. That judgment was delivered when, for the second time, it was necessary to adjourn Bingo Group's motion for removal. The circumstances in which each adjournment was ordered are set out in that judgment and I do not intend to repeat the detail there set out. It is sufficient to record that on each of 14 December 2012 and 19 February 2013 when the notice of motion was listed before me for determination, Bingo Group was ready to proceed with the hearing. However, on each occasion an adjournment was ultimately necessary, notwithstanding lengthy argument over the course of each day, by reason of the Council having failed to provide evidence or amending its points of claim in a manner that it had earlier foreshadowed it proposed to do. Importantly, on each occasion, lengthy argument was advanced on behalf of the Council seeking to establish that it would be able to identify a basis upon which Bingo Group was properly joined in the proceedings as a respondent. 14Although the original points of claim filed by the Council in November 2012 alleged that Bingo Group was a subcontractor to Verde Terra, with a consequent potential liability for breach of the EPA Act, Mr Tomasetti candidly acknowledged on behalf of the Council at the hearing on 14 December that there was no evidence then available to the Council upon which to sustain such an allegation. At the hearing on 19 February, the Council sought to rely upon amended points of claim in which it pleaded breach by Bingo Group on the basis that the Club had given permission either to Verde Terra or to Bingo Group to carry out relevant works on the land but that the Council was unable to indicate which of those two companies was undertaking those works. The Council acknowledged that further evidence and, more particularly, an amended pleading was required in order properly to plead its claim against Bingo Group. 15The attempts to implicate Bingo Group, strenuously undertaken on each of the hearings in December and February last, were made in the face of correspondence and material provided by the Company's solicitors shortly after service of the summons in September 2012, seeking to demonstrate the absence of the Company's involvement in the impugned work. The Council was also served with affidavits sworn in support of Bingo Group's notice of motion deposing to the absence of involvement of the Company with works or activities on the subject land. 16The deponents of those affidavits were not required for cross examination at the hearing on 14 December, at which time the evidence led on behalf of Bingo Group in support of its notice of motion concluded. There was a belated attempt made by the Council to have those deponents called at the February hearing but I declined that request. 17I should add that prior to the notice of motion being filed on behalf of Bingo Group in November last, the motion together with the supporting affidavits were provided, in draft, to the Council's solicitors, affording the Council a further opportunity to consider removing Bingo Group as a respondent to the proceedings. The Council did not take advantage of that opportunity. 18The first intimation that the Council was giving consideration to removal of Bingo Group from the proceedings came in the form of a letter from the Council's solicitors dated 21 February 2013. The letter stated that the prospect of removal was being considered but did so in terms that circumscribed the result of that consideration. The letter sought to comment upon the affidavit material that had been filed on behalf of Bingo Group in support of its motion and raised questions about documents that had been produced by it in response to a notice to produce issued only earlier that month. In my earlier judgment, I had referred to the delay on the part of the Council in seeking to gather evidence by use of such a notice in support of the contentions that it was then propounding. Ultimately, the letter concluded by stating that the consideration that it would give to removing Bingo Group as a respondent depended upon matters raised in its letter being "properly and satisfactorily explained." The information sought in the Council's letter was provided by letter from Bingo Group's solicitors on 13 March 2013. 19The power of the Court to award indemnity costs is expressed in s 98(1)(c) of the Civil Procedure Act 2005. Although the chapeau to the subsection expresses the power as being subject to rules of court, the only relevant rule is that found in Pt 42, r 42.2 of the UCPR which does not impinge upon the discretion to award indemnity costs. Nonetheless, it is recognised that an order for costs on that basis is not one that is ordinarily made. Making such an order necessitates that there be particular circumstances present beyond those ordinarily considered appropriate to justify an order in favour of a successful party other than "on the ordinary basis". 20The principles to be applied to the making of an indemnity costs order are helpfully summarised by Pain J in Glaser v Poole (No 2) [2010] NSWLEC 232. Although I do not suggest that considerations relevant to the exercise of discretion to award costs on an indemnity basis are closed, those relevant include: (i) that the justice of the case so requires; (ii) that there are special or unusual features of the case justifying an order; or (iii) that proceedings were commenced or continued in circumstances where a plaintiff or applicant, properly advised, should have known that there was no chance of success. 21In the circumstances pertaining to the conduct of proceedings by the Council against Bingo Group, as I have briefly outlined them, all three of these considerations would seem apt to justify the making of the order sought, with particular emphasis on the first two. The vigour with which the Council resisted the motion for removal, both in December 2012 and in February 2013, maintaining its intention, by further evidence and amendment of pleadings, to implicate Bingo Group as a proper respondent, only to capitulate one month after the second "fight", seems to me to identify circumstances rendering it unjust that Bingo Group be compensated for its costs only on the ordinary basis. Compensation to the level of indemnity costs would, in the circumstances, seem to me a just order. These same circumstances also identify "a special or unusual feature of the case". That "feature" involves the persistence in resisting Bingo Group's application in circumstances which necessitated argument and an adjournment on two occasions, each for the purpose of supporting its resistance, followed by the capitulation to which I have referred. 22In opposing an order for indemnity costs, the Council sought, in substance, to rely upon two arguments. First, it submitted that there was material available to the Council upon which it reasonably could have contemplated that Bingo Group was possibly implicated in those breaches of the EPA Act upon which it relied. It referred to business cards and email correspondence from persons apparently associated with works being undertaken on the land together with corporate searches obtained from the Australian Securities and Investments Commission (ASIC). These showed an apparent association with Bingo Group because "Bingo" was included in the company name. The difficulty with the submission is that any doubt cast by the business cards held by the Council prior to commencement of proceedings were explained in the affidavit evidence provided in support of Bingo Group's notice of motion filed in November last. Moreover, the ASIC searches upon which reliance was placed were received in November 2012, two months after commencement of the proceedings and when explanations as to the operation of different corporate entities had been given both in correspondence from Bingo Group's solicitor and the affidavit evidence to which I have referred. 23The second matter upon which the Council relies in opposing the order for indemnity costs is the letter from its solicitors dated 21 February 2013 to which I have referred. This letter identified only a prospect that the proceedings may be discontinued against Bingo Group with the qualifications that I have earlier identified. I do not regard that circumstance to outweigh all other circumstances that otherwise warrant the making an indemnity order. 24I have earlier referred to the hearing before me on 19 February last. For reasons explained in my judgment of that day I made an order that the Council pay the respondents' costs of the day. I had made a similar order on 7 February when the Council had made an unsuccessful application to me to vacate the hearing of Bingo Group's notice of motion then fixed for 19 February. Bingo Group seeks an order that each of those orders, being for the payment of costs of each of the two days in question, be vacated and that the overall order that I make operate so that all costs payable by the Council to the Company are to be paid on an indemnity basis. 25My power to vacate those two earlier orders is said to arise by operation of r 36.16(3) of the UCPR which relevantly provides: "(3) In addition to its powers under subrules (1) and (2), the Court may set aside or vary any judgment or order except so far as it: (a) determines any claim for relief or determines any question (whether of fact or law or both) arising on any claim for relief, or (b) dismisses proceedings, or dismisses proceedings so far as concerns the whole or any part of any claim for relief." Although the Council submits that the exclusory paragraph (a) of subrule (3) applied, so as to deny power to set aside the costs orders earlier made, I do not accept that submission. It seems to me that paragraph (a) is directed to the circumstance where a final determination has been made in the proceedings of a substantive nature. The orders for costs that I earlier made did not determine any claim for relief nor did they determine a question of fact or law arising from any claim for relief. They were orders made in response to procedural applications. In exercise of the power available to me I propose to set aside those orders. 26In summary, I propose to make an order that the costs of Bingo Group be paid by the Council on an indemnity basis. I will set aside the orders made on 7 and 19 February respectively, so far as they relate to Bingo Group, to the intent that all costs payable to Bingo Group are on the same basis. 27Given that the proceedings are to be discontinued against it, Bingo Group seeks an order that its costs be assessed and payable immediately. The power to make such an order is found in Pt 42, r 42.7 of the UCPR. The Council does not oppose such an order, given that Bingo Group has no further involvement in the proceedings, and as a consequence I propose to make it.

Notice of motion by the Trustees 28Having regard to the most recent iteration of the further amended summons and further amended points of claim upon which the Council seeks to rely, the Trustees no longer need to pursue the orders sought by them in their notice of motion filed on 19 April last. They have achieved the result that they sought. However, they seek an order that the Council pay their costs of the proceedings to date and that such payment be ordered on an indemnity basis from 27 September 2012. 29The summons filed by the Council on 3 September 2012 did not discriminate among the four named respondents as to the orders that it sought. Those orders included declarations that each of the named respondents had both threatened breach and had in fact breached the provisions of the EPA Act by reason of the manner in which work had been carried out on the land. The mandatory orders sought in the summons against all respondents included the undertaking of significant remedial works. 30By letter dated 27 September 2012, the solicitors retained by the Trustees wrote to the Council's solicitors requesting that the proceedings against the Trustees be discontinued. The letter referred to the fact that the Trustees owned the land and that by lease dated 3 September 2003, the land had been leased to the Club for a period of 10 years. It was stated that the lease had been registered on title and its provisions were thereby readily available to the Council. The letter continued: "The lease confers exclusive possession of the land on the lessee and contains the usual provisions transferring the risk of non-compliance with statutory duties, orders or notices relating to planning and environmental matters to the lessee." 31The letter of 27 September made clear that the Trustees had no relevant involvement in the work being undertaken on the land that was the subject of the Council's proceedings. It also referred to well known authorities establishing that the Court has no power to make orders against a person not in breach of the EPA Act and that any alleged breach must involve the carrying out or threat to carry out development (Wilkie v Blacktown City Council [2002] NSWCA 284; 121 LGERA 444 and Hillpalm Pty Ltd v Heaven's Door Pty Ltd) [2004] HCA 59; 220 CLR 472. 32As I have said, the letter of 27 September invited the Council to discontinue the proceedings against the Trustees "on terms not to relitigate for substantially the same cause of action". If this course was taken, the Trustees indicated that no order for costs would be pursued. The letter continued by indicating that if the Council did not accede to the Trustees request, they would seek either to strike out the summons or move for summary judgment. The letter continued by indicating that the offer to discontinue without an order for costs being sought should be treated as "a Calderbank offer." 33The Council did not then accede to the Trustees offer. By letter dated 8 November 2012, the solicitors for the Council maintained that the Trustees were proper parties to the proceedings and also invited them to file a defence if they maintained that they were not "responsible" for any breach of the development consent upon which the Council relied in order to maintain its proceedings. At that point in time, the Council had not filed its points of claim so that the filing of a "defence" was premature. The Council's original points of claim were not filed until 13 November 2012. 34Like the summons, the points of claim filed by the Council were, in all respects relevant to the present motion, indiscriminate in the allegations made against the four respondents. Paragraph 16 alleged that all respondents had breached the provisions of the EPA Act and certain conditions of the relevant development consent, in that they had "caused or permitted" development to be carried out on the land either without development consent or in breach of the relevant development consent. Paragraph 27 of the points of claim sought a declaration that the respondents, including the Trustees, had "caused or permitted" breaches of the EPA Act and repeated prayers for remedial orders of the kind identified in the summons. 35The amended points of claim that were filed on 7 February 2013, did not relieve the Trustees of facing the burden of an allegation that they had breached the EPA Act. Paragraph 26 of that amended pleading alleged that the works earlier described had been carried out "with the permission and approval of the Trustees". The particulars of that paragraph stated that the Trustees, along with the Club, had "observed, permitted and not attempted to prevent" the first and third respondents from carrying out the development "which is in plain and obvious breach of the Consent." The pleading maintained an entitlement to relief set out in an amended summons that was filed on 8 February 2013. Once again the amended summons sought orders restraining alleged breaches by the Trustees and requiring that remedial works be undertaken by them, along with the other named respondents. 36The notice of motion filed by the Council on 19 March 2013 annexed the further amended summons and further amended points of claim upon which it sought leave to rely. Relevantly, the amending documents made allegations and sought orders in terms that did not ameliorate the obligations that had been identified in the version of those documents filed in February. It was not until the making of further amendments to those documents, on the eve of the present hearing, that amendments reflecting the true entitlement to have the Trustees included as a party to these proceedings was identified. That entitlement involves no more than that the Trustees be a party whose joinder was necessary because the terms of any order sought that may affect the land owned by the Trustees was a matter upon which they would be entitled to be heard. The basis upon which the Trustees are appropriately joined as a party differs entirely from the basis upon which the proceedings were maintained against them until the eve of the present hearing. 37In seeking to resist the order that is sought by the Trustees, the Council submits: (i) the Calderbank offer made on 27 September 2012 involved no real element of compromise; (ii) the Trustees, as they now acknowledge, were always proper parties to the proceedings and therefore discontinuance against them was unwarranted; (iii) it was not until the Trustees filed their notice of motion on 19 April that the Council was aware of the present position taken by the Trustees, a position which, if articulated beforehand, might have led the Council to amend the proceedings against the Trustees in the manner presently proposed. These matters are put in opposition to an order for indemnity costs, it being accepted by the Council that it is responsible for costs thrown away by reason of the amendment that it now seeks. 38I have earlier set out the principles that are to be applied when considering an application for indemnity costs. I do not propose to repeat those matters. 39As to whether there are the necessary circumstances which takes the case of the Trustees out of the ordinary is a matter which I have found to be finely balanced. The Trustees have not achieved all that they initially sought, namely discontinuance against them. Indeed, they acknowledge that they should properly remain parties to the proceedings in order to address any remedial orders that might be made which affects their interests in the land. 40Nonetheless, the Council has, since the position of the Trustees was made clear to it, filed pleadings which, until the leave sought in the present hearing, maintained claims of breach and an obligation to undertake remedial works, potentially involving the Trustees incurring very substantial financial liability. The decided cases to which the Council was referred on behalf of the Trustees rendered it improbable that the Council could succeed in the case upon which it had proceeded against them (cf r 13.2 and r 14.28(1) of the UCPR). The filing of a notice of motion by the Trustees to achieve the amendments which the Council now seeks ought not to have been necessary. 41Moreover, I think there was an element of compromise in the Calderbank offer that was made on 27 September 2012. That compromise was the offer to forsake costs to which the Trustees would otherwise have been entitled. 42Mr T F Robertson SC, who together with Ms L Byrne, appeared on behalf of the Trustees, submitted that by reason of the amendment now sought to the summons and points of claim, the proceedings were so wholly changed against the Trustees that costs of the proceedings to date should be awarded to his clients. While I have some sympathy with that submission, as the Trustees do remain parties to the proceedings, unlike the Bingo Group, I do not think it appropriate to make an order on such a broad basis at the present time. However, the Trustees should have the costs of their notice of motion and costs thrown away by reason of the amendments sought, such costs to be paid on an indemnity basis from 30 September 2012, thereby allowing time for the Council to have considered the matters advanced on behalf of the Trustees in their solicitor's letter of 27 September.

Council's notice of motion 43I next turn to consider the Council's notice of motion. I have already addressed the Council's motion so far as it related to the proposed discontinuance against Bingo Group. 44The second matter to which the Council's notice of motion related was the joinder of Mangrove Mountain Landfill Pty Limited (Mangrove Mountain Landfill) as a third respondent in the proceedings. In support of its motion in that regard the Council relied upon the evidence of its solicitor Pauline Wright in an affidavit sworn on 18 March 2013. The material annexed to that affidavit demonstrates the potential involvement of Mangrove Mountain Landfill in works presently being undertaken on the land and which the Council claims are being undertaken in breach of the EPA Act. 45Having regard to the material annexed to Ms Wright's affidavit, I am satisfied that the joinder of Mangrove Mountain Landfill is appropriate and leave to join should be granted. To the extent that it is relevant, I record that no present party opposed that joinder. 46The Council has also submitted in the course of proceedings that the further amended summons and further amended points of claim which are now dated 30 April 2013 are documents for which leave should be given to enable it to rely upon them for the purpose of the proceedings. I have been taken to the detail of those documents and I am satisfied that it is appropriate to give the leave that is sought. Once again, I record that no party has expressed opposition to the amended documents that are the subject of leave sought by the Council. 47The first respondent seeks an order that its costs thrown away by reason of the proposed amendment to the points of claim and summons should be paid by the Council. There is no opposition to the making of that order and I propose to make it. 48Although no notice of motion was filed by the Club, it had foreshadowed to the Council that it would make an application for orders seeking dismissal of the proceedings against it for reasons not dissimilar to those relied upon by the Trustees. However, the Club acknowledges that it was a proper party to the proceedings, given that it was and remains the lessee of the land, and is entitled to be heard on any order that might be made that affects its use of that land. Ultimately, it acknowledges that the amended summons and points of claim address its concerns and as I understood the submission ultimately made, it sought an order to have paid its costs thrown away by reason of the amendment that I have allowed. 49As I have indicated, the Council does not oppose the making of an order for costs thrown away. The Club contends that those costs should include the costs of the day of 1 May, as it was not until the morning of that day, just prior to the commencement of the hearing, that the final form of the amended summons and pleadings appropriate to address the Club's concerns relieving it from allegations of breach and the necessity to undertake remedial orders was clearly articulated. In those circumstances it seems to me appropriate that the costs thrown away by reason of the amendment allowed should include the costs of the day of 1 May.

Directions 50I next address the directions to be made for the further conduct of the proceedings. These sundry and time consuming interlocutory applications having now come to an end, it is important to have this matter made ready for hearing. The works which are alleged to be have been carried out in breach of the EPA Act are substantial and it is therefore important that a hearing date be fixed so that this important issue can be the subject of final determination. Particularly is this so having regard to the nature of the work involved which, as I have earlier described, involves both the conduct of a waste facility and significant site works extending an existing golf course. 51The present estimate by the legal representatives is that the hearing of this matter is likely to occupy two weeks. In accordance with directions that I made on 19 February last, the Council has filed a number of affidavits from experts that seem to involve some seven expert disciplines. Notwithstanding the directions that I then gave, the Council has indicated that its evidence is not yet complete, although it has indicated that the further evidence upon which it would seek to rely should be filed and served by the close of business today. 52The parties have been invited to submit proposed directions for my consideration. They are in substantial agreement as to the sequence of events that should now take place in order to have this matter fixed for hearing. Having regard to my present understanding of the matter, I do not propose to make the usual directions in proceedings of this kind. The parties have contemplated this would be so. The directions that I will make involve allowing the Council to complete its affidavit evidence by the filing of nominated affidavits by the close of business today and then require the respondents to file their points of defence followed by the evidence upon which they propose to rely, with an opportunity given to the Council to respond. 53I am persuaded by the arguments of the parties that unlike the usual course, it is appropriate that this matter be the subject of case management, preferably by the trial judge, immediately after the evidence is completed. A consideration of the matter at that time will better enable the Court to have an appreciation of the evidentiary issues involved. Appropriate directions can then be given for the meeting of experts of comparable disciplines and the preparation of joint expert reports, should the individual affidavits served indicate utility in that course being taken. 54The further benefit of what I might refer to as early case management will be the capacity of the Court to direct the course which should thereafter be followed. My present appreciation of the matter, given the likely extent and nature of the evidence, is that affidavits, which I propose to direct be served but not filed. The likely consequence is that there will be a requirement for the preparation of a court book which will facilitate the more efficient disposal of the final hearing. 55For all these reasons I make the following orders:

1. I give leave to the applicant to discontinue the proceedings against Bingo Group Pty Limited upon the filing in the Registry by 4.00pm on Monday 6 May 2013 of a notice of discontinuance in the form required by the Uniform Civil Procedure Rules 2005.
2. Set aside the costs orders made by me on 4 February 2013 and again on 19 February 2013, so far as those orders require the payment by the applicant of the costs of the day of Bingo Group Pty Limited.
3. I order that the applicant pay the costs of the proceedings of Bingo Group Pty Limited on an indemnity basis.
4. I order that the costs payable in accordance with Order 3 be assessed and payable immediately.
5. I dismiss the notice of motion filed on behalf of the fourth respondent on 19 April 2013.
6. I order that the applicant pay the fourth respondent's costs of that respondent's notice of motion, together with the fourth respondent's costs thrown away by reason of the amendment sought to the summons and amended points of claim dated 30 April 2013, all such costs to be paid on an indemnity basis from 30 September 2012.
7. I give leave to the applicant to file in Court and rely upon the further amended summons dated 30 April 2013 together with the further amended points of claim also dated 30 April 2013.
8. I order that the applicant pay the costs of the first respondent thrown away by reason of the amendments allowed by Order 7.
9. I order that the applicant pay the costs of the second respondent thrown away by reason of the amendments allowed by Order 7, such costs to include the second respondent's costs of the day on 1 May 2013.
10. I direct that the applicant serve upon the respondents any affidavit of Peter Barclay, surveyor, James Dawson, golf course designer and Daniel Martins, hydrologist by 5.00pm today, 3 May 2013.
11. I direct that the respondents file and serve their points of defence by 17 May 2013.
12. I direct that the respondents serve any evidence on which they intend to rely by 14 June 2013.
13. I direct that the applicant serve any evidence in reply by 12 July 2013.
14. I direct that not later than 10 May 2013 the parties approach the Registrar for the purpose of obtaining: (i) a date for a case management hearing, preferably before the trial judge, such case management hearing to take place on or about 19 July 2013. (ii) dates for a two week hearing after 9 August 2013.
15. I reserve liberty to apply on three working days' notice from any one party to all other parties in the proceedings.

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: 16 May 2013