Jodie Dianne Ansted v Northern Beaches Council

June 2021 proceedings

1. The Second and Third Respondents did not complete the series of works referred to in the Consent Orders 1-4 (the Works) in the required 6-month timeframe, that is, by 26 April 2021.
2. On 26 April 2021, Mr and Mrs Prowse filed a Notice of Motion seeking an extension of the time for compliance with the Consent Orders pursuant to the liberty to apply reserved by Order 7 of the Consent Orders.
3. That Notice of Motion was heard by the Court on 2 June 2021 and orders varying the Consent Orders were made extending the timeframe for the completion of the Works to 25 June 2021 and varying the costs order (Order 5) to read as follows: (5) Subject to Orders 1-4 being complied with by the date originally provided for in the consent orders, the Applicants and the Second and Third Respondents are to pay their own costs.

Nature of orders sought

1. On 25 May 2021, the Applicants filed a Notice of Motion seeking the following orders: That on account of the Second and Third Respondents failure to comply with orders 1 to 4 inclusive of orders made by the Court on 27 October 2020, the Court vary Order 5 and replace it with the following orders: "That the Second and Third Respondents pay 50% of the costs of the First and Second Applicants incurred in the whole of the proceedings in an amount that may be agreed or assessed." Any such further order as the Court thinks fit in the circumstances.
2. No orders are sought against the Council. The 50% sought is said to represent that part of the proceedings that related to Mr and Mrs Prowse and excluded the costs of any part of the proceedings relating to the Council.
3. Mr and Mrs Prowse oppose the making of the order sought in the Notice of Motion.

Applicants' submissions

1. The Applicants submitted that pursuant to r 36.16 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) the Court has limited power to set aside or vary a judgment or order after entry of the judgment. However, where liberty to apply has been reserved there is an inherent power reserved for the purposes of "working out" the orders and supervising the enforcement of the orders. Here, the Consent Orders were made by consent but expressly reserved liberty to apply. In addition, the Land and Environment Court has been held to hold an inherent power to set aside judgment for any reasons that would vitiate the agreement or consent giving rise to the judgment: Logwon Pty Ltd v Warringah Shire Council (1993) 33 NSWLR 13 at 28-29.
2. In this case, the Court would exercise its power to vary the terms of Order 5 of the Consent Orders as it was expressly made contingent on compliance with the time for compliance in Orders 1-4. The fact that a consent order is conditional, and the condition has not been met has been held to be a basis to vary a consent order: Paino v Hofbauer (1988) 13 NSWLR 193.
3. The question that follows is whether the Court should exercise its discretion in the circumstances to order that Mr and Mrs Prowse pay the Applicants' costs as sought. The approach in circumstances such as the present are those distilled by Preston CJ (of LEC) in Kiama Council v Grant (2006) 143 LGERA 441 at [80]: 80 The principles that emerge from these cases are that in a civil enforcement or judicial review case where there has been no hearing on the merits: (a) where one party effectively surrenders to the other party by: (i) discontinuing without the consent of the other party; or (ii) giving undertakings to the Court or submitting to the Court making orders against the party substantially in the terms or to the effect claimed by the other party; the proper exercise of the costs discretion will ordinarily be to make the usual order as to costs, unless there is disentitling conduct on the part of the other party; and (b) where some supervening event or settlement so removes or modifies the subject of the dispute that no issue remains except that of costs, the proper exercise of the costs discretion will ordinarily be to make no order as to costs unless: (i) one of the parties has acted so unreasonably that the other party should obtain the costs of the action; or (ii) even if both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried so that the party should obtain the costs of the action.
4. In this case, the circumstances fall withing category (a) or (b)(ii).
5. For the purposes of determining costs it is not the role of the Court to conduct a hypothetical trial: Re Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin (1997) 186 CLR 622 (Lai Qin).
6. In this case, the Court was not limited to the relief that was sought by the Applicants in the Further Amended Summons, the Court could have, in the exercise of its discretion, made other orders as would best meet the practicalities as well as the justice of the situation before it: Dincel Construction System Pty Ltd v Penrith City Council [2021] NSWCA 133 at [60]-[63].
7. The relief ultimately obtained by the Applicants, although not in the same terms as that sought, was in a form that would have fallen within the width of the Court's discretion had the matter been fully heard. In particular, the Consent Orders effectively required Mr and Mrs Prowse to carry out works that brought the site into conformity with the conditions of their development consent.
8. The Applicants also suffered prejudice as a consequence of the Works not being completed within the period contemplated as outlined in the affidavits of Mr Ansted which were read in support of this application.

Second and Third Respondents' submissions

1. The Court, in exercising the power to vary a judgment should do so with great caution, having regard to the importance of the finality of litigation: State Rail Authority of NSW v Codelfa Constructions Pty Ltd (1982) 150 CLR 29 at 38.
2. The proceedings were not resolved by capitulation or, in effect, by giving the substance of the relief that was sought. It was a compromise. By that compromise the Applicants obtained little success in relation to the relief that was sought in the Further Amended Summons.
3. The Applicants cannot say that the evidence led would have supported the orders sought as the proceedings were compromised before Mr and Mrs Prowse were able to adduce their evidence and was resolved whilst the Applicants' evidence was being tested.
4. The parties should be left with the bargain they made or, in the alternative, there should be no order as to costs.

Findings

1. I accept the submissions of the Applicants that Order 5 made in the Consent Orders was conditional upon Mr and Mrs Prowse carrying out the Works within a fixed period of time. Absent compliance with that timeframe the compromise with respect to costs was no longer operative. In those circumstances, it is appropriate that in the exercise of my discretion that the Applicants be permitted to now seek to have resolved the question of costs. I do not consider that this is the exercise of the Court's power to vary the terms of Order 5, as that order was conditional. Rather, the Applicants are now seeking by exercising the liberty reserved to have determined the outstanding issue of costs.
2. These proceedings were resolved by the Consent Orders prior to the completion of the evidence and as such did not require a determination of the dispute by the Court. The principles that relate to applications for costs in such circumstances are those as set out in Lai Qin at 624-625: In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs (1). Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order (2). When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order. 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 (3). To do so would burden the parties with the costs of a litigated action which by settlement or extracurial action they had avoided. 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 (4). 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. Thus, for example, in R v Gold Coast City Council; Ex parte Raysun Pty Ltd (5), the Full Court of the Supreme Court of Queensland gave a prosecutor seeking mandamus the costs of the proceedings up to the date when the respondent Council notified the prosecutor that it would give the prosecutor the relief that it sought. The Full Court said that the prosecutor had reasonable ground for complaint in respect of the attitude taken by the respondent in failing to consider the application by the prosecutor for approval of road and drainage plans. Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. This is perhaps the best explanation of the unreported decision of Pincus J in South East Queensland Electricity Board v Australian Telecommunications Commission (6) where his Honour ordered the respondent to pay 80 per cent of the applicant's taxed costs even though his Honour found that both parties had acted reasonably in respect of the litigation. But such cases are likely to be rare. 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 (7).
3. The principles relating to how the approach referred to in Lai Qin applies to cases involving compromise was further examined in ONE.TEL Ltd v Commissioner of Taxation (2000) 101 FCR 548 at [6] in the following terms: 6 In my opinion, it is important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event or settlement so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the Court's discretion otherwise than by an award of costs to the successful party. It is the latter type of case which more often creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs. In Ex parte Lai Qin, McHugh J was careful to state (at 624) that the principles with which he was concerned were those that "govern an application for costs when a party elects not to pursue an action because he or she has achieved the relief sought in the action either by settlement or by extra-curial means". As his Honour recounted the facts, the instant case was one where the applicant had challenged a decision of the Refugee Review Tribunal denying her status as a refugee but, during the pendency of her action in the High Court, the Minister had exercised his special discretion in her favour under s 417 of the Migration Act 1958 (Cth). The question whether the Tribunal had or had not erred in law thus became moot. Sun Zhan Qui v Minister for Immigration and Ethnic Affairs was a similar case. Following the decision of the Full Court in Sun v Minister for Immigration and Ethnic Affairs (1997) 81 FCR 71, the Minister exercised his discretion under s 417, with the result that an outstanding proceeding in respect of one of several decisions of the Refugee Review Tribunal lost any significance for either party. Beaumont J followed Ex parte Lai Qin. Gribbles v Health Insurance Commission was a variation on the theme. There, the Health Insurance Commission was sued by a pathologist because it declined to recognise particular services as eligible for the payment of Medicare benefits; but during the pendency of the proceeding, certain arrangements affecting the performance of the services were changed, with the result that the Commission reversed its decision. The original dispute thus ceased to have any significance, and the argument about the appropriate costs order had to take place in the absence of any determination of the merits. Again, in Australian Securities Commission v Aust-Home Investments Ltd and in Australian Securities Commission v Berona Investments Pty Ltd, as Cooper J put it in the latter case (at 777), "events had overtaken the proceedings." The relief originally sought was no longer required, and the proceedings were terminated without any decision on the merits. Neither side had won or lost (see the former case at 202, and the latter at 777). Reddy v Hughes and Rizal v Minister for Immigration and Multicultural Affairs perhaps each turned even more clearly on an assessment of the reasonableness of a party's behaviour. In Reddy v Hughes, the respondent had offered the applicant a substantially complete remedy before the institution of proceedings, and Branson J held (at 415) that her Honour was "not able to be satisfied that the applicant acted reasonably in commencing the proceeding". In Rizal, although the applicant achieved the result he sought by his proceeding in the Court, there was an "at least arguable" objection to the Court's jurisdiction to entertain the application, and a proposed amendment to overcome the jurisdictional problem would have required leave to file an application long out of time. That leave had not been granted when the proceeding became moot because of the Minister's plainly reasonable decision to reconsider the request the previous rejection of which was the subject and casus belli of the litigation.
4. In seeking to determine whether the Applicants have been successful in the relevant sense as outlined above, I am also to have regard to the substance of the relief sought in the Further Amended Summons rather than by a close comparison of the precise terms of the orders sought: Nadilo v Eagleton [2021] NSWCA 232 (Nadilo) per Preston CJ (of LEC) at [85], [92] and [93]. Further, establishing that the Applicants would have inevitably succeeded is necessary but insufficient. It must also be demonstrated that Mr and Mrs Prowse's conduct in continuing to defend the proceedings up until the point of settlement was unreasonable: Nadilo at [94].
5. In the circumstances of this case, I am unable to find that the Applicants would have inevitably succeeded. In order for me to assess the prospects of success it would be necessary for me to conduct a hypothetical trial, which approach is not open. In this case, the hearing was incomplete. The evidence was disputed and there is no reasonable assessment of the evidence available in the context of this Notice of Motion that would enable a finding that the Applicants would inevitably have been successful in achieving the substance of the outcome they sought.
6. To the extent that the Applicants identify, for example, the fact that the Consent Orders included two orders relating to the use of the downstairs of the premises and the screening to the windows as indicating inevitable success or capitulation, such a piecemeal approach to the claims of the Applicants is the approach that I am to eschew in favour of a consideration of the substance, not the particulars, of the claims.
7. In this case, the Consent Orders represent a clear compromise of not only the proceedings but the underlying dispute between the parties.
8. The substance of the complaint was that the Works undertaken on Mr and Mrs Prowse's land was not authorised and that they should be required to complete the Works as authorised. To this extent the consent that Mr and Mrs Prowse relied upon as authority for the work was sought to be declared invalid. The Applicants have not been successful in obtaining such an outcome.
9. The underlying reason for the proceedings was a concern that there was a consequence of these alleged works that directed stormwater from the land of Mr and Mrs Prowse on to the Applicants' land. The Applicants had initially sought some relief relating to the passage of such water, but did not press this relief as it was, in effect, a nuisance claim, such claim being outside the jurisdiction of this Court. The Consent Orders however, provided a compromise whereby the issue of stormwater was addressed, and the Applicants were given the capacity to participate and to an extent oversee the design and carrying out of such works. This compromise was well beyond the scope of the substance of the relief sought, namely compliance with the consent granted and the reinstatement of land.
10. The compromise of proceedings where the parties are, by compromise, able to address the real issue that underlies the dispute, particularly where that issue is beyond the scope of the proceedings before the Court is to be encouraged. By resolving the real issue by compromise the proceedings become unnecessary as, in effect, the parties have reached a resolution of their underlying issue by a process other than that which would be obtained by success in the claim before the Court. In this case, I accept Mr and Mrs Prowse's submissions that the Consent Orders do not represent a capitulation to the relief sought but the identification and implementation of a parallel resolution that would not have been achieved if the proceedings had proceeded to conclusion.
11. For those reasons, as the Applicants were not ultimately successful in achieving the substance of the relief they sought through the Consent Orders, and where I am unable to determine, absent a hypothetical hearing, whether the Applicants would have been ultimately successful it is not appropriate that I make the order sought in the Notice of Motion. Further, approaching the proceedings considering the substance of the claims rather than the particular detail of the claims, I am not satisfied on the evidence that Mr and Mrs Prowse acted unreasonably in continuing the defence of the proceedings until such time as the Consent Orders were entered into.
12. To the extent that the Applicants relied upon what they considered the prejudice to them of Mr and Mrs Prowse not complying with the Consent Orders in the time in which those orders provided, I do not consider such factors are relevant to the question of costs raised in this Notice of Motion. Costs are compensatory and not punitive. In this case, the additional costs that were incurred as a consequence of Mr and Mrs Prowse not completing the work within the time contemplated was compensated for in the order for costs that I made in the Applicants' favour on 2 June 2021. The matter does not arise for further consideration in this Notice of Motion.

Costs of the Notice of Motion

1. Each party seeks its costs of this Notice of Motion.
2. The general discretion as to costs is provided for in s 98 of the Civil Procedure Act 2005 (NSW) and the general rule as to costs is that contained in r 42.1 of the UCPR that: Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs.
3. The general provision in r 42.1 of the UCPR is a presumption and not a rule. In this case, neither party submitted that there was any reason why an order other than that in r 42.1 should be made in connection with this Notice of Motion. As the Applicants have not been successful in the Notice of Motion and it is to be dismissed it is appropriate that an order for costs be made in Mr and Mrs Prowse's favour.

Orders

1. The Court orders that: 1. The Notice of Motion filed 25 May 2021 is dismissed; and 2. The Applicants are to pay the Second and Third Respondents' costs of the Notice of Motion.

Amendments 24 November 2021 - Typographical error - Representation. 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: 24 November 2021