Kiama Council v Grant

Australian Securities Commission v Aust-Home Investments Limited (1993) 44 FCR 194; Australian Securities Commission v Berona Investments Pty Limited (1995) 18 ACSR 772; Brown v Mornington Peninsula Shire Council (2004) 140 LGERA 11; Byron Shire Council v McAdam (2001) 116 LGERA 418; Cassegrain v CTK Engineering Pty Ltd (2005) 54 ACSR 249; Grant v Kiama Council [2005] NSWLEC 58 (4 July 2005); Hamilton v Woollahra Council [1992] NSWLEC 48 (10 July 1992); Hayden Theatres Pty Ltd v Penrith City Council (1998) 105 LGERA 230; Jan Yee Australia Pty Ltd v Woollahra Council [1997] NSWLEC 33 (26 March 1997); Joanou v Randwick City Council (1998) 105 LGERA 237; Kurnell Lodge Pty Ltd v Bourne [2004] NSWLEC 329 (24 May 2004); CASES CITED: Logwon Pty Ltd v Warringah Shire Council [1993] NSWLEC 143 (27 August 1993); Manly Council v Kelly [2005] NSWLEC 685 (29 November 2005); Morris v Gosford City Council [1996] NSWLEC 254 (29 November 1996); Murray v Valaire (No. 2) [2001] NSWLEC 241 (7 March 2001); Newcastle City Council v Winwood [2005] NSWLEC 294 (3 June 2005); Pavements & Excavations Pty Ltd v Tones (unreported, Court of Appeal (NSW), 28 March 1991); One.Tel Limited v Commissioner of Taxation (2001) 101 FCR 548; Oshlack v Richmond River Council (1998) 193 CLR 72; Perera & Dee v Gorczynski [2002] NSWSC 639 (25 July 2002); Pittwater Council v Varney [2005] NSWLEC 651 (15 November 2005); Re Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin (1997) 186 CLR 622; Sydney City Council v Doltone House Wharf [2006] NSWLEC 81 (7 February 2006); Wollondilly Shire Council v Anh Nhu Le (2004) 137 LGERA 416

APPLICANT P V Moggach (solicitor) SOLICITORS Kearns & Garside LEGAL REPRESENTATIVES: RESPONDENT L M Byrne (barrister) SOLICITORS Thurlow Fisher

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

1 HIS HONOUR: The applicant, Kiama Council ("the Council"), has applied for an order for costs in concluded civil enforcement proceedings in Class 4 of the Court's jurisdiction. 2 The proceedings were commenced by the Council on 6 June 2003 by an application Class 4 seeking declaratory relief and mandatory injunctive relief to remedy a breach of the Environmental Planning and Assessment Act 1979 ("the EPA Act") by carrying out remedial works. 3 The proceedings were concluded on 16 December 2005 by the Court making orders, by consent, that: "1. The Respondent carry out the work set out in the Schedule of Remedial Work annexure 'A' to the application dated 5 June 2003. 2. Order no. 1 be suspended for a period of forty-two (42) months to enable deferred commencement conditions A(1)-(6) and condition B(67) of the conditions of development consent granted in proceedings no. 11245 of 2003 ("the development consent") to be complied with. 3. If conditions A(1)-(6) and B(67) of the development consent are complied with, then Order no. 1 will be deemed to have been complied with." 4 The question of costs was reserved at the time the Court made these orders in the Class 4 proceedings on 16 December 2005. The question of costs was listed for and was heard on 20 February 2006. Circumstances leading up to the litigation 5 In September 2002, the respondent submitted a development application to the Council seeking consent to carry out a tourist facility, including constructing ponds for canoe rides, an archery range excavated into a slope, a mini golf course, an on ground chess board, donkey rides and landscaping. 6 On 24 September 2002, officers of the Council attended the respondent's land. They observed significant earthworks had been undertaken on the land. 7 On 4 October 2002, the Council issued a notice of intention to give an order under Part 6 Div 2A of the EPA Act to the respondent in relation to illegal earthworks that had been undertaken on the site. The terms of the proposed order was to "restore the site to its original condition before the commencement of illegal earthmoving works". The period for compliance with the proposed order after service was stated to be 7 days. The respondent was advised that he had a period of 14 days to make representations in writing to the Council "as to why the Order should not be given or as to the terms of the proposed Order or the period of compliance with the Order". 8 The respondent did not reply or contact the Council in response to the notice of intention within the 14 day period. 9 On 21 October 2002, the Council under a further inspection of the land which revealed that no restoration works had been commenced. 10 On 22 October 2002, an order under Part 6 Div 2A of the EPA Act was served on the respondent ordering the respondent within 7 days of the date of the Order to "restore the site to its original condition before the commencement of illegal earthmoving works". The respondent was notified that he had the right to appeal to the Land and Environment Court against the order within 28 days of service of the order. The respondent was also notified that failure to comply with the order was a criminal offence. 11 On 22 October 2002, the respondent replied by facsimile at 5.42pm to the Council in relation to the Council's notice of intention to give an order dated 4 October 2002. The respondent accepted that earthworks had been carried out on his property. He described it as follows: "The earthwork which was carried out at my property at Foxground consists of the following. a) The dams that were originally there & had filled, they were redredged, all weeds were removed & new spillways put in. b) A second car park was put in as per my original development of 1/85 for the garden tourist / maze complex. c) An archery range was made which my architect Paul Hictchcork put in plans for. d) An area was also graded to put the giant Chessboard on which Paul Hitchcork also put plans into council to be approved." 12 However, the respondent did not state he would restore the land or carry out any other action in relation to the earthworks. 13 On 31 October 2002, the Council responded to the respondent's letter of 22 October 2002. That letter stated that if the respondent asserted that the works undertaken by the respondent have development consent and construction certificates, evidence of such approvals should be provided to Council. The letter put the respondent on notice that until such time that the documentation was supplied to the Council in response to this matter, the Council would continue to enforce the order issued on 22 October 2002. 14 Thereafter, the Council wrote to the respondent on a number of occasions seeking further material in relation to the development application. These letters included letters dated 17 October 2002 and 31 October 2002 from the Council, as well as a letter from the Department of Land and Water Conservation to the Council dated 25 October 2002 which was forwarded to the respondent. 15 On 10 October 2002, Council officers attended the land with the respondent to inspect the works. A series of photographs were taken which indicated the extent of the works. 16 The Council sought the assistance of the Department of Land and Water Conservation in relation to the work which needed to be undertaken on the land to restore it to its condition prior to the works being undertaken. 17 On 7 May 2003, the now called Department of Sustainable Natural Resources wrote to the Council. The letter recommended the remedial works that needed to be undertaken on the land to restore it to its condition prior to the work being undertaken. 18 On 19 May 2003, the Council's solicitors wrote to the respondent requesting that the respondent give a written undertaking to carry out the remedial works referred to in the letter from the Department dated 7 May 2003, a copy of which was enclosed. The Council's solicitors advised as follows: "Unless I receive your written undertaking on or before Wednesday 4 June 2003 that you will: engage an experienced civil engineer to prepare a detailed plan of and then undertake the works required by the DSNR letter dated 7 May 2003; and ensure that the remediation works are completed as soon as possible; and in any event before 30 August 2003 my client will commence proceedings in the Land & Environment Court to require you to carry out the works. Council will seek payment of all legal costs associated with those proceedings". 19 On 23 May 2003, the respondent replied to the Council's solicitor's letter of 19 May 2003. All that the respondent said was: "Earlier this year our Architect, Mark Hitchcock hired Morse McVey & Associates who are civil engineers to carry out the request you asked for when you visited my premises. After I received your Solicitor's letter I immediately contacted Mark who said Geoff McVey was on holidays but his office is still working on those diagrams. Once these diagrams are finished we will submit them to your office". 20 It can be seen that the respondent did not give a written undertaking that Morse McVey & Associates, a firm which would answer the description of being an "experienced civil engineer", had been engaged "to prepare a detailed plan of and then undertake the works required by the DSNR letter dated 7 May 2003" as requested by the Council in its letter of 19 May 2003. The mere assertion that they had been engaged to work on "diagrams", and in particular diagrams "to carry out the request you asked for when you visited my premises", did not meet the description of preparing a detailed plan of and then undertaking the works required by the DSNR letter dated 7 May 2003. Furthermore, there was no undertaking given by the respondent that he would ensure that the remediation works required by DSNR would be completed at all or as soon as possible and in any event before 30 August 2003. 21 On 26 May 2003, the Council's solicitors responded to the respondent's letter dated 23 May 2003. The Council's solicitor stated: "The correspondence which is held by Council indicates that your engineer does not have a brief to prepare remedial plans which would require removal and remediation of the illegally constructed dams and other excavations. I repeat the requirement contained in my earlier letter; that is unless I receive your written undertaking on or before Wednesday 4 June 2003 that you will: engage an experienced civil engineer to prepare a detailed plan of and then undertake the works required by the DSNR letter dated 7 May 2003; and ensure that the remediation works are completed as soon as possible and in any event before 30 August 2003 Council will commence proceedings in the Land & Environment Court to require you to carry out the works." The litigation 22 On 6 June 2003, the Council commenced the proceedings by lodging an application Class 4. The application sought the following relief: "1. A declaration that the Respondent has carried out work being the construction of dams, modification of a watercourse to form ponds and other excavation and earthmoving ("the Works") at Lot 11 DP 607155 No 25 Princes Highway, Broughton ("the property") without obtaining development consent under the Environmental Planning and Assessment Act.

2. A declaration that the Works required development consent under the Environmental Planning and Assessment Act.

3. An order that, within 3 months of the date of the order, the Respondent undertake remedial work in accordance with the annexed Schedule A.

4. An order that the Respondent pay the Applicant's costs of and incidental to the proceedings.

5. Such further an other orders as the Court sees fit". 23 On 20 June 2003, the respondent replied to the Council's solicitors' letter of 19 May 2003. Still the respondent did not give the undertaking sought. The respondent simply said: "In reference to your letter of 19th May 2003 re my dams. I would like to point out to you that the dams have been there for over 10 years. I have appointed Geoff McVey of Morse McVey & Associates to assist with this matter. He suggested that we have an on site meeting with officers from the Council and Department of Sustainable Natural Resources at 9am on Tuesday 1st July 2003. Would you also kindly note that I work out of the Chester Hill office and all correspondence and phone calls should be directed to that office". 24 There were then various communications about the interlocutory mentions of the Class 4 proceedings in the Court. 25 On 15 July 2003, the respondent wrote to the Council's solicitor. Still, there was no undertaking offered. The respondent simply said: "I have spoken with Theresa Smyth from Kiama Council and rearranged another appointment with David Noble from the Department of Sustainable Natural Resources, herself and my engineer Geoff McVey on Tuesday 12th August at 9am at my property at Foxground. The previous appointment we set out for 9am on 15th July, David Noble was unable to attend. I have spoken to Theresa Smyth and she concurred with me that your company be informed and the court action be deferred till this meeting takes place. We also have government proof that these dams have been in existence for over 10 years". 26 On 15 August 2003, the matter came before the Registrar who made directions including that the applicant file and serve points of claim by 12 September 2003. 27 On 12 September 2003, the Council filed its points of claim. The points of claim pleaded, inter alia: "8. In September 2002, development application No 320/02 for "proposed additional facilities to existing tourist garden" on the land was lodged with the Applicant ("the development application"). 9. The development application sought approval for a giant chessboard, archery range, canoeing in existing ponds and mini golf on the land. 10. The development application has not yet been determined. 11. On 24 September 2002 a site inspection by officers of the Applicant discovered that earthworks had been undertaken on the land. Those earthworks included:- the construction of dams the modification of a watercourse to form ponds other excavation, mounding and earthmoving ("the Works") 12. The Works required development consent under the LEP. No development approval has been issued by the Applicant for the works. The development consent did not include the Works. 13. Remedial action is required to restore the land to the condition it was in prior to the Works being undertaken." 28 On 16 October 2003, the respondent filed a Class 1 appeal against the Council's deemed refusal of the applicant's development application. 29 On 20 October 2003, the Court made various directions, including that the respondent file points of defence by 17 November 2003. 30 On 28 November 2003, the respondent filed its points of defence. The respondent admitted making the development application and that the development application had not been determined by the Council. In relation to paragraphs 11 and 12 of the points of claim, the respondent pleaded as follows: "3. In relation to paragraph 11: a. the Respondent admits that he carried out the construction of dams and the modification of a watercourse to form ponds, but says that those works were approved pursuant to development consent 1/85 (the 'Watercourse Works'); and b. the Respondent admits that it carried out some other excavation, mounding and earthmoving (the Other Works). 4. In relation to paragraph 12, the Respondent: a. says that it had development consent to carry out the Watercourse Works. In the alternative, the Respondent says that the [sic] did not require development consent to carry out the Watercourse Works, those works being permissible in the zone without development consent as 'agriculture'; and b. admits that it did not have development consent for the Other Works and that development consent was required for the Other Works. Further, the Other Works are the subject of development application 320/02." 31 The respondent denied paragraph 13 of the points of claim, namely that remedial action is required to restore the land to the condition it was in prior to the Works being undertaken. 32 Finally, the respondent pleaded: "6. The Respondent denies that the Applicant is entitled to the relief sought. 7. In the alternative and in answer to the whole of the claim the Respondent says that, in the exercise of discretion, the Court would not grant the relief sought." 33 Subsequently, the Class 4 proceedings were adjourned on 1 December 2003, 2 February 2004, 21 June 2004, 16 October 2004 and 21 March 2005 because the Class 1 appeal was still pending. 34 On 4 July 2005, Commissioner Moore delivered judgment in the Class 1 appeal against the deemed refusal of the development application: Grant v Kiama Council [2005] NSWLEC 58 (4 July 2005). The decision concluded that development consent should be granted but that orders and conditions needed to be finalised. 35 On 12 October 2005, Commissioner Moore made final orders in the Class 1 appeal. The consent was subject to five deferred commencement conditions, including the submission to and approval by the Council of a detailed landscape plan. The consent was also subject to 67 other conditions, including conditions requiring landscaping works and vegetation management and the carrying out of remedial works. Condition 67 required: "(67) Remedial works shall be undertaken on the ponds and dams within the development site in accordance with the Morse McVey & Associates Pty Limited report entitled "Flood Study & Dam Construction" dated 26 August 2003 ("the Dam Report"). Before commencing, the developer shall obtain a construction certification for the works from Council. Upon completion of the works, the developer shall supply to Council certification from Morse McVey & Associates Pty Limited that the remedial works have been carried out in accordance with the Dam Report. The construction certificate must be obtained, the works must be carried out and the certificate from Morse McVey & Associates Pty Limited must be supplied to Council prior to the commencement of the tourist facility use". 36 On 16 December 2005, with the consent of both parties, the Court made orders in the Class 4 proceedings that: "1. The Respondent carry out the work set out in the Schedule of Remedial Work annexure 'A' to the application dated 5 June 2003. 2. Order no. 1 be suspended for a period of forty-two (42) months to enable deferred commencement conditions A(1)-(6) and condition B(67) of the conditions of development consent granted in proceedings no. 11245 of 2003 ("the development consent") to be complied with. 3. If conditions A(1)-(6) and B(67) of the development consent are complied with, then order no. 1 will be deemed to have been complied with." 37 Annexure A referred to in Order 1 was the same document outlining the 14 remedial actions, which had been annexed to the application Class 4 dated 5 June 2003. The applicant's submissions 38 Mr Moggach, the solicitor who appeared for the applicant Council, submitted:

(a) The usual order as to costs should apply. The Council was successful in the litigation. It brought civil enforcement proceedings to obtain an order remedying work that had been done on the property. The Court made orders to that effect. The fact that the orders made by the Court were consented to by the Respondent is not relevant. The Council should be compensated for the expense it incurred in bringing and succeeding in the proceedings: Oshlack v Richmond River Council (1998) 193 CLR 72 at 97 [67];

(b) There is no conduct of the Council which disentitles it to an order for costs. There is no misconduct of any of the types identified by McHugh J in Oshlack v Richmond River Council (1998) 193 CLR 72 at 97-98 [69] or Bignold J in Pittwater Council v Varney [2005] NSWLEC 651 (15 November 2005) at [78]. The proceedings could not be said to have been unnecessarily commenced by the Council or unreasonably prosecuted by the Council. The respondent's submissions 39 Ms Byrne, counsel for the respondent, submitted that no order as to costs should be made. 40 Initially, Ms Byrne's submissions proceeded on an assumption that the Council's argument for an entitlement to costs was pursuant to Part 15 rule 7 of the Land and Environment Court Rules 1996 ("the Rules"). Based on that assumption, Ms Byrne relied on the decision of McHugh J in Re Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin (1997) 186 CLR 622 at 624-626, followed in Manly Council v Kelly [2005] NSWLEC 685 (29 November 2005) at [19]. 41 However, the Council did not put its entitlement to costs on the basis of Part 15 rule 7, but rather the general power under s 69(2) of the Land and Environment Court Act 1979 ("the LEC Act"). The Council relied on the circumstances that the proceedings had been concluded by substantive court orders (although by consent of both parties) and had not been discontinued by the applicant because of any settlement or extra curial satisfaction of the applicant's claim by the respondent. 42 Ms Byrne alternatively submitted that the Council should not be entitled to the usual order as to costs because there was disentitling conduct by the Council. The disentitling conduct, Ms Byrne submitted, fell into three categories:

(a) misconduct of the Council in the circumstances leading up to the litigation: Oshlack v Richmond River Council (1998) 193 CLR 72 at 97 [69];

(b) the Council obtained relief in the proceedings which the applicant had already offered in settlement of the dispute: Oshlack v Richmond River Council (1998) 193 CLR 72 at 98 [69]; and

(c) the proceedings were unnecessarily commenced: Pittwater Council v Varney [2005] NSWLEC 651 (15 November 2005) at [78]. The breach of the EPA Act, which the order of the Court remedied, was a technical breach and posed no immediate environmental harm warranting the commencement of civil enforcement proceedings by the Council. Furthermore, the Council and the applicant were in communication about the breach. The approach to costs where no hearing on the merits 43 The civil enforcement proceedings were concluded by the making of injunctive orders by consent. These were substantive orders, yet they were not the product of a final hearing and determination of the applicant's claim. What is the proper approach to the question of costs in this situation? 44 In Australian Securities Commission v Aust-Home Investments Limited (1993) 44 FCR 194 at 201, Hill J reviewed a number of cases dealing with costs in this situation and proffered the following summary: "These cases seem to me to support the following propositions being made. (1) Where neither party desires to proceed with litigation the Court should be ready to facilitate the conclusion of the proceedings by making a cost order: Stratford and the SEQEB case. (2) It will rarely, if ever, be appropriate, where there has been no trial on the merits, for a Court determining how the costs of the proceeding should be borne to endeavour to determine for itself the case on the merits or, as it might be put, to determine the outcome of a hypothetical trial: Stratford . This will particularly be the case where a trial on the merits would involve complex factual matters where credit could be an issue. (3) In determining the question of costs it would be appropriate, however, for the Court to determine whether the applicant acted reasonably in commencing the proceedings and whether the respondent acted reasonably in defending them ( SEQEB ). (4) In a particular case it might be appropriate for the Court in its discretion to consider the conduct of a respondent prior to the commencement of the proceedings where such conduct may have precipitated the litigation: cf Sunday Times Newspaper Co Ltd v McIntosh (1933) 33 SR (NSW) 371. (5) Where the proceedings terminate after interlocutory relief has been granted, the Court may take into account the fact that interlocutory relief has been granted: cf Re Asiatic Electric Co Pty Ltd [1973] 1 NSWLR 603 at 606, a case which, however, depended upon the specific wording of the statute under consideration. Where interlocutory relief has been granted, that fact carries no implication as to the ultimate merits of the case but does ordinarily suggest that the Court granting interlocutory relief has accepted or found that there is an arguable issue to be tried between the parties and that the balance of convenience favours the grant of that relief." 45 In Australian Securities Commission v Berona Investments Pty Limited (1995) 18 ACSR 772 at 774, Cooper J added, after citing these principles: "These propositions are of assistance in focusing attention upon some of the relevant circumstances which should be considered in the exercise of the discretion to award costs where proceedings do not proceed to a final hearing. However, they are not the only circumstances; nor are they intended to limited the discretion." 46 In Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622, the prosecutrix applied for costs of a proceeding she had instituted in the High Court for an order nisi for writs of prohibition, certiorari and mandamus directed to the Minister for Immigration and Ethnic Affairs and the Refugee Review Tribunal. The prosecutrix had been refused a protection visa by the Minister under the Migration Act 1958 (Cth). She applied to the Refugee Review Tribunal for a review of the Minister's decision. The Tribunal affirmed the Minister's decision. The prosecutrix then brought proceedings in the High Court. One week later, the Minister granted a protection visa to the prosecutrix. The prosecutrix, having obtained the relief she sought, did not proceed with her action. 47 McHugh J determined the prosecutrix's application for costs. He commenced with a discussion of the principles "which 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": at 624. This prefatory statement is important because it sets the circumstances in which the principles are to apply. There has been a tendency in subsequent cases to apply the principles in circumstances other than those with which McHugh J was concerned in that case. McHugh J stated: "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 [ Latoudis v Casey (1990) 170 CLR 534]. 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 [ Latoudis v Casey (1990) 170 CLR 534 at 543, 566-568]. 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 [ Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194 at 201]. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial 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 [ Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194 at 201]. 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 [[1971] QWN 13], 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 [Unreported; Federal Court of Australia; 10 February 1989] 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." 48 The result in that case was that McHugh J held that there should be no order for costs. 49 In One.Tel Limited v Commissioner of Taxation (2001) 101 FCR 548, Burchett J considered Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194 and Re Minister for Immigration and Ethnic Affairs: Ex parte Lai Qin (1997) 186 CLR 622. Burchett J then stated at 553 [6]: "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". 50 In One.Tel, Burchett J found at 554 [7] that the matter involved a clear winner: "The applicants, by their proceeding, sought to challenge the validity of certain notices, and to have then set aside. The respondent, after initially defending these notices, encountered at least an evidentiary difficulty, and acknowledged that they were to be set aside. That means that the applicants have succeeded, just as the respondent succeeded in Ahmetaj v Minister for Immigration and Multicultural Affairs [1999] FCA 332, where a proceeding failed by reason of the occurrence of an event that was always liable to occur and to defeat the proceeding; in those circumstances, Sackville J, when the hearing did not proceed, distinguished Ex parte Lai Qin and made a costs order. As in that case, so here, the result one party sought was achieved without a hearing, but not by a "settlement" in the ordinary sense, or as McHugh J used the word, and certainly not by what His Honour called "extra-curial means". 51 Accordingly, the respondent was ordered to pay the costs of the applicant in that case. 52 In Cassegrain v CTK Engineering Pty Ltd (2005) 54 ACSR 249 at 252 [10], White J accepted, as Burchett J had pointed out in One.Tel, that: "there is a distinction in cases in which one party after litigation effectively surrenders to the other, and cases where some supervening event or settlement removes the subject of the dispute, so that although it could not be said that one side has simply won the only remaining issue is that of costs". 53 White J held at 252-253 [11] that the facts of that case fell within the first type of case because the second defendant effectively surrendered to the plaintiffs when they no longer opposed the Court granting the orders that the plaintiffs had sought: "11. This is not a case where the plaintiffs do not wish to proceed with the action. The primary relief which they sought was that CTK be wound up. They succeeded on that claim, and prima facie are entitled to their costs up to the time the second defendant advised the plaintiffs that he would not oppose the making of a winding-up order." 54 Accordingly, White J determined that there should be orders that the defendants pay the plaintiffs' costs. 55 The distinction drawn by Burchett J in One.Tel between the two types of cases can be used to explain the decisions in this Court to order or not to order costs in civil enforcement or judicial review proceedings in Class 4 of the Court's jurisdiction. 56 The first type of case is where one party effectively surrenders to the other without there being a hearing and determination on the merits. 57 A classic illustration of this type of case is where one party discontinues without the consent of the other party or parties. A line of authority in this Court establishes "as a general rule that when proceedings are dismissed or discontinued because the applicant chooses not to proceed with them, the ordinary rule is that costs follow the event, it being concluded in such cases that the event is relevantly the discontinuance of the proceedings": see Joanou v Randwick City Council (1998) 105 LGERA 237 at 240 citing Hamilton v Woollahra Council [1992] NSWLEC 48 (10 July 1992), Logwon Pty Ltd v Warringah Shire Council [1993] NSWLEC 143 (27 August 1993), Jan Yee Australia Pty Ltd v Woollahra Council [1997] NSWLEC 33 (26 March 1997), Morris v Gosford City Council [1996] NSWLEC 254 (29 November 1996) as well as the Court of Appeal's decision in Pavements and Excavations Pty Ltd v Tones (unreported, Court of Appeal (NSW), 28 March 1991). 58 In Jan Yee Australia Pty Ltd v Woollahra Council [1997] NSWLEC 33 (26 March 1997), the applicant filed a notice of discontinuance of its Class 4 proceedings thereby bringing the proceedings to an end. The notice of discontinuance bore the consent of one respondent but not that of another respondent, the Council. The Council applied for its costs. Bignold J ordered the applicant, as the discontinuing party, to pay the costs of the Council thrown away by the discontinuance together with the cost of the proceedings generally. Bignold J rejected the applicant's submission that the conventional rule that costs follow the event should be departed from because the proceedings were justifiably commenced, justifiably continued, justifiably settled, and in all probability would have simply succeeded had they been fully litigated. Bignold J held that the applicant had not made out these matters. 59 In Byron Shire Council v McAdam (2001) 116 LGERA 418, the applicant Council sought its costs against the respondent in Class 4 proceedings which were discontinued by consent. The applicant Council had commenced Class 4 proceedings and obtained interlocutory orders restraining the respondent from using or allowing others to use the premises without consent. Subsequently, the respondent succeeded in Class 1 proceedings obtaining development consent for the use of the premises. The parties by consent sought to discharge the interlocutory orders and to discontinue the Class 4 proceedings. The applicant sought its costs on the discontinuance pursuant to Part 15 rule 7 of the Rules. Talbot J determined, first, that the applicant Council was successful in causing the respondent to satisfy the claim made against her. Next, Talbot J determined that there was no disentitling conduct on the part of the applicant's council. Accordingly, Talbot J ordered the respondent to pay the applicant's costs of the proceedings. 60 Another illustration of the first type of case is where a party consents to the Court making orders or gives an undertaking to the Court in substantially the same terms or effect as sought by the other party in the proceedings. 61 In Wollondilly Shire Council v Anh Nhu Le (2004) 137 LGERA 416, the Council had issued an order under s 121B of the EPA Act requiring the respondents to demolish and remove certain horticultural structures including a greenhouse erected unlawfully on the land. The Council commenced civil enforcement proceedings seeking declaratory relief that the respondents were using the land for the purpose of agriculture or intensive horticulture contrary to the EPA Act and consequential injunctive relief in relation to future use and to remedy the past breach by demolishing and removing the unlawful horticultural structures. Subsequently, the parties reached a settlement and the Court made consent orders reflecting the settlement. The orders were that the respondent use the land in conformity with the EPA Act, and demolish and remove the horticultural structures from the land unless a building certificate for those structures was obtained by a certain date. 62 Pain J held that the orders made, while differing somewhat from those sought in the Council's application, achieved the substantive result sought by the Council in that the offending structures would be either approved in a building certificate process or demolished: at 420 [14]. 63 Pain J held that the decision of the Council to commence the civil enforcement proceedings, in circumstances where the respondents had failed to comply with the s 121 B order for some 11 months and attempts to negotiate with the respondents to have the structures removed had been unsuccessful, was reasonable. Conversely, the respondent's actions were unreasonable prior to the Council's proceedings being commenced: at 420 -421 [18]. The Council's actions in settling the matter were reasonable: at 421 [19]. 64 Pain J concluded that "the Council achieved the substantive outcomes which it sought and acted reasonably in commencing and settling the proceedings and is entitled to an order of costs in its favour": at 421 [19]. 65 In Kurnell Lodge Pty Ltd v Bourne [2004] NSWLEC 329 (24 May 2004), the applicant applied for costs against the respondents in a case which had been settled by the respondents giving certain undertakings to the Court. The proceedings were commenced by the applicant seeking declaratory and injunctive relief against the respondents for using land otherwise than in accordance with a development consent issued by the Court. Lloyd J held that the fact that the respondents gave an undertaking in terms similar to that which the applicant sought suggests that the claim of the applicant was satisfied after the proceedings had been commenced. Lloyd J relied on Part 15 rule 7 of the Rules. The Court held that there was no sufficient disentitling conduct on behalf of the applicant. Accordingly, Lloyd J ordered the respondents to pay the applicant's costs. 66 In Newcastle City Council v Winwood [2005] NSWLEC 294 (3 June 2005), the applicant Council brought civil enforcement proceedings seeking declaratory relief in relation to the demolition of a verandah of a building in a heritage conservation area without consent, prohibitory injunctive relief restraining further demolition work and mandatory injunctive relief to re-instate the verandah. The respondent gave a written undertaking not to carry out any further works on the property. This satisfied the Council's claim for prohibitory injunctive relief. The respondent also sought and obtained consent to demolish the whole building. This removed the subject matter of the Council's claim for mandatory injunctive relief. 67 Pain J held that the proceedings were reasonably commenced but the Council's claim was only partially satisfied: at [26] and [27]. The Council had also decided to allow the demolition on the building: at [30]. The Council had decided to discontinue the proceedings where it had not achieved all it sought in the proceedings: at [29]. In these circumstances, Pain J decided that the Council should receive only half of its costs: at [36] and [38]. 68 In Pittwater Council v Varney [2005] NSWLEC 651 (15 November 2005), the Council brought civil enforcement proceedings seeking declaratory relief that the respondent was carrying out development without consent, prohibitory injunctive relief restraining the carrying out of further work and mandatory injunctive relief to remedy works already carried out. The Court made both interlocutory and final orders, by consent, to that effect. Bignold J held that, based on the outcomes reflected in both the interlocutory and final orders made, the Council was the successful party: at [77]. Bignold J held that the usual order as to costs should be made, absent misconduct. 69 Bignold J rejected the respondent's argument that the proceedings were unnecessarily commenced or unreasonably prosecuted by the Council up to a certain juncture (at [84]) but accepted the respondent's argument from that juncture on (at [93]). Accordingly, Bignold J ordered the respondent to pay the Council's costs up to the relevant juncture but made no order for costs from that time on: at [102]. 70 Manly Council v Kelly [2005] NSWLEC 685 (29 November 2005) is another illustration of the first type of case. The Council had brought proceedings seeking declaratory relief that the respondent had not complied with an order issued by the Council under s 124 of the Local Government Act 1996 to remove car bodies and other rubbish from the respondent's land and mandatory injunctive relief that the respondent so remove the car bodies and other rubbish. By consent, the Court granted injunctive relief substantially to the effect sought by the Council, but did not make any declaration. 71 Pain J held that "the Council succeeded in large part in achieving what it set out to do in these proceedings": at [23]. However, Pain J held that "given the matters in dispute between the parties, I am unable to conclude that the Council would have completely succeeded at the hearing": at [23]. Accordingly, Pain J awarded most but not all of the costs of the Council: [23] and [25]. Pain J rejected the respondent's argument that there was any disentitling conduct by the Council: at [24]. 72 The second type of case is where some supervening event or settlement so removes or modifies the subject of the dispute that no issue remains except that of costs. Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 was, of course, an example of such a case. 73 Another example of this type of case is Hayden Theatres Pty Ltd v Penrith City Council (1998) 105 LGERA 230. The applicant no longer wished to proceed with its judicial review action because the subject matter of the legal challenge, namely the original grant of development consent had been surrendered by one of the respondents, the developer, in exchange for a further development consent. Hence, the subject of the dispute had completely disappeared. Bignold J applied the principles in Lai Qin: at 233-234. There was no unreasonable conduct in the litigation by either the applicant or the respondents: at 234. No order for costs was made: at 235. 74 In Murray v Valaire (No. 2) [2001] NSWLEC 241 (7 March 2001), the applicant brought civil enforcement proceedings claiming an order that the respondent be restrained from carrying out building works contrary to a development consent and an order that the respondent remove works already carried out contrary to the development consent. The respondent contended that the works were being carried out lawfully in that they were in conformity with a construction certificate issued by the relevant council. Subsequently, a new construction certificate was issued by the council. The applicant surrendered the first construction certificate and relied on the second. 75 Lloyd J held that the effect of the surrender of the first construction certificate and the issuing of the new construction certificate satisfied the applicant's claim and there was no utility in the matter proceeding to hearing: at [6]. Lloyd J held that both parties had acted reasonably and the Court could not find that the applicant was almost certain to have succeeded: at [9]-[11]. The proper exercise of the costs discretion was to make no order as to the costs of the proceedings: at [12]. 76 In Sydney City Council v Doltone House Wharf [2006] NSWLEC 81 (7 February 2006), the applicant council brought civil enforcement proceedings seeking a declaration that the respondents were using premises as a function centre without consent. The respondents contended the use was not unlawful because it was carried out under the authority of an existing consent, the terms of which were wide enough to permit use of the premises as a function centre. Without prejudice to this position, the respondents nevertheless sought and obtained a further development consent that expressly permitted use of the premises as a function centre. The respondents thereupon agreed to conduct their activities in accordance with the further development consent. The applicant discontinued the proceedings. 77 Cowdroy J held that the case fell within the circumstances in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622. The supervening event of the grant of consent and the agreement of the respondents to conduct their activities in accordance with that consent, removed the subject of the dispute. All parties acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the proceedings were discontinued: at [20]-[24]. 78 However, even in this second type of case, it may still be appropriate to make an order for costs where one of the parties has acted so unreasonably that the other party should obtain the costs of the action (Re Minister for Immigration and Ethnic Affairs: Ex parte Lai Qin (1997) 186 CLR 622 at 644) or one party was almost certain to have succeeded if the matter had been fully tried: Re Minister for Immigration and Ethnic Affairs: Ex parte Lai Qin (1997) 186 CLR 622 at 625. 79 An example of a case where these exceptions were applied is Perera & Dee v Gorczynski [2002] NSWSC 639 (25 July 2002). The respondents (Perera and Dee) substantially achieved the relief they had sought when the appellant (Gorczynski) provided the relief without the necessity for a court order. The subject of the dispute was thereby removed. Nevertheless, an order for costs was made against the appellant. Gzell J held that the appellant acted unreasonably before action and effectively required the respondents to commence the proceedings and the respondents were bound to succeed if their proceedings had been determined on the merits: at [20]. Summary of principles 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. Approach in this case 81 This is a case where the usual orders as to costs should be made. The Council has been successful in the litigation. The proceedings have been concluded by the making of the orders of the Court. The orders made are substantially the same as the orders sought by the Council in its Class 4 application. The fact that the orders made by the Court were made by consent does not alter these conclusions. 82 This is a case of the first type identified by Burchett J in One.Tel. The respondent, after defending the applicant's claim for two and a half years, effectively surrendered to the applicant by consenting to the Court making the injunctive orders against the respondent that the applicant had sought from the outset in its originating process. The injunctive order was stayed for a period of time to allow the respondent, if it so elected, to take up the development consent granted by the Court in the Class 1 proceedings. However, that consent also contained conditions requiring the carrying out alternative remedial work. Either way, therefore, the applicant has achieved its objective of having the applicant carry out remedial work in relation to the ponds and excavations that allegedly constituted the breach. 83 This is not a case of the second type identified by Burchett J in One.Tel or dealt with by McHugh J in Lai Qin, where the applicant, as the moving party, no longer wishes to proceed with its action. There has not been a settlement or extra-curial event that removes or modifies the subject of the dispute. 84 In the present case, the Court made injunctive orders of the type and substance sought by the applicant in its originating process. The making of those orders brought the applicant's action to an end, except for the question of costs. There was nothing more that the applicant could achieve by proceeding with the action. Put in more conventional language, the applicant's cause of action merged with the orders of the Court. 85 However, as noted earlier, even in cases of the second type, the Court may still be able to conclude that an order for costs is appropriate. One circumstance is where one of the parties has acted so unreasonably that the other party should obtain the costs of the action: Re Minister for Immigration and Ethnic Affairs: Ex parte Lai Qin (1997) 186 CLR 622 at 624. 86 In the present case, the respondent's continued failure to comply with the foreshadowed and actual administrative orders of the Council to carry out the remedial work effectively invited the applicant to bring the enforcement proceedings in the Court to obtain an injunctive order compelling the respondent to carry out the remedial works. 87 The chronology of events stated earlier in the judgment reveals that the Council was entirely justified in commencing and continuing the Class 4 proceedings. The respondent failed to respond within the time required to the notice of intention to give an order. After the Council gave the respondent an order, the respondent took no action to comply with the order or to lodge an appeal against the order, as he was entitled to do. 88 The belated response of the respondent to the first notice of intention to give an order seemingly asserted that he was entitled to carry out the works. When the Council responded to the respondent requesting that he provide evidence of any approvals authorising the carrying out of the works, the respondent never provided any such approvals. 89 The respondent failed to provide the undertakings sought by the Council on 19 May 2003 to carry out remedial work. The respondent's response did not join issue with the undertakings sought. The respondent never stated that the civil engineer that he had appointed had been instructed either to prepare a detailed plan or to undertake the works required by the DSNR letter dated 7 May 2003. The respondent did not undertake that he would carry out the remedial works in any timeframe at all. When the Council pointed this fact out to the respondent on 26 May 2003, and sought again that the respondent give the undertakings, the respondent failed to respond. 90 Indeed, the respondent delayed even after the proceedings were commenced on 6 June 2003. The respondent did not consent to orders being made until two and a half years afterwards, on 16 December 2005.

91 This circumstance of the respondent acting unreasonably also provides a basis for making an order for costs against the respondent. 92 Accordingly, the applicant should be entitled to an order for costs unless there is some disentitling conduct on its part: Oshlack v Richmond River Council (1998) 193 CLR 72 at 96 [66], 97 [67] and [69]. For the reasons I give below, there is no such disentitling conduct. 93 The first disentitling conduct relied upon by the respondent is said to be the conduct of the Council in the circumstances leading up to the litigation. However, as the above chronology shows, there was no disentitling conduct on the part of the Council in the period leading up to the litigation. The Council gave ample notice to the respondent and acted entirely reasonably. The situation is similar to that in Wollondilly Shire Council v Anh Nhu Le (2004) 137 LGERA 416. The Council acted reasonably in commencing the proceedings and the respondent acted unreasonably before commencement of the proceedings. See also Brown v Mornington Peninsula Shire Council (2004) 140 LGERA 11 at 15 [20]. There was also no conduct of the Council in continuing the litigation which could be said to amount to misconduct. The Council acted reasonably.

94 The second asserted misconduct of the Council is that the orders made on 16 December 2005 in the proceedings had already been offered by the respondent. The recitation earlier in the judgment of the facts leading up to the litigation shows clearly that this is not correct. At no time did the respondent ever offer to do remedial work of the nature and extent of that ultimately ordered by the Court. Indeed, all of the responses by the respondent steadfastly avoided offering to do any remedial work at all. 95 The third alleged misconduct of the Council is that the bringing of the proceedings was unnecessary because the breach was merely a technical breach with no imminent environmental harm. Again, that is shown by the above facts not to be correct. The Council from the outset had given the respondent notice that work needed to be carried out to remedy the earthworks that had allegedly been carried out illegally. The Council engaged the services of the Department of Sustainable Natural Resources who identified that remedial works needed to be carried out and specified what those works were. If the breach had been merely technical and there was no imminent environmental harm, it is inconceivable that the Department of Sustainable Natural Resources would have required detailed remedial works to be carried out. Furthermore, after the respondent was provided with the remedial works specified by the Department, the respondent never disputed the necessity to do those works. Indeed, the orders ultimately made by the Court require the respondent to carry out remedial works as specified by the Department. 96 Finally, the fact that there had been some communication between the applicant and respondent in the month preceding the commencement of the proceedings does not constitute any disentitling conduct on the part of the Council. As can be seen from the above summary of the respondent's correspondence, the respondent never undertook to do the works itself or to engage its civil engineer to prepare a detailed plan and undertake the remedial works specified by the Department. 97 Accordingly, the respondent's submission that it was not necessary for the Council to commence the proceedings is rejected. 98 For these reasons, there is no disentitling conduct on the part of the Council. Accordingly, the Council, as the successful party, should be entitled to the usual order as to costs. Orders 99 The Court orders:

1. The respondent pay the applicant's costs of the proceedings.

2. The respondent pay the applicant's costs of the application for costs of the proceedings.

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