Ku-Ring-Gai Council v Labordus

Abigroup Limited v Abignano (1992) 39 FCR 74 ; Australian Hardboard Ltd v Hudson Investment Group [2007] NSWCA 104; Coombwood Pty Ltd v Baulkham Hills Shire Council (1995) 36 NSWLR 200; Colgate-Palmolive Co and Anor v Cussons Pty Limited (1993) 46 FCR 225 ; Dowdle v Hillier (1949) 66 WN (NSW) 155; CASES CITED: Fylas Pty Ltd v Vynal Pty Ltd [1992] 2 Qd R 593 ; Latoudis v Casey (1990) 170 CLR 534; Phillips v Walsh (1990) 20 NSWLR 206; Rosniak v Government Insurance Office (1997) 41 NSWLR 608; Westfield Management Pty Ltd v Direct Factory Outlets Homebush Pty Ltd (No 4) [2005] NSWLEC 168; Woollahra Municipal Council v Baranov (2006) 144 LGERA 96

APPLICANT Mr M Wright SOLICITORS LEGAL REPRESENTATIVES: Deacons RESPONDENT Mr J Johnson SOLICITORS McKees

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

JUDGMENT ON COSTS 1 Her Honour: These are Class 4 proceedings enforcing a statutory order issued by Ku-Ring-Gai Council (the Council) in April 2002 under s 124 of the Local Government Act 1993 requiring the removal of an existing brick retaining wall on the southern boundary of the Respondent's property, 30 Lynbara Avenue St Ives, and its replacement with a structurally sound wall. The matter was set down for hearing and resolved by consent orders made on 21 March 2003 at the outset of that hearing. Order 1 required the Respondent to remove a brick wall and construct a replacement retaining wall. Order 2 required that a survey be prepared and an engineering drawing detailing the works to drain surface water adjacent to the wall be directed to the stormwater system in Lynbara Avenue. 2 Lack of compliance with the consent orders was an issue and the matter was returned to the Court list by the Council in July 2005. The parties asked for the matter to be referred to mediation and this occurred in December 2005 and February 2006, unsuccessfully. It was listed before me in March 2006 for further orders. Since then I have made numerous case management orders. Lack of compliance with the consent orders is ongoing.

3 The subject of this judgment is prayer 7 of a Notice of Motion dated 15 February 2007 filed by the Council seeking an order, inter alia, that its costs be paid on an indemnity basis by the Applicant from August 2005 to date. Until July/August 2007 the First Respondent was represented by an agent Mr Wilmot who is not legally qualified. The costs motion was first set down for hearing on 24 July 2007 but did not proceed as the Respondent did not attend and her agent was ill and could not. The second date set down for the costs hearing of 6 September 2007 was vacated on the application of the Respondent's newly appointed solicitors. Directions were made on 30 August 2007 for any evidence to be filed by the Respondent by 2 October 2007. No evidence was filed by that date. The First Respondent was represented by counsel at the hearing.

4 I was informed at this hearing on 23 October 2007 that a Notice of Motion was filed on 22 October 2007 by the Applicant's solicitors seeking to have the consent orders discharged or revoked. That motion will be heard in due course. Evidence relied on 5 The Council relied on the affidavit of Ms Tyrell, solicitor, sworn 27 May 2007. It annexed various orders from August 2005 to the date of the affidavit and correspondence which refers to matters raised in the course of numerous mentions before the Court. An affidavit of Mr Fox, solicitor, sworn 3 August 2005 was also relied on which sets out the history of the proceedings until that date. Annexed to the affidavit of Mr Fox is an email to the Council dated 2 February 2005 from a neighbour of the Respondent attesting to ongoing water problems in his backyard.

6 The Respondent relied on part of an affidavit of Mr Davies, engineer, sworn 2 October 2007. Mr Davies has provided engineering advice to the Respondent during 2006 and 2007.

Terms of Orders 7 In addition to seeking the costs of the mediation held during December 2005 and February 2006 the Council seeks its costs on an indemnity basis in relation to the numerous orders made by me since March 2006. It is useful to summarise the terms of those orders.

8 Orders dated 14 March 2006 required the parties' respective engineers to meet within 21 days to agree on a design for the replacement wall in light of the consent orders of 21 March 2003. They were directed to make recommendations departing from the consent orders if necessary to ensure the integrity of the replacement wall and to ensure the surface water adjacent to the replacement wall be directed effectively to Lynbara Avenue.

9 Orders dated 10 August 2006 required the Respondent to provide the Applicant with Mr Davies' engineering report prepared in or about April 2006 by 14 August 2006. The two engineers were required to meet and provide a joint report to the Court by 6 September 2006.

10 Orders dated 22 September 2006 required that the Respondent identify the property or properties burdened by any proposed stormwater drainage easement, obtain stormwater drainage easement in order drain stormwater across the relevant properties, identify existing stormwater drainage easements, obtain owner's consent to amend existing easements in order to drain water from the property, obtain a report from a hydraulic engineer to undertake specified work, inter alia.

11 Orders dated 26 October 2006 required the Applicant's solicitor to write directly to the Respondent's engineer seeking a response to various specified matters.

12 Orders dated 6 November 2006 stood the matter over to 5 December 2006.

13 Orders dated 5 December 2006 required the Respondent to instruct her engineer to meet with the Council's representative to discuss specified matters.

14 Orders dated 24 April 2007 required the Respondent through her agent to serve any proposed solution to this matter on the Council's solicitors by 30 April 2007. Council's submissions 15 It is clear from the affidavit evidence of Ms Tyrell that there has been no compliance with the consent orders made in March 2003. The work required by the consent orders dated 21 March 2003 is to be carried out by the Respondent. No attempt was made by the Respondent to return the matter to the Court. That was left to the Council, which did so in July 2005.

16 The history of the matter is identified in the correspondence attached to the affidavits of Ms Tyrrell including the orders of the Court, statements by me made on 7 February 2007 that there was no point making further case management orders due to non-compliance with the Court's case management orders and the repeated efforts by the Council over many months to communicate with the Respondent's agent, Mr Wilmot and Mr Davies, engineer.

17 There has been a failure to provide Mr Davies with adequate instructions to enable him to carry out investigation or design work, see Tyrell at 37,36 and annexure V. The Council has at all times acted reasonably and patiently and sought to identify a practical outcome in the matter.

18 The Court has broad powers to award costs at any time under s 69 of the Land and Environment Court Act 1979 (the Court Act). The orders made by the Court have been supervising compliance with the Court orders made by consent on 21 March 2003. Costs are sought from 5 August 2005 to date on an indemnity basis. The Council has incurred substantial costs in attempting to have the Court's consent orders made in March 2003 complied with by the Respondent.

19 Only very recently on 22 October 2007 has an application been made to the Court by the Respondent's solicitors to discharge or revoke the Court's consent orders. The failure to comply with the Court orders is unexplained. There is no evidence of attempts by the Respondent to do any substantive work to ensure compliance with the Court's orders. There is no disentitling conduct on the Council's part suggesting it should not get its costs. Further, costs on an indemnity basis are justified by the unreasonable conduct of the Respondent, see Westfield Management Pty Ltd v Direct Factory Outlets Homebush Pty Ltd (No 4) [2005] NSWLEC 168 at [35].

20 The submissions of the Respondent's counsel that the Court lacked jurisdiction to make some of its orders since March 2006 as this exceeded its supervisory powers is disputed. All the Court's orders were directed to supervising the carrying out of the consent orders. The Council has never accepted that the consent orders are unenforceable. The Council's efforts have been directed to facilitating compliance with the Court's orders.

21 The Respondent could have applied at any time to vary the order but did not do so until very recently. The Council has not pursued contempt proceedings for non-compliance with Court orders but acted reasonably in returning the matter to the Court. While some of the Court's orders were directed to elucidating whether alternative drainage arrangements existed, the Council has never conceded that such orders are not within the scope of the original consent orders which were broad. The Court in its supervisory function in working out orders can require the Respondent to develop alternatives. The Respondent chose to be represented by an agent when she previously had legal representation at the time the consent orders were entered into in March 2003. Her agent's actions were a hindrance to the resolution of the matter. The Respondent failed to facilitate the process by providing proper instructions to the engineer briefed in the matter by the Respondent, Mr Davies. Respondent's submissions 22 There are particular difficulties with this matter. Until recently the Respondent was a litigant represented by an inexperienced agent which resulted in a great deal of irrelevant and repetitive material being produced to the Court.

23 In such circumstances there is an onus on the Council to assist the Court to ensure that it acts within jurisdiction. For the last four and a half years the Council has been pursuing a form of alternative remedy or practical solution necessitated by the engineers agreeing that there was a mistake in ground levels at the time of the consent orders being entered into (this is disputed by the Council as being able to found a submission that the orders requiring draining of the Respondent's property to the street could not be complied with).

24 Where orders are not complied with the Council should have brought contempt proceedings. The Court does have jurisdiction to work out orders but not order something different to that contained in the consent orders. It was agreed that working out orders before the Court does include supervising enforcement of these, see Phillips v Walsh (1990) 20 NSWLR 206.

25 Several of the orders made were beyond jurisdiction as follows: (i) Orders of 14 March 2006 were not for the purpose of enforcing consent orders (ii) Orders of 10 August 2006 were beyond jurisdiction and unenforceable as they are imprecise (iii) Orders of 22 September 2006 are at variance with the orders of 21 March 2003 as these contemplate an alternative solution to that in the consent orders (iv) Orders of 26 October 2006 are also beyond jurisdiction because they are not enforcing the consent orders (v) Orders of 6 November 2006 are also beyond jurisdiction because they are not enforcing the consent orders (vi) Orders of 5 December 2006 follow those made on 22 September 2006 and they are not enforcing the consent orders (vii) Orders of 24 April 2007 are also not enforcing the consent orders

26 In March 2006 Mr Davies, the engineer advising the Respondent, was ill and away in June and July 2006 so that there should be no order for costs for that period as the Respondent was unable to comply with the orders made.

27 The costs of the mediation of December 2005 and early 2006 should not be awarded given that such a procedure is intended to encourage settlement of a matter.

28 From 22 September 2006 the Court's orders have really been directed to having the Respondent put in place a different solution to that contained in the consent orders. Costs in Class 4 proceedings generally follow the event and to date there has been no event. The enforcement process is therefore incomplete and it is premature to seek costs. Finding 29 The Council utilised the liberty granted in the March 2003 consent to apply to return the matter to Court in 2005 due to non-compliance with the consent orders. I have broad discretion to determine costs under s 69 of the Court Act. An application for costs can be made at any time although the more usual circumstance is where there is a final event which can guide the costs outcome. Latoudis v Casey (1990) 170 CLR 534 is well established authority that costs are compensatory, not punitive. 30 The Court has, as the parties before me accepted, power to make orders to enable supervision of compliance with its orders, see Phillips v Walsh at 209-210 where McLelland J stated: …subsequent to a final order application may be made for the purpose of dealing with a matter involved in, or arising in the course of, working out that order; for example, by making more specific provision for its implementation or by modifying its operation to take account of some subsequent change of circumstance or by enforcing it.

That case was referred to in Woollahra Municipal Council v Baranov (2006) 144 LGERA 96 at [19]. Baranov considered the important qualification identified by McLelland J that an order may not be made which provides substantive relief not sought in the statement of claim or which is substantially different to that given by the final order (at [20]). In Baranov , a council sought an order for payment of a specific sum after final orders had issued and this was refused. It was held this was not within the Court's power given that final orders had been made. Additional cases considered where the Court refused to make orders that a certain sum be paid as that was an amendment of the final order included Dowdle v Hillier (1949) 66 WN (NSW) 155. 31 More recently in Australian Hardboard Ltd v Hudson Investment Group [2007] NSWCA 104 Campbell JA (Tobias JA concurring) identified at [50] - [57] authorities concerning the scope of a court's power to "work out the order" where final orders have been made and liberty to apply is exercised subsequently by the parties. I note that Young JA dissented in the overall result but agreed with the principles identified in those paragraphs. Reference is made by Campbell J to Abigroup Limited v Abignano (1992) 39 FCR 74 at 88 and he then stated as follows: 53 Some aspects of the width of the court's jurisdiction to superintend the enforcement or working out of an order for specific performance were listed by White J in Riltang P/L v L P/L [2004] NSWSC 977 at [51]: "It is well established that where a plaintiff obtains an order for specific performance the Court may substitute other forms of relief where a decree of specific performance is not complied with. (Fry on Specific Performance (6 ed paras 1170-81)). Where the purchaser has gone into possession such substituted relief may include the appointment of a receiver, an injunction to restrain the purchaser from continuing possession of the land, and an order for sale of the land with the vendor to have liberty to bid. Where either plaintiff or defendant wishes to rescind a contract pursuant to a contractual right to do so, or terminate [it] for breach, he must obtain leave, or more appropriately, vacation of the order for specific performance. ( Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245 at 260; JAG Investment Pty Ltd v Strati [1981] 2 NSWLR 600 at 603-604). Whilst not directly in point these cases illustrate the width of the Court's jurisdiction to superintend the enforcement or working out of an order for specific performance." 54 In Fylas Pty Ltd v Vynal Pty Ltd [1992] 2 Qd R 593 McPherson SPJ considered what is involved in "working out" an order, at 598: "... a judgment or order that expressly reserves to parties a leave or liberty to apply can be varied on an application pursuant to such leave only so far as may be necessary for the purpose of working out the actual terms of the order so as to make it more efficacious in matters of detail. What is meant in this context by "working out" the terms of an order is considered in some of the cases on the point. In Cristel v Cristel [1951] 2 K.B. 727, 728, Somervell LJ said it "involves matters on which it may be necessary to obtain the decision of the court. Prima facie, certainly, it does not entitle people to come and ask that the order itself shall be varied". A simple judgment for a money sum requires no "working out" in any sense, so that liberty to apply is quite inappropriate in such a case. On the other hand, there are many orders, particularly on the equity side, as to which the process of carrying the primary judgment into effect may require supervision, with the consequence that further or supplementary orders or directions may be needed to enable it to achieve its purpose. An example commonly encountered in practice is specific performance, where, because the consent or approval of some person or instrumentality may be needed to authorise a preliminary step, the judgment sometimes takes the form only of a declaration that the contract be specifically performed, together with subsidiary orders compelling particular acts to be done. See Egan v Ross (1928) 29 SR (NSW) 382, 388; Hasham v Zenab [1960] AC 316; Brown v Heffer (1967) 116 CLR 344, 350. The primary order may then need to be supplemented by further orders from time to time before the stage is reached at which the defendant can finally be ordered to perform specifically what he contracted to do in the way of transfer or payment as the case may be: Brown v Heffer (1967) 116 CLR 344, 350. In Penrice v Williams (1883) 23 Ch D 353, 356-357, Chitty J spoke of an order that is "clearly not of a final character, and also when there is necessarily something to be done irrespective of what appears on the face of the order". His Lordship was there explaining that in some cases an order may by its very nature need to be supplemented to give full effect to it, in which event liberty to apply is implied and need not be expressly reserved. See also Fritz v Hobson (1880) 14 Ch D 542, 561; Cristel v Cristel [1951] 2 KB 725, 731. A decree of specific performance in the limited form previously described nevertheless is a "final" order for the purpose of appeal and otherwise, and so, at least as to issues litigated, cannot be discharged or varied under liberty to apply, notwithstanding that further decisions and orders may yet have to be made in working out its consequences. What cannot be done under the guise of "working out" an order is to vary it." … 56 Rather, what can be done under a reservation of liberty to apply depends on what needs to be done, in the particular case, to work out the particular orders that have been made. If an order is one the working out of which of its nature involves deciding complex questions, or questions that were not specifically raised at the time that the order was made, those questions can be raised and decided in the original suit pursuant to liberty to apply. 57 One example of such a case arises if an order is made for the administration by the court of the trusts of a deceased estate, and for an inquiry before the Master concerning what were the assets of the estate at the death of the testatrix, and in the course of that inquiry facts emerge suggesting that, since the death of the testatrix, some particular asset was declared by its owner to be held on trust for the estate. In such a situation it is proper for the court to direct a further inquiry, in the administration suit, as to whether that asset is held on trust for the estate, even if no allegation that it was held on trust for the estate was made either on the pleadings or before the Master: Melliday v McMahon (1901) 1 SR (NSW) (Eq) 6 at 8. This is, it seems to me, an example of an inquiry that falls within the scope of the general order that had been made for administration of the entire estate (an expression general enough to include administration of any assets that were declared after the death of the testatrix in question to be held on trust for the estate), even though the particular topic of that inquiry was not mentioned in the pleadings. Because it is within the scope of the general order that had been sought, and made, it is legitimate for the question to be inquired into in the administration suit. 32 These authorities referred to by Campbell J such as Fylas Pty Ltd v Vynal Pty Ltd [1992] 2 Qd R 593 confirm that whether orders relate to the working out of a final order must depend on the circumstances, as identified in [56] and [57] in Australian Hardboard. In some situations quite extensive orders might be made following the making of final orders in order to achieve the necessary working out of that final order. The authorities referred to by Campbell J consider circumstances such as a judgment for payment of a sum of money. The Court's power to engage in the working out of that type of order will be limited. This can be contrasted with other matters related to, for example, orders for specific performance or the administration of an estate. Depending on what is required by the final orders, further orders made in the context of a party exercising its liberty to apply where these are related to detailed working out of the final orders, including enforcement, may be acceptable. 33 The Respondent also relied on the Court of Appeal decision in Coombwood Pty Ltd v Baulkham Hills Shire Council (1995) 36 NSWLR 200 in which Kirby P at 203 cautions that judicial officers must be wary of going beyond their lawful jurisdiction. That case did not concern the working out of an order but dealt with the making of orders concerning the payment of interest outside the terms of the enabling legislation and I have found it of less assistance than the other authorities referred to above.

34 The criticism is made of the orders, particularly those of 22 September 2006 and following, that these were not directed to working out the consent order but rather to developing an alternative proposal to that contained in the consent orders. The orders criticised by the Respondent as being beyond power, being the order of 22 September 2006 and orders made subsequently, were all made as case management orders. The original consent orders dated March 2003 had not, until yesterday when a motion was filed, been sought to be varied by either party. This costs order was originally set down for hearing in July 2007, and the hearing date was vacated twice. I consider all the orders made from March 2006 to April 2007 were within the Court's powers to engage in a working out of the consent orders and were not intended to be or directed to be a substitution for or amendment of these. 35 The Respondent's counsel argued that because of an error in ground levels recognised by the Council's engineer shortly after the consent orders were made, the original orders could not be complied with. This submission was not conceded by the Council and whether that is in fact the case has never been determined by the Court. The intention of all the orders requested by the Council and made by me was to provide a practical implementation of the consent orders through engagement of the parties' respective engineers. This has not occurred satisfactorily in accordance with the orders made over several months. The lack of compliance with the orders is the reason that so many orders were made. As I do not consider the orders made by me were beyond jurisdiction the issue therefore arises of whether I should exercise my discretion to make the costs orders sought by the Council including on an indemnity basis. 36 While there has still been no finalisation of the enforcement of the consent orders so that there is no final "result" which can be the basis for guiding a cost determination, it is clear that consent orders which were final were made in March 2003 and these have not yet been complied with despite numerous case management orders directed to achieving that outcome. The proceedings have had an unfortunate history in the period March 2006 to the date of hearing due to the inability of the Respondent through her agent to adequately represent to the Court the Respondent's position. There was also a failure to ensure that the Court's orders in relation to the provision of engineering reports and the necessary communications with the Council's engineers occurred. I consider it is appropriate to exercise my judicial discretion to make a costs order in the Council's favour for some of its costs. 37 In relation to the period from August 2005 to March 2006 during which mediation took place, I do not consider the Council's costs of the mediation should be payable. My understanding is that usually such matters would be considered as part of the mediation agreement between the parties but I do not have such a document before me. Mediation is an important avenue of alternative dispute resolution which should be generally encouraged as, if successful, it obviates further dispute between the parties. I do not consider the Council's costs for the period during which mediation occurred should be paid by the Respondent. 38 The Council also seeks its costs for the period in which orders were made by the Court from March 2006 until April 2007. I do not agree with the Respondent's counsel's submission that the orders in March and August 2006 are not enforceable. These are directed to working out the consent orders and their meaning is clear. The Respondent's counsel submitted that the inability to comply was due to the absence of Mr Davies in June and July 2006 and also his ill-health in March 2006 as attested to in his affidavit. The difficulty with taking his evidence into account is that it was not necessarily made known to the Council or the Court in a coherent way by the Respondent through her agent. The Council's costs for this period should be paid by the Respondent. 39 The history of the proceedings identified in Ms Tyrell's affidavit does identify that some attempts were made to comply with the Court's orders by the Respondent. Her engineer Mr Davies did undertake work on her behalf during and after August 2006. I consider that the Council should have half its costs paid by the Respondent for the period 11 August 2006 to 24 April 2007, taking into account that some efforts were made to comply with orders in that period. 40 The Council seeks its costs on an indemnity basis because of unreasonable behaviour on the part of the Respondent as represented by her agent. In Westfield (No 4) I noted that such orders are not lightly made and the circumstances, such as finding of improper purpose or unreasonableness, must justify departure from the usual practice that party/party costs be awarded. I considered numerous authorities on this issue such as Colgate-Palmolive Co & Anor v Cussons Pty Ltd (1993) 46 FCR 225 and Rosniak v Government Insurance Office (1997) 41 NSWLR 608 at [35] which emphasised that the usual costs order is not lightly deviated from. Each case must considered on its own facts. There is no evidence before me of improper purpose or deliberate intention to defy the Court's orders by the Respondent as represented through her inexperienced agent. While the numerous failures of the Respondent through her agent to progress the matter in accordance with the Court's orders since March 2006 is unexplained, and no doubt frustrating to the Council given the length of time taken on a matter that was finalised in March 2003, that is not grounds to exercise my discretion to award costs on an indemnity basis and I decline to do so. Orders 41 The Court makes the following orders: 1. The Respondent is to pay the Council's costs for the period 14 March 2006 to 10 August 2006 inclusive. 2. The Respondent is to pay half the Council's costs for the period 11 August 2006 to 24 April 2007 inclusive.

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.