Lu v Walding - [2022] NSWLEC 15 - NSWLEC 2021 case summary — Zoe

NSWNSWLEC

Lu v Walding

[2022] NSWLEC 15

Land and Environment Court (NSW)|2021-12-14|Before: Pain J

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At a glance

Source facts

Court

Land and Environment Court (NSW)

Decision date

2021-12-14

Before

Pain J

Catchwords

[2018] NSWCA 245 Alves v Patel [2005] NSWSC 841 Brown v Randwick City Council (2011) 183 LGERA 382
[2006] NSWLEC 96 King Network Group Pty Ltd v Club of the Clubs Pty Ltd (No 2) [2009] NSWCA 204 Kirk v Industrial Court (NSW) (2010) 239 CLR 531
[2010] HCA 1 Kisimul Holdings Pty Ltd v Clear Position Pty Ltd (No 2) (2014) 86 NSWLR 645
[2014] NSWCA 317 Latoudis v Casey (1990) 170 CLR 534

Source

Original judgment source is linked above.

Catchwords

[2018] NSWCA 245 Alves v Patel [2005] NSWSC 841 Brown v Randwick City Council (2011) 183 LGERA 382[2006] NSWLEC 96 King Network Group Pty Ltd v Club of the Clubs Pty Ltd (No 2) [2009] NSWCA 204 Kirk v Industrial Court (NSW) (2010) 239 CLR 531[2010] HCA 1 Kisimul Holdings Pty Ltd v Clear Position Pty Ltd (No 2) (2014) 86 NSWLR 645[2014] NSWCA 317 Latoudis v Casey (1990) 170 CLR 534[1990] HCA 69 Lu v Walding (No 2) (2021) 249 LGERA 1[2021] NSWLEC 21 Overton Investments Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 (NSW) (2001) 113 LGERA 439[2001] NSWCA 137 Platford v van Veenendaal and Shoalhaven City Council (No 2) [2018] NSWLEC 86 R v HickmanEx parte Fox and Clinton (1945) 70 CLR 598[1945] HCA 53 Ralph Lauren 57 Pty Ltd v Byron Shire Council (2014) 199 LGERA 424

Judgment (40 paragraphs)

[1]

[2]

Judgment

The Applicants Ms Lin Lu and Mr Fredrick Woo commenced judicial review proceedings challenging the grant of development consent to their neighbours Mr Adrian and Mrs Alexandra Walding (the Waldings) by the Northern Beaches Council (the Council) for a garage and roof terrace at the front of the Waldings' house. Unbeknownst to all parties, at the time that development consent was granted most of the land the subject of the consent was owned by the Council under a road reservation dating from the early 1950s. A large number of issues arose in the proceedings because of the substantive legal issues raised and concerning the exercise of discretion because the proceedings were commenced well outside the time limit in r 59.10 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR). In Lu v Walding (No 2) (2021) 249 LGERA 1; [2021] NSWLEC 21 I upheld some of the legal issues in favour of the Applicants and exercised my discretion to permit the proceedings to be continued. I declined to order demolition of the partly built garage, at [265]-[272]. Final orders providing for remedial works were made on 5 August 2021. The issue of costs now arises.
Broadly the Applicants seek in their written submissions all their costs of the proceedings, paid by the Waldings and the Council in equal share as agreed or assessed. Orally the Applicants agreed that they seek costs and it is irrelevant which Respondent(s) pay these. The Waldings submit that the Applicants should be ordered to pay the Waldings' costs and that from 30 July 2019 (the date of the Waldings' first offer made pursuant to the principles in Calderbank v Calderbank [1975] 3 All ER 333 (Calderbank)/offer of compromise) the Applicants should be ordered to pay costs on an indemnity basis. The Waldings consider that the Council has contributed to the circumstances from which this litigation arose. Accordingly, it may be appropriate for the Council to share in the payment of the Waldings' costs. The Council filed a submitting appearance save as to costs in the substantive proceedings. The Council does not seek costs. Its submissions respond to the other parties' submissions. The Council submits it should not be subject to any costs order made in favour of another party. Further, its costs of defending the applications for costs should be paid by the other parties.
The Applicants' written submissions on costs dated 8 September 2021 refer to costs orders made in respect of two interlocutory applications. The court file records the following costs orders in respect of those interlocutory applications: 1. on 24 May 2019, Pepper J ordered the Applicants to pay the Waldings' costs of the day; and 2. on 16 March 2020, Duggan J ordered the Waldings to pay the Applicants' costs of the Waldings' motion filed on 9 March 2020, as agreed or assessed.
These costs orders stand.

[4]

Ground 1 - jurisdictional error due to absence of landowner's consent

Ground 1 alleged absence of a jurisdictional fact as no written landowner's consent was provided by the Council for that part of the garage and roof terrace to be located on the Council's land: Lu v Walding (No 2) at [23]. The Applicants submitted at [26]-[34] that the Council could not unknowingly give its landowner's consent. At [35], the Applicants submitted that the absence of landowner's consent was a jurisdictional error, relying on the Court of Appeal's decision in Al Maha Pty Limited v Haujun Investments Pty Limited (2018) 233 LGERA 170; [2018] NSWCA 245.
The Waldings' argued at [36]-[37] that in granting development consent, the Council granted landowners' consent by consenting to the application, whether or not it was conscious of doing so, relying on Sydney City Council v Claude Neon Limited (1989) 15 NSWLR 724. The Waldings' submitted at [38]-[49] that if there was an absence of landowner's consent, this did not render the decision to grant development consent invalid.
The Waldings' development application (DA) approved by the Council was accompanied by the following documents, identified at [17], which showed the front boundary in the wrong location: 1. A survey plan prepared by Mr David Frew dated 30 October 2016 (the Frew Survey Plan). The Frew Survey Plan included a notation that stated "[n]o boundary survey has been undertaken. Bearings and dimensions are from title only and are subject to confirmation by boundary survey". 2. An existing site plan drawing dated 8 August 2015 prepared by Sullivan Design & Construction. 3. A "Notification Plan" drawing prepared by Sullivan Design & Construction dated 8 August 2015. 4. The Statement of Environmental Effects (SEE) dated 15 December 2016 prepared by Planning Approvals which included an aerial view of the Waldings' property sourced from "SIX Maps".
A SIX Maps plan also appeared in the Council's "Delegated Authority Report" dated 9 May 2017 conducted in relation to the DA. The SIX Maps plan incorrectly depicted the location of the Waldings' front boundary as including land owned by the Council: at [55].
No written consent was provided explicitly by the Council: at [57]. I accepted at [58]-[62] the Applicants' submissions that, in accepting the DA, the Council was not implicitly providing landowner's consent because it was unaware it needed to do so. I held that no landowner's consent was given by the Council to that part of the development proposed on the Council's land at the time it approved the DA. I held that absence of landowner's consent was a jurisdictional error at [63]-[66].

[5]

Ground 1 - section 101 was not a bar to judicial review

As a consequence of upholding Ground 1 and in finding that the absence of landowner's consent was a jurisdictional error, meaning a precondition to the valid determination of the DA was not satisfied, a threshold issue arose as to whether the proceedings were maintainable under s 101 of the EPA Act: at [67]. A notice of the grant of consent was published on 8 July 2017 and the proceedings were commenced on 13 February 2019, outside the three-month timeframe required under s 101.
The Applicants submitted at [68]-[74] that s 101 was not a bar to judicial review of a decision in circumstances where there was jurisdictional error (here, the failure to obtain landowner's consent), relying on the decision of Preston CJ in Brown v Randwick City Council (2011) 183 LGERA 382; [2011] NSWLEC 172 (Brown). Post Kirk v Industrial Court (NSW) (2010) 239 CLR 531; [2010] HCA 1 (Kirk), section 101 did not apply to prevent judicial review challenges.
The Waldings submitted at [75]-[86] that s 101 protected decisions from judicial review relying on Woolworths Ltd v Pallas Newco Pty Ltd (2004) 61 NSWLR 707; [2004] NSWCA 422 (Pallas Newco), save for the application of R v Hickman; Ex parte Fox and Clinton (1945) 70 CLR 598; [1945] HCA 53 (Hickman). The observations in Brown should not be relied upon. The decision of Kirk did not require a change from the approach in Pallas Newco.
The Attorney-General of NSW also participated in the proceedings to make submissions on the s 101 jurisdictional issue recorded at [87]-[102]. The Attorney-General contended that s 101 was effective according to its terms notwithstanding Kirk.
I considered at [103]-[104] that the decision of Kirk should be considered to determine if it had any relevant impact on the construction of s 101 as determined in Pallas Newco. I considered at [105]-[123] that the application of Kirk to s 101 in the statutory scheme in the EPA Act does not require a change from the approach in Pallas Newco, which affirmed the importance of the three-month period in limiting the period of uncertainty for holders of development consent. The Applicants' judicial review challenge was time-barred in relation in relation to Ground 1 save for the application of Hickman.
I considered at [124]-[135] whether the relevant breach in this case, being the lack of landowner's consent, came within the Hickman principles. I agreed with the Applicants' submissions that landowner's consent is a fundamental requirement of such significance in the EPA Act scheme that it constituted a limit on power that was "essential". The error fell within the Hickman principles and was not protected by s 101. Ground 1 was therefore established.
Although strictly unnecessary to do so, I then considered the arguments in Grounds 2 and 4. Ground 3 was not pressed.

[8]

Extension of time to commence proceedings/exercise of discretion to grant relief

The next substantial issue considered was whether to extend time to commence proceedings under r 59.10 of the UCPR. Another matter concerning the exercise of discretion was whether to order demolition of the garage built on Council owned land. Evidence relevant to both matters was summarised at [171]-[230].
Ms Lu gave evidence summarised at [172]-[202] of how she became aware the garage and roof terrace was being built beyond the legal boundary of the Waldings' property. After Ms Lu observed concrete being poured for the garage beyond the area of her letterbox in late September 2018, she engaged a surveyor who produced a report dated 12 December 2018 showing the garage and roof terrace under construction were located wholly on the Council's land. Ms Lu gave evidence about her conversations and correspondence on the issue with the Council and Mrs Walding. Ms Lu gave evidence that the garage and roof terrace was causing significant visual impacts on her property and privacy concerns.
Mr Walding gave evidence summarised at [203]-[207]. When they purchased their property in 2014, the Waldings had been unaware the land in front of their property belonged to the Council. Mr Walding gave evidence about his conversations and correspondence with Ms Lu and the Council in relation to the garage.
Mrs Walding gave evidence summarised at [208]-[219] about the steps taken to prepare and submit the DA and the Council's assessment. Mrs Walding became aware in late November 2018 that she did not own the land that the garage was being built upon. On 10 December 2018 she received a letter from the Applicants' lawyer about the issue. Mrs Walding gave evidence about further conversations and correspondence with the Council and Ms Lu, including on 6 February 2019 when Mrs Walding suggested to Ms Lu that visual screening could be erected to address privacy concerns.
The parties' town planning consultants, Mr Kosnetter for the Applicants and Mr Betros for the Waldings, prepared expert reports summarised at [220]-[230]. Mr Kosnetter stated that the garage created unacceptable visual bulk and scale impacts on the streetscape and unacceptable privacy impacts on the Applicants' property. Mr Betros stated that ameliorative measures could reduce visual bulk and privacy concerns and recommended a reduced trafficable area, planting and a fence atop the terrace. In a supplementary report commenting on Mr Betros' opinion, Mr Kosnetter agreed that potential mitigation measures were available that could sufficiently ameliorate visual privacy impacts upon the Applicants but the visual bulk and streetscape impacts would remain unacceptable and unreasonable.

[10]

Exercise of discretion in grant of final relief

The Applicants' submitted at [237]-[243] that the Court should exercise its discretion to order demolition because a private advantage had been won by the Waldings, the development had unacceptable and unreasonable environmental and amenity impacts, and the Council's assessment of the impacts of the development had been cursory at best.
The Waldings submitted at [244]-[250] that the Court would not order demolition because they had made reasonable open offers to carry out ameliorative measures, no real environmental utility would be served by an order for demolition, no adverse consequences flow from the error as to land ownership and the proceedings were not commenced until the garage was effectively completed.
I declined to order demolition of the partly built garage at [265]-[272]. In relation to the Applicants' submission that the Waldings' obtained a private advantage, their doing so was unintentional. There was no direct evidence of the Council's intentions in relation to the land upon which the garage was built and no basis for demolition arose from the Council's actions. I noted the Applicants' delay in commencing the proceedings and the financial prejudice to the Waldings in the circumstances.
Whether a declaration of invalidity ought be made was left open: at [273]. I noted at [275] that the Applicants had been successful in many of their legal arguments with more limited success in relation to the exercise of discretion. By email dated 9 July 2021 the Applicants' solicitor advised the Court that the parties had "reached an agreement that resolves all outstanding matters between them, other than the question of costs", and "declaratory relief is no longer sought by the Applicants; and the ameliorative measures to be implemented have been agreed between the Applicants and the [Waldings], to be more fully and formally set out in proposed short minutes".
Final orders providing for remedial works as agreed by the parties were made on 5 August 2021 at [277] as follows: (1) The First and Second Respondent must carry out in a proper and workman like manner within 6 months of the date of these orders the ameliorative measures to the garage rooftop terrace in accordance with the sketch plan prepared by Anthony Betros dated 15 July 2021 and contained at Attachment "A" to these orders (Sketch Plan). (2) Costs are reserved. (3) The parties have liberty to restore on seven days' notice with respect to Order 1. (4) Subject to Orders 1, 2 and 3 the proceedings are otherwise dismissed.

[12]

Agreed chronology

The parties provided the following agreed chronology of correspondence between the parties: Date Event Evidence reference 10 December 2018 Letter from Bick & Steele to First and Second Respondents regarding location of garage constructed by First and Second Respondents and foreshadowing potential legal proceedings. Bick Affidavit at Annexure A, pp. 5-6 17 December 2018 Letter from Bick & Steele to the First and Second Respondents confirming survey error relating to the garage and seeking undertakings to avoid legal proceedings. Bick Affidavit at Annexure B, pp. 7-8 5 February 2019 Letter from Bick & Steele to the First and Second Respondents attaching a draft Class 4 Summons and again requesting undertakings to avoid legal proceedings. Salon Affidavit at Annexure A, pg. 6 6 February 2019 Conversation between Mrs Walding and Ms Lu regarding construction of garage on the Dedicated Land and suggested ameliorative measures. EB Tab 12 pg 83 [98]; EB Tab 65 pg 306 [96] 6 February 2019 Email from the First and Second Respondents to Bick & Steele in response to letter dated 5 February 2019 and following earlier conversation between Mrs Walding and Ms Lu. Bick Affidavit at Annexure C, pg. 9 11 February 2019 Letter from Mills Oakley to Bick & Steele in response to letter from Bick & Steele to the First and Second Respondents dated 5 February 2019, including giving of undertaking by First and Second Respondents not to carry out any further work on the Dedicated Land so as to allow negotiations to resolve the matter without recourse to litigation. Salon Affidavit at Annexure B, pg. 8 12 February 2019 Email from Bick & Steele to Mills Oakley in response to letter dated 11 February 2019 and to ameliorative measures proposed by First and Second Respondents during discussions on 6 February 2019. Salon Affidavit at Annexure C, pp. 9-11; EB Tab 58 pg 274 13 February 2019 Class 4 Summons filed. 1 March 2019 Council filed a notice of appearance. 4 April 2019 Council filed a notice of change of solicitor. 12 April 2019 Amended Summons filed in Court before Sheahan J. 12 April 2019 Council filed a submitting appearance save as to costs. 23 May 2019 Affidavit of Peter Mack indicating that the First and Second Respondents at that time proposed to file a qualified submitting appearance to be heard only in relation to relief and costs. 24 May 2019 Matter relisted before Pepper J due to slippage in the timetable. 27 May 2019 Email from First Applicant to Michael Regan, Mayor, Northern Beaches Council. Bick Affidavit at Annexure D, pp. 10-11; EB Tab 4 pp 57-58 6 June 2019 Email from Councillor Sarah Grattan of the Third Respondent to the First Applicant indicating that Council was not considering disposal of the road reserve at that time. Bick Affidavit at Annexure E, pg. 12; 6 June 2019 Letter from representative of the Northern Beaches Council Mayor to First Applicant indicating that given the current litigation before the Court, it would be inappropriate to comment on the concerns raised by Applicants. Bick Affidavit at Annexure F, pg. 13 14 June 2019 Response to Summons filed by the First and Second Respondents. 18 June 2019 Email from First Applicant to Ray Brownlee, CEO of the Third Respondent following meeting on the same day. EB Tab 5 pg 59 26 June 2019 Applicants and First and Second Respondents attend mediation. 12 July 2019 First and Second Respondents provide a without prejudice "sketch" of a design solution (described by the parties in the proceedings as the "Betros sketch") seeking agreement on approach to resolve proceedings. Bick Affidavit at Annexure G, pp 14-32 17 July 2019 Without prejudice email from Bick & Steele to Mills Oakley regarding settlement discussions. Salon Affidavit at Annexure E, pp. 14-15 18 July 2019 Email from Mills Oakley to Bick & Steele in response to email dated 17 July 2021. Bick Affidavit at Annexure H, pp. 33-5 19 July 2019 Email from Bick & Steele to Mills Oakley regarding provision of detailed plans, the need for landowner's consent and development consent from the Third Respondent and payment of the Applicants' costs. Bick Affidavit at Annexure I, pg. 36 24 July 2019 Letter from Third Respondent to First Applicant indicating that Council is not currently considering the sale or lease of the road reserve. Bick Affidavit at Annexure J, pg. 43; EB Tab 6 pg 60 30 July 2019 Letter from Mills Oakley to Bick & Steele enclosing the First Offer of Compromise and the First Calderbank Offer. Salon Affidavit at Annexure E, pp. 16-17 30 July 2019 First Calderbank Offer from First and Second Respondents (including proposed ameliorative measures). Salon Affidavit at Annexure E, pg. 18 30 July 2019 First Offer of Compromise from the First and Second Respondents. Salon Affidavit at Annexure E, pg. 19 13 August 2019 First and Second Respondent's lay evidence filed. EB Tabs 65 and 112 20 August 2019 Email from Bick & Steele to Mills Oakley indicating that neither the First Calderbank Offer nor the First Offer of Compromise is acceptable to the Applicants. Email notes that no detailed plans had been provided to enable any assessment of the proposed design solution. Also notes that any settlement would need to include the payment of the Applicants' costs. Bick Affidavit at Annexure K, pg. 44-5 21 August 2019 Email from Mills Oakley to Bick & Steele in response to email dated 20 August 2019 and seeking confirmation that the ameliorative measures in the "Sketch" provided on 12 July 2019 are suitable to be formalised into detailed drawings. Bick Affidavit at Annexure K, pg 44 9 September 2019 First and Second Respondents filed Amended Response to Summons. 3 October 2019 Letter from Mills Oakley to Bick & Steele enclosing 3 October 2019 Open Offer, Second Offer of Compromise and Second Calderbank Offer. The letter seeks an "assurance" on the proposed approach to resolving proceedings. Salon Affidavit at Annexure F, pg. 23-4 3 October 2019 Second Calderbank Offer from First and Second Respondents (including proposed ameliorative measures). Salon Affidavit at Annexure F, pg. 21 3 October 2019 Second Offer of Compromise from the First and Second Respondents. Salon Affidavit at Annexure F, pg. 22 24 October 2019 Letter from Bick & Steele to Mills Oakley in response to 3 October 2019 Open Offer. Salon Affidavit at Annexure G, pp. 26-7 25 November 2019 Email from First Applicant to Ray Brownlee, CEO of Third Respondent detailing discussions at meeting held on 12 November 2019. Bick Affidavit at Annexure L, pp. 48-9 13 January 2020 Letter from the Third Respondent to the First and Second Respondents indicating that given the status of the legal proceedings, Council is not currently considering the disposal (by means of sale, lease or licence) of the Dedicated Land. Salon Affidavit at Annexure H, pg. 31 24 February 2020 Letter from Mills Oakley to Wilshire Webb seeking for Council to reconsider its position stated in its letter dated 13 January 2020. Salon Affidavit at Annexure H pp 29-30 9 March 2020 Notice of Motion filed by First and Second Respondents to further amend response to Summons together with supporting affidavit of Ben Salon. 13 March 2020 Hearing of Notice of Motion before Duggan J. 16 March 2020 Hearing of Notice of Motion before Duggan J (continued). Motion upheld. The First and Second Respondents were ordered to pay the Applicants' costs of the motion as agreed or assessed. 17 March 2020 Revised Further Amended Response to Amended Summons filed by First and Second Respondents. CB Tab 2, pg 12 29 April 2020 Letter from Mills Oakley to Bick & Steele containing Third Calderbank Offer. Salon Affidavit at Annexure I, pp. 33-4 25 May 2020 Letter from Bick & Steele to Mills Oakley in response to Third Calderbank Offer and previous offers made by the First and Second Respondents. Salon Affidavit at Annexure J, pp. 36-7 16 July 2020 Email from Mills Oakley to Bick & Steele providing "without prejudice" architectural drawings and landscape plans that reflect the "Betros sketch" provided on 12 July 2019 and advising that while no specific instructions were held on settling the proceedings, the drawings and plans are provided to form the basis for settlement discussions. Salon Affidavit at Annexure K, pp. 38-41 21 July 2020 Letter from Mills Oakley to Bick & Steele containing the Fourth Calderbank Offer. Salon Affidavit at Annexure L, pp. 43-4 22, 23, 24 July 2020 Hearing before Pain J. 24 July 2020 Letter, directed to be sent by Pain J, from Mills Oakley to Bick & Steele regarding the First and Second Respondents' position on discretion and relief. The letter outlined that the ameliorative measures contained in the "Betros sketch" and Expert Planning Reports would adequately mitigate the privacy impacts on the Applicants' property. Salon Affidavit at Annexure M, pg. 46 15 March 2021 Judgment delivered. 22 March 2021 Email from Bick & Steele to Mills Oakley offering to accept ameliorative measures in which part of the roof top terrace is trafficable in accordance with the enclosed photograph with sketched ameliorative measures. Salon Affidavit at Annexure N, pp. 47-8 24 March 2021 Email from Bick & Steele to Mills Oakley providing a summary of the Applicants' fees and offer regarding same. Salon Affidavit at Annexure O, pp. 49-51 15 April 2021 Letter from Mills Oakley to Bick & Steele responding to offers of 22 and 24 March 2021 and containing the Fifth Calderbank Offer from the First and Second Respondents. Salon Affidavit at Annexure P, pp. 53-61 26 May 2021 Orders made by Pain J at a directions hearing on the filing of further expert evidence on ameliorative measures. 8 June 2021 Expert report of Mr Kosnetter on ameliorative measures filed for the Applicants. 22 June 2021 Expert report of Mr Betros on ameliorative measures filed for the First and Second Respondents. 28 June 2021 Email from Bick & Steele to Mills Oakley setting out the differences between the party's experts on ameliorative measures. 1st & 2nd Respondents' Additional Tender Bundle - pp 11 to 14 2 July 2021 Email from Mills Oakley to Bick & Steele on ameliorative measures discussing the reduction in trafficable area and visual screening. 1st & 2nd Respondents' Additional Tender Bundle - pp 10 to 11 2 July 2021 Email from Bick & Steele to Mills Oakley on ameliorative measures discussing the reduction in trafficable area and visual screening. 1st & 2nd Respondents' Additional Tender Bundle - pg 9 The email notes an understanding that the First and Second Respondents had been previously prepared to offer 1.8m high screening. 7 July 2021 Email from Mills Oakley to Bick & Steele on ameliorative measures discussing the reduction in trafficable area and visual screening. 1st & 2nd Respondents' Additional Tender Bundle - pg 6 8 July 2021 Email from Bick & Steele to Mills Oakley on ameliorative measures, in particular the height of visual screening. 1st & 2nd Respondents' Additional Tender Bundle - pg 5 9 July 2021 Email from Mills Oakley to Bick & Steele on ameliorative measures seeking confirmation on how the Applicants' proposed ameliorative measures address privacy concerns. 1st & 2nd Respondents' Additional Tender Bundle - pp 3 to 4 9 July 2021 Email from Bick & Steele on ameliorative measures advising on how the Applicants' proposed ameliorative measures address privacy concerns. 1st & 2nd Respondents' Additional Tender Bundle - pg 3 9 July 2021 Email from Bick & Steele to Pain J's Associate advising on agreement between parties on ameliorative measures and that declaratory relief is no longer sought by the Applicants. 1st & 2nd Respondents' Additional Tender Bundle - pg 15 30 August 2021 Email from Mills Oakley to Wilshire Webb requesting an update on the Third Respondent's position regarding disposition of the road reserve. Salon Affidavit at Annexure Q, pg. 63 13 September 2021 Follow-up email from Mills Oakley to Wilshire Webb again requesting an update on Council's position. Salon Affidavit at Annexure Q, pg. 63 23 September 2021 Email from Wilshire Webb to Mills Oakley indicating no instructions received from Third Respondent. Salon Affidavit at Annexure Q, pg. 62

[13]

Evidence on costs

The Waldings read the affidavit of Mr Benjamin Salon, solicitor, sworn on 8 October 2021 which annexed correspondence between the parties on costs, settlement and ameliorative measures. The Applicants read the affidavit of Mr Darren Bick, solicitor, affirmed on 7 December 2021 which annexed additional correspondence and documents relating to costs not included in Mr Salon's affidavit. The Waldings tendered further additional correspondence in relation to ameliorative measures (Ex 1). These documents are identified in the table above in [35] and summarised as follows.
By letter dated 10 December 2018 addressed to the Waldings, the Applicants' solicitor requested that the Waldings cease all building works relating to the garage and roof terrace until a survey was obtained. It had come to the Applicants' attention that part of the development was on the Council's land.
By letter dated 17 December 2018 addressed to the Waldings, the Applicants' solicitor stated that the Applicants had engaged an independent registered surveyor who confirmed that the garage and roof terrace under construction were located wholly within the road reserve owned by the Council. The Applicants' solicitor requested that the Waldings undertake to immediately cease all building works, refrain from using land on which the garage and roof terrace were located, demolish all parts of the building carried out beyond their property boundary and surrender the development consent.
By letter dated 5 February 2019 addressed to the Waldings, the Applicants' solicitor stated that the Applicants had not received a substantive response to the letters dated 10 and 17 December 2018. The Applicants sought a written undertaking from the Waldings to cease construction work on land owned by the Council, to refrain from occupying the land on which the garage was located and to demolish parts of the development carried out on the Council's land.
By email dated 6 February 2019 Mrs Walding advised the Applicants' solicitor that she had spoken to the First Applicant Ms Lu and "made it clear to her that we are open to discussions and negotiations to see if we can address their concerns relating to the garage. …"
By letter dated 11 February 2019 addressed to the Applicants' solicitor, the Waldings' solicitor sought a response to "the suggestions" put to the Applicants with a view to resolving the matter. The Waldings undertook to cease construction work on the Council's land including the garage and roof terrace so that negotiations may ensue. The Waldings' solicitor noted that the Council would need to be included in settling the matter.
By email dated 12 February 2019 addressed to the Waldings' solicitor, the Applicants' solicitor recounted that on 6 February 2019 Mrs Walding had approached the Applicants offering to carry out certain visual screen and landscaping works to mitigate the visual impacts of the garage and roof terrace. Mrs Walding had stated she was not prepared to remove the garage and roof terrace. The Applicants' solicitor stated that the proposed ameliorative measures were unacceptable to the Applicants. The Applicants noted the Waldings' undertaking to cease all building and construction works on the Council's land. The Applicants required an undertaking from the Waldings to refrain from occupying the land on which the garage was located and to demolish parts of the development carried out on the Council's land.
By letter dated 13 February 2019 the Waldings' solicitor advised the Applicants' solicitor of the Waldings' inability to give an undertaking to demolish the garage and roof terrace on the Council's land.
By email dated 27 May 2019 addressed to the Mayor of the Council, the First Applicant Ms Lu stated that a Council planner had advised her on 7 December 2018 that even if an error existed, since the development consent had been approved, the Council was unable to do anything about it. Ms Lu had therefore commenced legal proceedings. Ms Lu noted that the Council had started an assessment of selling the land on which the garage was located to the Waldings and was also assessing a modification application relating to the development consent. Ms Lu stated that the Council should not determine any modification application for an invalid development consent whilst proceedings were on foot.
By email dated 6 June 2019 Councillor Sarah Grattan advised Mrs Walding that there would be no sale of land whilst legal proceedings were ongoing. By letter dated 6 June 2019 Mr Andrew Pigott of the Council advised Mrs Walding that it would be inappropriate to comment whilst litigation was on foot.
By email dated 18 June 2019 addressed to the Council, the First Applicant Ms Lu noted that the Council had confirmed it would not consider selling the land on which the garage and roof terrace were built to the Waldings. Ms Lu asked the Council for something in writing to this effect as it might help end the legal proceedings earlier and avoid the parties incurring unnecessary costs.
By email dated 12 July 2019 the Waldings' solicitor provided the Applicants' solicitor with an architectural sketch of the garage roof terrace with a reduced trafficable area (the Betros sketch). The Waldings' solicitor sought an in-principle agreement from the Applicants on the work to be done before the architect prepared a technical plan.
By email dated 17 July 2019 the Applicants' solicitor advised the Waldings' solicitor that as part of any settlement the Applicants required payment of their costs to date. By email dated 18 July 2019 the Waldings' solicitor advised the Applicants' solicitor that his clients had hoped to have architectural drawings completed by now to allow for agreement to be finalised. The Waldings were unable to respond to the mediation offer until their counsel returned from leave.
By email dated 19 July 2019 the Applicants' solicitor noted that the Applicants were yet to receive detailed plans which would enable them to properly consider the settlement proposal and were yet to receive confirmation that the Waldings would pay the Applicants' costs incurred so far. Any settlement would be contingent on obtaining landowner's consent, land tenure and development consent.
By letter dated 24 July 2019 Mr Campbell Pfeiffer of the Council advised the Applicants, in response to Ms Lu's request dated 18 June 2019 for a statement in writing, that the Council was not considering the sale or lease of the road reserve parcel given legal proceedings were underway.
By letter dated 30 July 2019 addressed to the Applicants' solicitor, the Waldings' solicitor attached a document headed "offer of settlement without prejudice save as to costs" dated 30 July 2019 and a document headed "offer of compromise" dated 30 July 2019. The Waldings' solicitor stated that there was a real prospect the proceedings would be dismissed with no declaration being made as sought by the Applicants and that it was highly unlikely the Court would order demolition of the garage and stairs. The Waldings offered to prepare and lodge a modification application for the garage and roof terrace in accordance with the Betros sketch. The proposed modification would reduce the trafficable area to the garage rooftop by metal palisade fence, reduce the height of the existing block wall to the non-trafficable area and provide low maintenance landscaping to that non-trafficable area. The Waldings offered to pay the Applicants' costs of $10,000. The offer was open for 28 days. The offer of compromise dated 30 July 20219 offered to pay the Applicants $10,000 in respect of their costs and have the summons dismissed.
By email dated 20 August 2019 the Applicants' solicitor advised the Waldings' solicitor that the Applicants did not accept the offer of settlement or the offer of compromise dated 30 July 2019. The Applicants were yet to receive any detailed plans which would allow them the opportunity to consider any proposed design solution. The Council had confirmed that it would not consider any land tenure arrangement with the Waldings whilst proceedings were on foot. Any settlement would need to include payment of the Applicants' costs.
By letter dated 3 October 2019 addressed to the Applicants' solicitor, the Waldings' solicitor stated that the Court would not as a matter of discretion require the removal of the garage. The Waldings understood that the Applicants' principle objective was in relation to privacy and visual amenity. Upon receipt of an "assurance" from the Applicants that they agreed in principle to the following approach, the Waldings would: prepare architectural drawings in accordance with the Betros sketch provided to the Applicants on 12 July 2019; lodge a new DA to modify the garage and stairs constructed on the Council's land in accordance with the architectural drawings; the Applicants would provide the Council with a letter of support for the new DA; and the existing consent would be surrendered as a condition of the new consent. The Waldings would pay the Applicants' costs in the sum of $21,000.
A document headed "second offer of settlement without prejudice save as to costs" dated 3 October 2019 was in similar terms to the above letter dated 3 October 2019. The offer was open for 28 days. A document headed "second offer of compromise" dated 3 October 2019 offered to pay the Applicants' costs in the sum of $21,000 and have the summons dismissed.
By letter dated 24 October 2019 the Applicants' solicitor stated that the Applicants disagreed the Court would refrain from ordering demolition and that the development on the Council's land was incapable of being regularised. The Applicants were prepared to consider any design solution and associated architectural drawings the Waldings may wish to prepare. Any settlement would be contingent on the Waldings paying the Applicants' costs which so far exceeded $110,000.
By email dated 25 November 2019 addressed to the Council, the First Applicant Ms Lu stated that the building was a mistake, it had ruined her family's life, reduced public interest, amenity and led to neighbourhood gossip about its height, bulk and prominence on the street. Ms Lu understood that the Council would not agree to sell or lease the land nor would the Council provide landowner's consent to an application to purchase the land to regularise the development.
By letter dated 13 January 2020 the Council advised the Waldings that it would not consider disposing of the land in front of their property by means of sale, lease or licence whilst legal proceedings were on foot. By letter dated 24 February 2020 the Waldings' solicitor asked the Council to reconsider its position not to consider any DA whilst proceedings were on foot.
By letter dated 29 April 2020, headed "without prejudice save as to costs", the Waldings' offered to settle the proceedings on the basis that the Applicants pay the Waldings' costs as agreed or assessed on an ordinary basis. The Waldings' solicitor stated that it was unreasonable for the Applicants to maintain proceedings that had no reasonable prospects of success. This offer was open for seven days.
By letter dated 25 May 2020, the Applicants rejected the Waldings' offer dated 29 April 2020. The Applicants had not received any architectural drawings from the Waldings.
By email dated 16 July 2020 the Waldings' solicitor provided to the Applicants' solicitor amended architectural and landscape plans and drawings.
By letter dated 21 July 2020, headed "without prejudice save as to costs", the Waldings offered to settle the proceedings on the basis that the Waldings would pay the Applicants' costs as agreed or assessed on an ordinary basis and would undertake ameliorative measures set out in the amended plans and drawings once those modifications had been approved by the Council. This offer was open until 22 July 2020.
By letter dated 24 July 2020, in the course of court proceedings, the Waldings' solicitor outlined his clients' position in relation to the relief of demolition sought by the Applicants. Ameliorative measures identified by the experts would adequately mitigate the privacy impacts on the Applicants' property.
Judgment was delivered on 15 March 2021. By email dated 22 March 2021, the Applicants' solicitor advised the Waldings' solicitor that the Applicants would prefer the entire area of the terrace to be non-trafficable. The Applicants were prepared to accept an outcome in which part of the roof top terrace was trafficable as outlined in an attached sketch.
By email dated 24 March 2021 the Applicants' solicitor provided the Waldings' solicitor with a summary of the Applicants' costs up to and including 31 August 2020 being $307,796.03. The Applicants offered to settle the question of costs on the basis that the Waldings pay the Applicants $250,000 (noting that the Waldings may wish to seek a contribution from the Council).
By letter dated 15 April 2021, headed "without prejudice save as to costs", the Waldings offered to pay the Applicants' costs on an ordinary basis until 30 July 2019 and to receive costs from the Applicants on an ordinary basis from 1 July 2019 onwards. The letter also detailed the Waldings' position on ameliorative measures.
By email dated 28 June 2021 the Applicants' solicitor set out the differences and points of agreement between the parties on ameliorative measures. The Applicants sought a 1.8m setback for the non-trafficable area along the long edge of the garage adjoining the boundary between the two properties. The Waldings sought a 1.2m setback. The Applicants and the Waldings were prepared to agree on a 1.8m high privacy screen.
By email dated 2 July 2021 the Waldings' solicitor stated that if the height of the privacy screen was reduced to 1.6m his clients were prepared to provide a 1.5m setback for the non-trafficable area. Information was also sought on the Applicants' instructions in relation to declaratory relief.
By email dated 2 July 2021 the Applicants' solicitor stated that the Applicants were prepared to accept a 1.5m setback for the non-trafficable area on the proviso that the privacy screen was 1.8m high.
By email dated 7 July 2021 the Waldings' solicitor stated that his clients were prepared to accept a 1.8m high privacy screen if the setback was 1.35m for the non-trafficable area.
By email dated 8 July 2021 the Applicants' solicitor stated that the Applicants felt they should be afforded a high level of privacy and required a 1.8m high privacy screen and setback of at least 1.5m. The Applicants were prepared to forgo making any submissions on declaratory relief if the ameliorative measures included a 1.8m high privacy screen and 1.5m setback for the non-trafficable area.
By email dated 9 July 2021 the Waldings' solicitor sought confirmation that if his clients agreed to the 1.5m setback and 1.8m high privacy screen that the Applicants would withdraw their claim for declaratory relief. By email dated 9 July 2021 the Applicants' solicitor confirmed that the Applicants would not press their claim for declaratory relief if the Waldings agreed to the 1.5m setback and 1.8m high privacy screen.

[14]

Applicants' costs should be paid

The Applicants seek all their costs of the proceedings. There is a presumption that successful parties should be awarded their costs for the proceedings: Kiama Council v Grant (2006) 143 LGERA 441; [2006] NSWLEC 96 at [49], [56], [72]; Ralph Lauren 57 Pty Ltd v Byron Shire Council (2014) 199 LGERA 424; [2014] NSWCA 107 at [23], [28]; Cutcliffe v Lithgow City Council (2006) 147 LGERA 330; [2006] NSWLEC 463 (Cutcliffe) at [13].
The Applicants are entitled to their costs, having been successful on all significant grounds notwithstanding that the Court did not make a declaration. The Applicants chose not to press declaratory relief taking into account what the Court stated in Lu v Walding (No 2) at [273]. What the Applicants needed was a conclusion that there was jurisdictional error in relation to the development consent, as the Court found. The Court upheld the Applicants' case in relation to Ground 1, which was the key ground. That then formed the basis for the Court's exercise of discretion. Whilst demolition was sought, the Applicants' key concerns were about privacy and visual amenity impacts of the garage and rooftop terrace. It was the substantial impact of the garage on the enjoyment of the Applicants' use of their terrace and adjacent living area that was the driver for the order seeking demolition. The final orders including reducing the trafficable area on the rooftop terrace did ameliorate these privacy concerns.
The majority of court time and effort was in respect of Ground 1, reflected in the length of the judgment in respect of Ground 1. The Applicants were successful on that ground. Very little hearing time was spent on Ground 2, failure to consider, and Ground 4, unreasonableness. That the Applicants were unsuccessful on Grounds 2 and 4 is irrelevant to the question of costs since the Applicants were successful on Ground 1. The matters that took up most of the time in court were Ground 1, followed by time to commence proceedings and discretion not to order demolition. The Court granted the application to permit the proceedings to be commenced out of time and in that regard the Applicants were successful. While the Court declined to grant the orders sought for demolition of the garage, it did make orders for amelioration of the privacy impacts on the Applicants by way of a reduced trafficable area.
The Court would not accept the submissions of the Waldings' and the Council that the amelioration represented in the Betros sketch is very similar to the amelioration measures ultimately ordered by the Court on 5 August 2021. The final orders provided the Applicants with a significantly improved level of privacy. In the plan ordered by the Court the privacy screen is 1.8m high and set back 1.5m. The screen is 4.8m long. The plan ordered by the Court provided for a vegetated area in the set back to the side and also to the street. The Betros sketch provided a 1.0m high brick wall to the Applicants' boundary, the wall is 1.8m long, there is no setback from the Applicants' property, and no vegetation buffer to the Applicants' property. The series of emails in evidence demonstrate toing and froing between the parties about the detail of the height of the privacy screen and the setback inter alia. These were two key issues that the Applicants were concerned to secure to ensure a superior privacy outcome. The offers being put in accordance with the Betros sketch were nowhere near the same as the solution that was ultimately ordered by the Court. The Applicants achieved much greater privacy outcomes.
The Applicants' costs should be paid in full. This is not a case where it would be appropriate to apportion costs. See Brown (No 2) at [11] where Preston CJ stated: What is clear from these summaries of principle is that the mere fact that an applicant does not succeed on all issues raised in the proceedings is not sufficient by itself for the Court to depart from the usual rule and instead award costs only with respect to the issues on which the application did succeed. The issues on which the applicant did not succeed need to be "clearly dominant or separable" or "clearly discrete" from those on which the applicant did not succeed: James v Surf Road Nominees (No 2) at [32] and [34] respectively. In determining the discreteness of the issues, it is relevant to consider whether the time taken on each issue, at the hearing and in evidence, can be identified or realistically estimated: James v Surf Road Nominees (No 2) at [35]. It may also be relevant to consider whether the issues on which the applicant did not succeed lacked real merit: see Centro Properties Ltd v Hurstville City Council at [21] and [23] and similar comments in the dicta quoted in [14], [16] and [20] and in McCallum v Sandercock (No 2) at [49(e)].
The issues that the Applicants were unsuccessful on (Grounds 2 and 4) were not clearly dominant or separable or discrete from Ground 1. Grounds 2 and 4 flowed from and were consequent upon the error alleged in Ground 1. Those alleged errors were consequences of the Council's lack of knowledge that it was the owner of the land. Similarly in respect of the Court's discretion, the Court was required to consider the same lay and expert evidence on discretion in order to determine whether to extend time (upon which the Applicants were successful) and whether to order demolition (upon which the Applicants were unsuccessful). There is no proper basis to separate costs and hearing time in respect of the evidence and consideration of the discretionary considerations.

[16]

Offers of settlement

The Court would not accept the submission that the Applicants did not engage with the Waldings in an attempt to settle the proceedings. The "offers" made by the Waldings were either not capable of acceptance or were unreasonable. While there were some early discussions in relation to ameliorative measures to protect the Applicants' privacy prior to the commencement of proceedings, no offer in writing was made until 30 June 2019. Despite repeated requests from the Applicants that architectural and sight line analysis be provided to clarify the scope and impact of the Waldings' proposed ameliorative measures, architectural plans were only provided on 16 July 2020, a year after the offer of 30 July 2019 and only days before the hearing commenced. This was despite ongoing assurances by the Waldings that such plans and analysis would be provided.
It should be remembered that since the garage is located entirely on the Council's land, absent any order by the Court, the carrying out of any ameliorative measures would be contingent on the consent and approval by the Council. At all times prior to the hearing and following, the Council made it clear that it would not sell, lease, license or otherwise dispose of the land whilst proceedings remained on foot. To this end none of the Waldings' offers were "endorsed" by the Council and therefore incapable of acceptance. Any development consent or modification application to carry out ameliorative measures would have required landowner's consent, which was not provided at the time of any of the offers made by the Waldings or subsequently.
The oral "offer" made by Mrs Walding on 6 February 2019 to Ms Lu, to carry out non-specific visual screening and landscaping works to mitigate the visual impact of the garage, was not an "offer" capable of acceptance. The letter from the Waldings' solicitor to the Applicants' solicitor dated 11 February 2019 refers to this 'pre-litigation offer' as "the suggestions" put to the Applicants as a means to resolve the matter rather than a specific offer. This 'pre-litigation offer' was merely an invitation to engage in discussions and acknowledged that any settlement would require the Council's agreement. No specific screening or landscaping works were proposed.
An email from the Waldings' solicitor dated 12 July 2019 provided the Betros sketch of a design solution with a reduced trafficable area. The Betros sketch was not accompanied by an offer from the Waldings. No architectural plans, detailed sight lines or elevations were provided. On 18 July 2019 the Waldings' solicitor sent an email indicating that detailed drawings would be provided in about a week. On 19 July 2019 the Applicants' solicitor sent an email stating that the Applicants were yet to be provided with detailed plans. Those plans were crucial for the Applicants' ability to engage with any offers in terms of amelioration measures. Architectural plans were provided to the Applicants one year later, on 16 July 2020, a few days before the hearing commenced on 22 July 2020.
The Waldings' first written offer of compromise and first Calderbank offer dated 30 July 2019 offered to carry out ameliorative works in accordance with the Betros sketch provided on 12 July 2019 and to pay $10,000 towards the Applicants' costs on the basis that the summons is dismissed. The Applicants responded to that offer by email from the Applicants' solicitor dated 20 August 2019. Neither the first offer of compromise nor the first Calderbank offer were reasonable or capable of acceptance because: no architectural plans had been provided to enable any proper assessment of the proposed design solution; the Council had confirmed in writing that it would not consider any land tenure arrangements while the proceedings were on foot (and therefore landowner consent had not been obtained); and any settlement should have included the payment of the Applicants' reasonable costs.
The "open offer", second offer of compromise and second Calderbank offer made on 3 October 2019 offered to resolve the matter through an approach contingent on the Applicants providing an "assurance" of their agreement in principle with the proposed course summarised above in [53]. The Applicants' response dated 24 October 2019 indicated that the Applicants were prepared to consider any design solution and associated architectural plans that the Waldings may wish to prepare. The offer should have included payment of the Applicants' reasonable costs. Other issues with the offer were that: the garage was constructed entirely on a public road reserve; the Council had confirmed in writing that the sale or lease of the land would not be considered; any DA would lack landowner consent from the Council.
A third Calderbank offer made by the Waldings on 29 April 2020 offered that the proceedings be dismissed forthwith and the Applicants pay the Waldings' costs as agreed or assessed on an ordinary basis. The Applicants' response dated 25 May 2020 rejected this offer. The Applicants' noted that no architectural drawings had ever been received and that the "offers" were speculative, contingent and not capable of acceptance. The Applicants had confirmed on 24 October 2019 that they were prepared to consider any design solution and any architectural drawings that the Waldings wished to prepare. Despite seven months passing, no plans had been provided.
The fourth Calderbank offer dated 21 July 2020 offered that the proceedings be dismissed forthwith, the Applicants pay the Waldings' costs as agreed or assessed on an ordinary basis, and that the Waldings undertake the proposed modifications in the amended architectural plans once those modifications had been approved by the Council. The offer was open until 22 July 2020. No formal response was provided. The offer was unreasonable in that it was open for acceptance for only one business day, it was unacceptable and suffered from the same issues as previous offers, and the proposed works could not be carried out because the Waldings did not have landowner consent.
The Waldings' declined the Applicants' offers dated 22 and 24 March 2021 to settle the question of costs on the basis that the Waldings pay the Applicants' $250,000. The Applicants had incurred total costs of $307,796.03.
The Applicants did not formally respond to the Waldings' fifth Calderbank offer dated 15 April 2021 which offered to resolve the question of costs as summarised above in [65]. The Applicants continued to engage in discussions with the Waldings regarding ameliorative measures which were eventually agreed.

[21]

Failure to obtain the relief sought

The Applicants failed to obtain any of the relief that they sought. It was the Waldings who "really succeeded" in the proceedings, as used in Overton at 449. The Applicants sought a declaration in Ground 1 of the summons and this was not granted. Declaratory relief was a significant order sought and this was not granted. The Court concluded it was not appropriate to make a declaration. The only relief that was granted, certain ameliorative measures, was not relief that was sought by the Applicants. It was, however, what in substance the Waldings had been offering by way of ameliorative measures since before the commencement and during the proceedings. The Applicants refused to engage on ameliorative measures until after judgment was delivered.
The obvious deficiencies of the Applicants' case on discretion were clearly brought to the attention of the Applicants' solicitors by the Waldings' solicitors, and were broadly consistent with the reasons the Court declined to make the orders for demolition. It was highly unlikely that the Court was going to order demolition of the garage as sought by the Applicants. Properly advised, the Applicants should have appreciated that their case on discretion was weak for the reasons that the Waldings' solicitors sought to explain in their without prejudice correspondence. The Applicants should have appreciated that the only relief that they would obtain was an order for privacy ameliorative measures of the nature that the Court ultimately ordered and which the Waldings had consistently been offering since before the Applicants commenced the proceedings.
Most of the costs in the proceedings were a consequence of argument about s 101 and also whether extension of time to launch proceedings should be granted. The Waldings should not be saddled with costs incurred by the Applicants in seeking to bring proceedings almost a year after the expiration of the limitation period to commence proceedings. The purpose of s 101 is so that people can rely on development consents. The length of the time taken in relation to Ground 1 was due to the importance of the s 101 issue which is emphasised by the intervention of the Attorney-General. It cannot be suggested that the Waldings acted unreasonably in contesting this issue. Had the Applicants commenced proceedings in time much of Ground 1 would not have arisen as an issue or UCPR r 59.10.
In such an event the Court would order that the Applicants pay the Waldings' costs.

[22]

Offers of settlement

The Waldings made a series of Calderbank offers and offers of compromise to the Applicants before and during the proceedings seeking to resolve the matter by way of ameliorative measures as detailed above in [36]-[71]. The Applicants elected not to accept many very reasonable offers by the Waldings to undertake ameliorative measures the subject of undisputed evidence before the Court. Before and during the proceedings the Waldings had offered to undertake ameliorative measures including visual screening, landscaping and a reduction of the trafficable area on the roof of the garage. The Waldings seek indemnity costs from 30 July 2019 because it cannot be said that the Applicants did any better than what was offered in that first Calderbank offer.
The reduction in trafficable space on the roof of the garage ultimately ordered was less than had been offered by the Waldings in the open offer, first, second and fourth Calderbank offers and as depicted in the Betros sketch. The Betros sketch reduced the trafficable space to 18.58m2 whereas the space detailed in orders made by the Court equals 21.25m2. Visual screening had been offered by the Waldings before the proceedings were commenced. Landscaping ordered by the Court was substantially the same as had been offered in the open offer, first, second and fourth Calderbank offers and as had been offered by Mrs Walding on 6 February 2019.
In reply oral submissions the Waldings' counsel submitted that the Applicants were in a position to assess and respond to the Betros sketch. It was incorrect for the Applicants' counsel to submit that the Applicants were not in a position to respond without architectural drawings.
On 16 July 2020 the Waldings' solicitors sent to the Applicants' solicitors amended architectural and landscape plans and drawings which reflected the Betros sketch. A comparison of the amended plans and drawings with the orders made by the Court demonstrates the ameliorative measures referred to in the orders involved little more than a slight modification of the architectural drawings sent on 16 July 2020. Had the Applicants engaged with the proposed ameliorative measures the hearing would most likely have been avoided.
It has long been settled law that a court may properly depart from the general rule on costs where a party obtains relief no more substantial than that already offered to that party to settle the proceedings. In Tickell v Trifleska Pty Ltd (1990) 25 NSWLR 353 at 354-355 Rogers CJ Comm D referred to the importance of endeavours to negotiate in good faith to resolve proceedings. The Waldings made many detailed and reasonable offers, including by undertaking to implement ameliorative measures which exceeded the ameliorative measures ultimately ordered. The Applicants failed to respond to these offers in any realistic fashion.
These circumstances and the ultimate verdict should be a weighty consideration of the reasonableness of the Waldings' offers and the response of the Applicants: Alves v Patel [2005] NSWSC 841 at [57]. There is nothing to indicate that the Applicants not accepting the Waldings' offers was at all reasonable, especially given that privacy was the primary concern. The Waldings' offers to undertake ameliorative measures were reasoned, made in advance of the hearing, open for a reasonable period and included a supplementary costs offer. It was unreasonable for the Applicants not to accept the offers.
Once judgment was delivered on 15 March 2021 and the Applicants were required to engage with the issue of ameliorative measures the matter resolved promptly. By email dated 24 March 2021, the Applicants made an offer on the payment of the Applicants' costs by the Waldings. The Waldings responded with a fifth Calderbank offer dated 15 April 2021 which remained open for acceptance. On 26 May 2021 the Court granted leave to the Applicants to adduce the Betros sketch which was not in evidence during the proceedings. From 28 June 2021 when the Applicants first addressed the issue of ameliorative measures, the matter was resolved in about ten days. This reinforces that these proceedings could have been resolved had the Applicants properly considered the Waldings' offers. Ameliorative measures agreed between the parties and given effect to by the Court were less extensive than the ameliorative measures offered by the Waldings before and during the proceedings.
The Waldings attempted to settle the proceedings by the lodgement of a modification application for ameliorative measures. The Applicants persuaded the Council not to resolve the dispute by giving landowner's consent or selling the land on which the garage was built. The Waldings' only options were to agree to demolition or wait for the judgment outcome. The Applicants' conduct precluded any settlement of the proceedings. At the same time as the Waldings were endeavouring to resolve matters with the Applicants, the Applicants were endeavouring to undermine the Waldings' attempts to reach an agreement with the Council to regularise what had occurred. See Ms Lu's statements summarised above in [44], [56] and the Council's letters dated 24 July 2019 and 13 January 2020 advising the parties that it would not consider disposing of the dedicated land until after the proceedings were determined.

[26]

Council's submitting appearance

It is well established that a submitting appearance does not provide an immunity from costs for a consent authority: Cutcliffe at [50]; Bungendore at [18]-[20]. While the principles set out in Cutcliffe at [50] speak of a successful application that can be readily applied in the circumstances of these proceedings where, as the Waldings and the Council submit, the Applicants have not been successful. In Cutcliffe at [50] it is relevantly stated as follows: … (b) where the beneficiary does not defend the proceedings, the applicant's costs will ordinarily be awarded against the consent authority, whether or not the latter enters a submitting appearance. This is because the cause of the litigation is the error of the consent authority and not of the applicant or the beneficiary. The consent authority cannot immunise itself from costs consequences of its own error by entering a submitting appearance because then a successful applicant cannot be properly compensated in costs. It is not sufficient that a consent authority should bear the applicant's costs only up to the time of the consent authority's submitting appearance because the applicant must continue to incur costs thereafter in order to establish, by evidence and argument at a hearing, that it is entitled to declaratory and injunctive relief. (c) where the beneficiary does defend the proceedings, albeit unsuccessfully, the applicant's costs will ordinarily be awarded against both the beneficiary and the consent authority, whether or not the latter enters a submitting appearance. The award of costs against the consent authority is because its error is the cause of the litigation. It cannot immunise itself from costs by entering a submitting appearance for the reason given in (b) above. The award of costs against the beneficiary is because it chose to defend the proceedings. A qualification is that the beneficiary alone may be required to bear the applicant's costs to the extent that they exceed the costs that the applicant would have incurred if both respondents had submitted, being costs attributable to defences that the beneficiary has unsuccessfully raised and the consent authority has not raised. An example may be a defence by the beneficiary that, notwithstanding an invalidating error by the consent authority, the court, for discretionary reasons, ought not to grant any relief. …
It should be noted, however, there is a distinguishing feature between the circumstances of this case and Cutcliffe. The Council had two roles in this litigation. Firstly, its role as a consent authority. Secondly, in its capacity as landowner on part of the land the subject of the development consent. In the Council's capacity as landowner, it had the capacity to significantly influence the outcome of the proceedings. If the Council had agreed to resolve the error by transferring the dedicated land back to the Waldings, it would have in all practical respects resolved the controversy. However, by taking the neutral position that the Council did, it left the Waldings in the position where they had to defend the proceedings. Obviously enough, if ordered to remove the garage the Waldings would have claimed damages from the Council based on an action in negligence.
The principles at [50(c)] in Cutcliffe demonstrate that it would be open to the Court to order that the Council, together with the Applicants, pay the costs of the Waldings. This is because the legal error found by the Court is that of the Council, and the Waldings have defended the proceedings successfully including that the Court has decided not to grant the relief sought by the Applicants. In considering whether such a joint costs order would be made, the Court would no doubt take into consideration the failure of the Applicants to accept any of the offers made by the Waldings.
If the Court were to take the view that the Applicants should have the benefit of some costs order, the Waldings submit that consistent with the principles in Cutcliffe at [50(c)], the Council would be ordered to pay the Applicants those costs or at least share the burden of those costs with the Waldings.

[28]

Council's assessment of the development application - no countervailing conduct

The Council is not to blame for the subject of the proceedings. The information contained within the documentation submitted with the DA (see above in [9]) was relied on by the Council (as it was entitled to do) and this information was incorrect in terms of the site boundaries for the Waldings' site. It was not unreasonable for the Council to rely on this material for the following six reasons: 1. Applicants for consent are required to submit information with a DA including a site plan of the land and a sketch of the development pursuant to cl 50 and Sch 1 Pt 1 of the EPA Regulation. There is no express requirement in the legislation that a council must double check the factual accuracy of information provided by an applicant for consent. 2. The Court found in Lu v Walding (No 2) at [17(a)] that the Frew Survey Plan included a notation that stated "[n]o boundary survey has been undertaken. Bearings and dimensions are from title only and are subject to confirmation by boundary survey". A reader of this document might think there would be a discrepancy in millimetres or centimetres, not that the front boundary was out by the length of a garage. To include the front boundary in the Frew Survey Plan in circumstances where it was out to that extent, even with the disclaimer, was misleading to the Council. 3. The Frew Survey Plan purports to have been prepared by a competent surveyor. Councils routinely rely on surveyors and information in surveys. It would create an unworkable environment for a council assessing DAs if it were unreasonable in every case for it not to peer review or recheck for itself the information on every survey plan submitted with every DA. 4. It would be unreasonable for councils to have to check information on a survey when surveys can only be produced by persons registered as land surveyors under the Surveying and Spatial Information Act 2002 (NSW). 5. Condition six of the development consent stated, "[n]o portion of the proposed building or works, as approved within the subject site, are to encroach upon any road reserve or other public land except as may be permitted by the Local Government Act 1993. …" The Council understood that pursuant to this condition of consent the building would not encroach on the road reserve. 6. Whether the road reserve was widened decades ago is not in issue. It was incumbent on the applicant for consent to determine where the front boundary was and identify on the plans where the building was relative to the boundary. Ultimately the boundary of the property needed to be determined and the Waldings did not provide information that the EPA Regulation required an applicant for consent to provide.
The Waldings submitted that the failure to correctly identify the front boundary arose because of the failure of the Council to update its land registers. Failure of the Council to update it land registers is irrelevant to a surveyor reviewing title documents to identify where the front boundary was. There is no evidence that the SIX Maps website was based on information in a council's land register.
It is unlikely the situation would have been remedied by the Council transferring land to the Waldings as submitted by the Waldings above in [114]. This argument raises a question about whether in fact it would have been quite improper for the Council to dedicate the land back to Waldings. There would be grounds to argue that it would have been improper for the Council to give a section of the road reserve to a neighbouring landowner for the ulterior motive of trying to limit liability in costs proceedings. The evidence also does not support the argument that dedicating the land to the Waldings would have caused the Applicants to discontinue their claim.
The evidence does not support the Applicants' submission above in [78] that the Council encouraged the Waldings to keep building.

[29]

Council's submitting appearance

Ordinarily, a submitting party who genuinely takes no part in the proceedings will not be ordered to pay costs: Highland v Labraga (No 3) [2006] NSWSC 871 at [19]-[23]. Whether or not a costs order should be made against a submitting party should be determined according to an appraisal of the circumstances: Kisimul Holdings Pty Ltd v Clear Position Pty Ltd (No 2) (2014) 86 NSWLR 645; [2014] NSWCA 317 at [13]-[14].
The Council filed a submitting appearance save as to costs early in the proceedings. The Council did not actively participate in the litigation and its conduct in the proceedings did not result in any of the active parties incurring additional costs. The presumption is that parties filing submitting appearances should not be liable for costs after submitting since they do not contribute to the costs of proceedings. The circumstances of this case do not justify a departure from the ordinary practice and costs should not be awarded against the Council.
Specifically, in respect of judicial review proceedings, provided that a contradictor exists a submitting party is not generally liable for costs. This issue was recently considered in Hy-Tec at [27]-[30]. The guidelines formulated by Biscoe J in Cutcliffe at [50(b)] should not be applied as a rule in every case in which a consent authority enters a submitting appearance. The circumstances of each case need to be considered: GPT Re Ltd v Wollongong City Council (2006) 151 LGERA 174; [2006] NSWLEC 658 at [29]; see also Platford at [30]-[31]. In Platford the beneficiary of the consent played a role in causing the council's failure to consider relevant matters, in the case of providing an inadequate report which omitted a material issue at [26]-[27]. The circumstances here are similar given the inadequate plans provided by the Applicants.
Unlike the situation described in Cutcliffe at [50(b)], these proceedings were actively defended by another party, the Waldings. The Waldings chose to take an active defence. This is not a judicial review proceeding where all active respondents made submitting appearances and there is a risk of the applicant not being compensated. Further, where proceedings are defended by at least one party, the guideline in [50(b)] of Cutcliffe is not engaged because the rationale underpinning the guideline - a successful application cannot be properly compensated for costs if the submitting consent authority is not liable - does not apply: see Rossi v Living Choice Australia Ltd [2015] NSWCA 244 (Rossi (CA)) at [73]. The fact that a decision-maker erred in their approach is not sufficient to order costs against it: Rossi (CA) at [73].
In Hy-Tec the Court made declarations sought by the applicant which included setting aside a determination of the EPA purporting to vary an EPL. The decision is similar to the current case because one party submitted and one did not. The EPA filed a submitting appearance and the council was actively involved in the proceedings. Costs were awarded solely against the council as the party actively involved: at [32]. The council was ordered to pay the EPA's costs of the costs determination since it had incurred costs in making written submissions and had been successful in doing so: at [33]. Similarly in this case, if the Council is successful and the Court finds the Council should not have to pay the costs of the Applicants or the Waldings then those parties ought pay the Council's costs associated with this particular costs application which it is defending.

[35]

Exercise of discretion in substantive proceedings relevant to considering whether disentitling conduct by the Applicants

Whether there is disentitling conduct for costs purposes on the Applicants' part, such as delay as submitted by the Waldings summarised above in [99] must be considered. The complex circumstances which I considered at length in allowing the proceedings to be continued despite being commenced well outside the time specified in r 59.10 of the UCPR, set out at [251]-[264] in Lu v Walding (No 2), are also relevant to consider in relation to whether there is any disentitling conduct by the Applicants relevant to costs considerations.
Essentially the Waldings' DA for a garage applied to land which they did not own, a matter they and the Council were unaware of at the time the DA was lodged with the Council and then approved. I identified in Lu v Walding (No 2) that several plans lodged with the DA incorrectly depicted the Waldings' front boundary, including the site plan and the notification plan: at [17]. At the time the Council approved the DA it relied on these plans according to its submissions in this costs hearing. The SEE lodged with the DA had a SIX Maps plan also showing the boundary incorrectly: at [17]. The Council's Delegated Authority Report included an extract from SIX Maps which also incorrectly depicted the front boundary: at [55].
I took into account that the Applicants did not know that the Waldings' DA related to land they did not own, had no reason to suspect that was the case and there was no failure on their part in not becoming aware there was an issue within the three month statutory period for commencing proceedings. I accepted Ms Lu's evidence that she did not become aware that the Waldings were building on Council owned land until the foundations for the garage were poured. As a result of Ms Lu's actions which included obtaining an accurate survey the Waldings and the Council also then became aware of the true situation for the first time.
Similar considerations apply now and I do not consider there was disentitling delay in the commencement of proceedings by the Applicants in the unusual circumstances of this case.
Essentially the same considerations were also considered in determining whether demolition of the garage ought be ordered, Lu v Walding (No 2) at [265]-[272]. As summarised above in [31], I declined to order demolition as inter alia the Waldings obtaining a private advantage was unintentional, there was delay in commencing proceedings given that building work was on-going and there was financial prejudice to the Waldings.
In my view it is fair to characterise the outcome of the proceedings as that the Applicants were successful to a significant extent albeit not achieving the primary relief sought and there is no relevant disentitling conduct to prevent a partial award of costs in their favour.

[36]

Calderbank offers/offers of compromise

Whether an award of costs to the Applicants should be modified because of the Waldings' various Calderbank offers/offers of compromise is next considered. The parties have provided the extensive correspondence between them before the litigation commenced, between the hearing and judgment and after judgment was delivered, as set out in the table above in [35] and summarised above in [36]-[71]. Most relevantly, the Waldings made numerous offers of compromise and four offers termed Calderbank offers before the hearing commenced on 22-24 July 2020. The fourth Calderbank offer was made on 21 July 2020, the day before the hearing commenced, to which no formal response was provided. A further Calderbank offer was sent on 15 April 2021 after the delivery of judgment, but I do not consider that has any relevance given its timing.
As identified by the Waldings above in [105] parties are encouraged to attempt to resolve disputes outside of court. One of the factors relevant to determining costs is whether the rejection of a Calderbank offer was reasonable in the circumstances: Brymount Pty Limited t/a Watson Toyota (ACN 003 200 459) v Cummins [2005] NSWCA 69 at [14] citing SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 at [37]. Whether rejection of a Calderbank offer was unreasonable is an evaluative judgment to be made by reference to the terms of the offer and all the relevant surrounding circumstances: E Group Security Pty Ltd v Chief Commissioner of State Revenue (No 2) [2021] NSWSC 1296 (E Group Security) at [58] citing King Network Group Pty Ltd v Club of the Clubs Pty Ltd (No 2) [2009] NSWCA 204 at [11]. Further, Ward CJ in Eq, outlined at [58]-[60] in E Group Security relevant factors to consider as follows: 58. … The defendant has also noted that a finding of unreasonableness should not be made other than on clear grounds (Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353 at [113]). 59. The factors to be taken into regard when considering whether the rejection or non-acceptance of the offer was unreasonable include: the stage of the proceeding at which the offer was received; the time allowed to the offeree to consider the offer; the extent of the compromise offered; the offeree's prospects of success assessed as at the date of the offer; the clarity with which the terms of the offer were expressed; and whether the offer foreshadowed an application for indemnity costs in the event of the offeree's rejecting it (see Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; [2005] VSCA 298 at [25] per Warren CJ, Maxwell P and Harper AJA; Commissioner of State Revenue v Challenger Listed Investments Ltd (No 2) [2011] VSCA 398 at [8] per Buchanan and Tate JJA and Sifris AJA; Miwa Pty Ltd v Siantan Properties Pty Ltd (No 2) [2011] NSWCA 344 at [12] per Basten JA (with whom McColl and Campbell JJA agreed)). 60. The defendant has pointed in his submissions to various factors that in other cases have been found to be relevant in determining whether the rejection of a Calderbank offer was not unreasonable, and tending against such finding, including: all relevant evidence not having been served at the time of the offer (Vale v Eggins (No 2) [2007] NSWCA 12 at [22]); the full parameters of the dispute remaining uncertain at the time of the offer (Precision Products (NSW) Pty Ltd v Hawkesbury City Council (2008) 74 NSWLR 102; [2008] NSWCA 278 at [192]); the offeror's case changing after the making of the offer (South Eastern Sydney Area Health Service at [85]); the inclusion of conditions in the offer (Magenta Nominees Pty Ltd v Richard Ellis (WA) Pty Ltd (unreported, FCAFC, Spender, French and Lee JJ, 29 August 1995); and the issues in dispute in the proceedings being complex (MGICA (1992) Pty Ltd v Kenny & Good Pty Ltd (No 2) (1996) 70 FCR 236 at 242D).
The surrounding circumstances giving rise to the litigation particularly inform my consideration of the various offers made and the Applicants' responses. The proceedings were complex and the matters raised were not legally straightforward. The Applicants were not unreasonable to commence the litigation given the unsatisfactory circumstances they found themselves in through no fault on their part. The garage largely built by the Waldings on Council owned land had a substantial impact on the privacy and amenity of the Applicants' property justifying the making of ameliorative orders requiring the Waldings to undertake work to render parts of the garage non-trafficable inter alia: Lu v Walding (No 2) at [251]-[271].
The Applicants' responses to the various Calderbank offers/offers of compromise are summarised in their submissions above in [79]-[88]. The reasons given for why the 6 February 2019 oral offer of landscaping was not accepted was that it was lacking in specific detail. The absence of detailed architectural drawings to supplement the Betros sketch included in the 12 July 2019 email meant that the request for an in-principle agreement lacked sufficient specificity. The first Calderbank offer of 30 July 2019 was to carry out works in accordance with a rough sketch and only offered a small amount of costs. Contrary to the Waldings' assertions that these offers were capable of acceptance I accept the Applicants' submissions that they were not. The position of the Council also rendered settlement difficult. The second Calderbank offer of 3 October 2019 was not straightforward in execution in that it required the Waldings to make a further DA with amendments to the Council, surrender the current consent if a new approval was obtained and offered limited payment of costs. The Applicants' refusal of the offer was reasonable. The third Calderbank offer of 29 April 2020 was refused for reasons the Applicants identify above in [85] which are also reasonable. The architectural plans were provided very close to the final hearing in July 2020. The fourth Calderbank offer of 21 July 2020 was only open for one day, an unreasonable timeframe, and the offer in relation to costs was unreasonable given the amount expended by the Applicants until that date.
I accept the Applicants' submissions that the offers were not sufficiently clear or failed to provide adequate reimbursement of the legal costs incurred by the Applicants. The nature of the offers did not meet the Applicants' requirements in those unusual circumstances. That following delivery of judgment the Applicants reached agreement on ameliorative measures relatively promptly is not a disentitling consideration.
I do not consider there was a failure by the Applicants to accept reasonable offers which suggests a different costs order ought be made. The Applicants should receive a substantial portion of their costs of the proceedings.
Balancing up all the various matters set out above I consider the Waldings should pay two thirds of the Applicants' costs.
For completeness I note that while the Waldings have sought to criticise the Applicants in causing, according to them (see above in [114]), the Council not to transfer the land the garage is located on to the Waldings, for the reasons given by the Council set out in [123] this is not self-evidently a submission that can be accepted. Such matters are not relevant to this costs decision.

[37]

Who should pay the Applicants' costs?

The next issue arises of whether all Respondents should be jointly and severally liable for the Applicants' costs. The Council resists any such order as it filed a submitting appearance save as to costs very early in the proceedings, on 12 April 2019. Ordinarily it would not be subject to a costs order as a result. All the parties have identified relevant authorities concerning the effect of a submitting appearance. As I identified in Hy-Tec at [27]-[30]: 27. The relevant case law is helpfully summarised in the parties' submissions, particularly those of the EPA. In Cutcliffe, Biscoe J stated at [50(b)]: where the beneficiary does not defend the proceedings, the applicant's costs will ordinarily be awarded against the consent authority, whether or not the latter enters a submitting appearance. This is because the cause of the litigation is the error of the consent authority and not of the applicant or the beneficiary. The consent authority cannot immunise itself from costs consequences of its own error by entering a submitting appearance because then a successful applicant cannot be properly compensated in costs. It is not sufficient that a consent authority should bear the applicant's costs only up to the time of the consent authority's submitting appearance because the applicant must continue to incur costs thereafter in order to establish, by evidence and argument at a hearing, that it is entitled to declaratory and injunctive relief. 28. In GPT, Biscoe J stated at [29]: Costs guidelines can be no more than general. They must be flexible. They must be understood to be the servant, not the master, of the interests of justice, and so must yield where appropriate to the circumstances of the individual case. … 29. In Platford both respondents (a council as the consent authority and a beneficiary of a development consent) filed a submitting appearance and the Court considered whether it was appropriate for costs to be awarded against only the council or both respondents. Preston CJ of the LEC ordered costs against both the consent authority and the beneficiary of the consent, holding at [21] that the ordinary rule that no order for costs should be made against a submitting party has less applicability in judicial review proceedings where both respondents file submitting appearances. Application of the ordinary rule would result in the successful applicant not being compensated for the costs of the proceedings. 30. In Rossi (CA), Basten JA stated at [73] (Ward JA agreeing): The circumstance engaging par (b) in Cutcliffe was that the beneficiary of the decision does not defend the proceedings; it was then said that the reason why the consent authority could not "immunise itself from costs consequences of its own error by entering a submitting appearance [was] because then a successful applicant cannot be properly compensated in costs." But that cannot be true in the case of proceedings which are actively defended by another party. The mere fact that the decision-maker is ultimately found to have erred in its approach is not, of itself, a sufficient reason to order costs against it, being costs incurred after the entry of a submitting appearance. So far as the guidelines in Cutcliffe suggest otherwise, they should not be applied.
The Waldings were active parties in the proceedings. The Council did not cause any costs to be incurred in the course of the proceedings. I accept the Council's submissions above in [125]-[129] that they should not be liable for any costs in these circumstances, consistent with Rossi (CA) at [73].
The Waldings' submission that the Council should have detected the error in the plans submitted with the DA and therefore should also be liable for costs is not accepted for costs purposes. As submitted above in [121]-[122], the Council was entitled to rely on the plans submitted with the Waldings' DA and the SEE which included a SIX Maps map which was also erroneous. As identified in Platford at [26]-[27] error in material lodged with a DA is attributable to an applicant seeking to rely on that material. That the Council's records were deficient is a secondary explanation for how these unusual circumstances arose.
The Waldings are liable for the Applicants' costs of the proceedings, to the extent that I award these.

Lu v Walding

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (40 paragraphs)

Parties

Legislation Cited (6)

Cases Cited (51)

Cited By (3)