Mangos and Anor. v Fairfield City Council

10442 of 2002 MANGOS & ANOR v FAIRFIELD CITY COUNCIL

HIS HONOUR

1. This is an application for costs made by the Council in class 1 proceedings which were discontinued in the Court by the filing of a Notice of Discontinuance by the Applicant to the class 1 proceedings.

2. The Notice was dated 24 January 2003 and Notice of an Intention to Discontinue had been given to the Council's Solicitors on 21 January 2003 in circumstances where the hearing dates for the appeal were a little more than two weeks thereafter. Those hearing dates, that is for 12 and 13 February 2003, had been allocated by the Registrar at call-over on 18 September 2002. On that occasion the hearing dates allocated had been allocated on the basis that the hearing would be presided by a Judge with the assistance of a Commissioner because the Registrar had been informed that points of law were involved in the case and that the determination of those points of law would involve the need for a determination of facts in law. That matter is attested to more amply by the Notice of Motion filed on that day by the Council's Solicitor, supported by two affidavits.

3. I have been considerably assisted by the detailed arguments that have been advanced today. I think the facts of the matter can be stated quite simply and are these.

4. The class 1 proceedings were commenced in the Court in respect of the Council's refusal of a modification application made to it under the Environmental Planning and Assessment Act, s 96. The appeal was lodged at the end of July and had been made in respect of the Council's determination of that modification application which itself had been communicated on 25 October 2001. That Notice of Determination indicated that there were four reasons for the refusal of the modification application:

1. Dealing with the environmental impacts of the proposed development.
2. Raising the question of the objectives of the relevant zone and the inconsistency of the proposal therewith.
3. Raising the question of the public interest.
4. Circumstances of the case were such that Council cannot approve of a commercial use within a non-urban residential zoning.

The matter came before the Registrar for call-over initially on 20 April and again on 4 September and 18 September before the hearing dates that I have earlier mentioned were allocated. When the matter was before the Registrar on the first occasion, she gave the standard direction for the filing of Statement of Issues and this the Council did by document filed on 2 September.

Those issues so raised went well beyond the reasons for decision refusing the modification application in as much as issue 1 fleshed out the fourth reason that I have quoted from the Determination, by raising the question whether the proposed use was prohibited within the zone. Issue 2 raised the question of whether the modified development would be substantially the same as the unmodified version of the development and Issue 3 raised the question of whether the proposed development as modified, would qualify as a home business use within the meaning of the Local Environmental Plan.

When the matter came back before the Registrar there had been some anticipation that the Council would be raising points of law because on 4 September the Registrar had announced that if there were no points of law raised, the matter would be fixed for hearing in the conventional manner. By that I mean it could be expected to have been listed for hearing at a future date by a Commissioner of the Court as a planning appeal. When the matter came before the Registrar on 18 September, the Council had filed a Notice of Motion in which it raised for determination by the Court, three questions of law. That Motion itself indicated that the questions of law would be raised on 12 February 2003, which is of course the first of the two hearing days allocated by the Registrar on that occasion. Those questions of law further focussed attention on legal issues, even more so than the Statement of Issues had and raised three discreet questions of law. That was the last time the matter came before the Court until the Notice of Discontinuance was filed, thereby bringing the proceedings to an end on or about 24 January 2003.

Before filing the Notice of Discontinuance, there had been, as I had indicated, communication with the Council's Solicitors on 21 January by the town planning agent retained by the Applicants, in which they advised that Counsel opinion on behalf of the clients had been obtained. That advice was to the effect that it would be appropriate for the current appeal to be discontinued and a new development application lodged with the Council in lieu of the modification application that had been refused and was subject to the pending appeal. The letter gave some detail of Counsel's opinion and went on to say that the Applicants were proposing to file a Notice of Discontinuance with the consent of the Council and with no order for costs, with an undertaking to file a new Development Application for the Council's consent in lieu of the process then on foot. Council's consent to the Notice of Discontinuance was sought.

In their reply, the Council's Solicitors, dated 23 January, advised that the matter was shortly to be heard. Their client's case was being prepared, a barrister had been briefed and in the circumstances they were instructed to inform the Applicant that the Council would not consent to the discontinuance unless he had agreed to pay the Council's costs incurred up to and including the filing of the Discontinuance. It was in those circumstances that the Applicants filed the Discontinuance on the following day.

In its letter to the Applicants' town planning agent in response to the filing of the Notice of Discontinuance, Council's Solicitors advised that the Council had incurred professional costs and disbursements in preparation of the hearing in the sum of $5,642. Requested payment of that amount with advice that in default of payment, they had instructions to commence proceedings in the Court for an award of costs pursuant to Pt XI r 5 of the Rules of Court. That amount of professional costs and disbursements is detailed in the costings provided in the affidavit sworn 24 June by Hemant Brakash, a Solicitor in the employ of the Council's Solicitors. It is to be noted that of the sum $5,642, the bulk of those costs and disbursements had been incurred up to and including 18 September 2002 when the proceeding was allocated the hearing dates and that only a small amount of costs thereafter had been incurred up until the time of discontinuance.

As I have mentioned, the Council's case for costs is based upon the fact of the Discontinuance with the power to award costs in favour of a party who does not consent to the Discontinuance being conferred by the Rules of Court Pt XI rule 5, which provides and I quote from subr 1; If a party to any proceedings discontinues them in whole or in part, the Court may on the application of another party, order the discontinuing party to pay the costs of any party against whom the discontinued claim was brought who does not consent to the Discontinuance.

The cases in this Court that have attempted to expound the application of the power conferred by Pt XI r 5 of the Rules of Court, in the context of the Court's established practice of not awarding costs in planning appeals, save in exceptional circumstances, are legion.

One of the earlier cases in which an attempt was made to correlate the power conferred by Pt XI r 5 and the Court's practice of not awarding costs in planning appeals was my decision in Manly Wharf Pty Ltd v Manly Council (1998) LGERA 245. There have been many case since, including a number of the cases which counsel for the Applicant has helpfully brought to my attention today.

One case that I think bears particular reference is the decision of Lloyd J in Menangle Sand and Soil v Wingecarribee Shire Council 108LGERA 209. In the passage at 213 where his Honour was able to extract from the decided cases, a number of principles to emerge in a situation where a planning or building appeal had been discontinued without the consent of the other party to the litigation. Those principles included the following; Principle A In planning and building appeals, it is first necessary to look for some exceptional circumstances so as to found an order for costs. This is a direct consequence of the practice direction. Principle B Ordinarily, the filing of a Notice of Discontinuance without consent will satisfy the exceptional circumstance test. This is because discontinuance usually represents an abandonment of the Applicant's claim so the costs incurred by the other party are necessarily wasted or thrown away. Principle C A relevant consideration in every case is whether the discontinuance was reasonable conduct on the part of the discontinuing party in the circumstances of the case, such as to negate the ordinary costs consequence of a discontinuance. Such conduct may be based on some action by the other party to the litigation or some supervening event beyond the party's control"

His Honour also made another helpful observation of his survey of the cases when he said at 214: In those cases in which an order for costs was made against the discontinuing party, the Discontinuance had occurred well after the case had been set down for hearing and relatively shortly before the hearing date. It is self evident that in those circumstances, the other party's litigation would have incurred substantial costs in its preparation for the hearing, which costs were necessarily wasted.

Counsel for the Council has placed particular reliance upon a passage of a Judgment of mine in which I focussed attention upon the provenance of Pt XI r 5. This is the decision in Gormick Constructions Pty Ltd v City of Sydney Council [2002]. In particular he relies upon the passage where I say at par (45): In my judgement, the existence of these rules places the discontinuance of proceedings without the other party's consent in a special category of case from the perspective of the making of costs orders which is to be differentiated from other cases where there is no adjudication on the merits because the case is settled or because further prosecution of the case has become futile.

and I quote the oft quoted decision of McHugh J sitting singly in the High Court in Re Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin and I refer to a reported decision of mine in Joanou v Randwick City Council, those being class 4 proceedings.

The particular passages relied upon by Counsel for the Council in the Judgment in Gormick however, must be understood in their context and in the light of the fact that earlier in my Judgment in Gormick, I had respectfully adopted the statement of principles collected in Lloyd J's decision in Menangle Sand and Soil. I refer in particular to paras 31 to 33 of my Judgment in Gormick.

The significance of the adoption of those principles, is that it is not correct to postulate that the mere fact of discontinuance gives rise to a presumptive entitlement to costs but that it is appropriate to examine the facts of the litigation and in particular the facts surrounding the discontinuance, in order to determine whether in the circumstances the discontinuance was reasonable and justifiable on the part of the discontinuing party, so as to negate the cost consequence normally suffered by a discontinuing party. I adhere to the views that I expressed in Gormick, including the endorsement of the principles annunciated by Lloyd J in Menangle Sand and Soil. The consequence of this in the present case, is, it is in my view legitimate and necessary to examine the course of this litigation leading up to and including the act of discontinuance by the Applicant. This is particularly the case in light of the fact that the great bulk of the costs incurred by the Council are to be understood as costs that had been incurred at the time that the matter was allocated for hearing on 18 September.

I have already pointed out that an examination of the lists of costs and disbursements in Mr Brakash's affidavit, indicate that virtually all of the costs were incurred up until that date. In my view this is significant because it indicates that the present case is not a case where the discontinuance of the proceedings has necessarily led to a wastage of costs incurred in preparation for the hearing. Indeed, as counsel for the Applicant candidly conceded, if that were the case, then his client's opposition to the costs order sought against him would be far less defensible.

In my view, a proper appreciation of the history of this litigation and the manner in which it had been progressed, leads me to conclude that the Applicant's discontinuance in the proceedings, at the time and in the circumstances that that occurred was reasonable conduct. Counsel's opinion had been obtained and it obviously was to the effect that the questions of law raised by the Council in the case were formidable obstacles lying in the path of the Applicant's success in the proceedings. No criticism is made of the fact that counsel's opinion was not obtained until January, a little more than three months, allowing for Christmas vacation, after the Applicant was aware of the questions of law that the Council had raised for determination by the Court at the hearing. As I have said, significantly, costs were not incurred in preparation for the hearing after 18 September. They had been basically incurred prior thereto.

The significance of this lies in the fact, as counsel for the Applicant pointed out, that when his client exercised his right of appeal, he was appealing against the Council's determination of the modification application which had raised merit grounds and factual grounds as the basis for the decision.

The questions of law, legitimately raised by the Council, only arose after the Applicant had exercised his statutory right to appeal against the Council's determination, whereas it was perfectly legitimate for Council to raise those matters and as I have said when the Applicant obtained counsel's opinion, it obviously recognised the strength of points raised by the Council. That fact and the incurring of the expenses by the Council's lawyers in raising those questions of law should not be visited upon the Applicant who exercised his right of appeal against the Council's decision on the merits of his s96 application.

It is in these circumstances that I am satisfied as a matter of discretion that the power undoubtedly available to the Court pursuant to Pt 11 r 5 of the Rules of Court, should not, in the exercise of judicial discretion, be exercised against the discontinuing party because of my earlier stated conclusion, that within the context of the litigation history and having regard to the manner in which it was progressed, the conduct by the Applicant was both reasonable and justifiable. It did not cut across, undermine or lead to a wastage of any costs incurred by the Council in preparation for the hearing, once it is appreciated, as I have said on a number of occasions, that the bulk of the costs detailed in Mr Brakash's affidavit were incurred by the Council in itself, raising those questions of law in its Motion that came before the Registrar on 18 September 2002 when she allocated the hearing dates for the case in February 2003.

In the circumstances and the exercise of discretion, I am of the opinion that there should be no order for costs in the proceedings and I so order.

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