Marrickville Council -V- Syfurn P/L & Ors. [1999] NSWLEC 71

EX TEMPORE JUDGMENT DATE: 03/24/1999

APPLICANT: Mr. C.W. McEwen, Barrister SOLICITORS: Phillips Fox LEGAL REPRESENTATIVES: RESPONDENT: Mr M. Rayhill SOLICITORS: Michael N. Rayhill & Co.

JUDGMENT: IN THE LAND AND Matter No. 40166 of 1998 ENVIRONMENT COURT OF Coram: Bignold J. NEW SOUTH WALES 24 March 1999

1.On 26 August 1998, the Council commenced class 4 proceedings against the Respondents who own or are relevantly interested in the ownership of premises known as 553 New Canterbury Road, Dulwich Hill, claiming a declaration that the Respondents were carrying out development in breach of conditions 2 and 3 of Development Consent No. 12891 granted by the Council in 1990 for the use of the premises as a general wholesale and auction centre.

The Council's application also claimed a mandatory order that the Respondents provide 41 paved and line-marked carparking spaces on the property not later than 21 days from the date of order.

Council also claimed a prohibitory injunction restraining the Respondents from using land designated for carparking purposes for purposes other than parking and ancillary purposes.

Council's claims were based upon Conditions 2 and 3 imposed upon the grant of the aforesaid development consent which was granted by the Council on 21 February 1990.

Upon the matter coming on for hearing today, the parties informed the Court that they had settled the case, except for the outstanding question of costs and short minutes of order, were handed to the Court and the Court was invited to make the orders, by consent, therein recorded.

Those orders, which were duly made by the Court by consent, restrained the Respondents from using the aforesaid property for the approved purpose of wholesale and auction centre except in accordance with the conditions of development consent 12891 dated 21 February 1990, but that the injunction be suspended for a period of nine months from today.

The Court was also asked to note and receive an undertaking given by the Respondents to hold no more than three auctions within the nine months period of suspension of the injunction and to give the Council appropriate notice of the holding of each of those auctions.

From the copious correspondence that has been tendered on the hearing of the outstanding question of costs, it appears that the consent orders so made and so settled between the parties reflect the party's agreement to settle the case where those negotiations commenced soon after the filing of the proceedings. It is to be recalled that they were commenced on 26 August 1998, an issues conference was held on 7 December 1998, and a week later settlement negotiations were entered into in earnest, culminating in the settlement of the case but for the question of costs. That is reflected in the consent orders earlier made today.

So as concerns the outstanding question of costs, the Court has two applications to determine, one by the Council seeking its costs in the proceedings on the conventional basis that the consent orders vindicate its claims and that costs ordinarily follow the event, the settlement being the event which indicates that the Council has been, and is properly to be regarded, as the successful litigant. That application is resisted by the Respondents, who in turn make an application for costs to be paid to them by the Council.

The basis for resisting the Council's costs application have been variously put by Mr Rayhill in the course of his address today. Although at one stage in the hearing, the matter was pressed by him on the basis that the Council must be adjudged to be guilty of some misconduct in or relating to the litigation as the argument was further refined, I did not understand that to be the basis for the Respondent's resistance of the Council's application for costs. If it were, it was somewhat masked.

Instead, Mr Rayhill has referred to the historical development of the subject premises dating back to the 1940's when the present hut style structure came into existence, and has referred to the fact that in the course of the existence of that building and the use of the subject land over many years, the need for paving the carparking spaces has not manifested itself. Moreover, a survey of the historical uses made of the subject land and building reveals, if anything, so he submitted, a much reduced scale of development undertaken by the Respondents pursuant to the 1990 development consent for the wholesale and auctioneers business to be conducted therein.

It is this fact, combined with the unexplained delay in enforcement action by the Council in relation to the 1990 development consent, that I would understand to be the principal basis for the Respondents' argument, that they should not have to pay the Council's costs, but that rather, the Council should pay the Respondents' costs.

The argument seeks to gather momentum by relying upon other features of the historical use of the premises and other involvements of the Council in those uses. In particular, reliance is made upon the fact that soon after the Council's first notice given in July 1995, calling upon the Respondents to comply with the carparking and paving conditions of the 1990 development consent, Council, at officer level, seems to have invited the Respondents to make a s 102 modification application to reduce the number of car spaces required to be provided by the development from 41 to 27.

The correspondence that has been tendered in evidence does indicate that the Council, when called upon to explain how its carparking requirements embodied in conditions 2 and 3 of the 1990 development consent were derived, pointed out to the Respondents that the number of spaces based upon the floor area of the building was 27 and not 41.

I should indicate that the original requirement for the 27 carparking spaces to be paved and provided dates back to a development consent granted by the Council in June 1983 for the use of the premises as a grocery wholesale outlet - I interpose that the first Respondent became the registered proprietor of the subject land in 1981, some two years before the approval of the grocery wholesale business.

In any event, the Respondents duly made the s 102 modification application but in March 1996 were notified that the Council had refused the application.

Later that year, Council was to call upon the Respondents to comply with the obligations imposed by the relevant conditions of development consent. The correspondence that was in evidence indicates that the Respondents regularly sought extensions of time and that these were regularly granted for one reason or another.

So things continued until February 1997 when the Council renewed its demand for compliance with the conditions of consent. This prompted the Respondents to seek and obtain further extensions of time, leading to the Respondents filing with the Council yet another s 102 modification application, this time seeking a waiver altogether of the condition requiring the paving of the carparking spaces (that application being made in July 1997).

In September 1997 the Council notified the Respondent that that application had been refused. Thereafter, applications for extension of time were made for one reason or another and duly granted and so the case meandered into and throughout 1998 until by letter dated 17 April 1998 the Council's solicitors made formal demand for compliance.

The emergence on the scene of the Council's solicitors appeared to bring a greater sense of urgency and momentum into the Council's resolve to enforce the conditions of consent and although further extensions were sought and obtained for more modest extensions of time thereafter, ultimately the Council's position was made clear to the Respondents in the letter dated 25 June 1998 from the Council's solicitors advising that the Council had granted a further extension of time for compliance until 24 July 1998 but advising that no further extension of time beyond that time would be granted, and that they had been instructed by the Council to commence proceedings against the Respondents (the company owner of the land and its directors) if the conditions were not complied with by 24 July 1998.

I should notice in passing that that advice from the Council's solicitors was in response to a request by the Respondents that the matter be held in abeyance pending the outcome of a development application proposed to be lodged by the Respondents for the subject land, contemplating a residential redevelopment in keeping with what has occurred by way of residential redevelopment in the locality in recent years.

That redevelopment application for residential development, which had featured in discussions leading to the settlement of the case, has in fact not yet been lodged with the Council but the Respondents anticipate its lodgement within the next few weeks.

There have been assertions made by the Respondent in correspondence (and they were repeated by Mr Rayhill from the bar table today) that the enforcement action set in train by the Council in recent years had led to a downturn in the auctioneers business conducted on the subject premises and that the Respondents have been driven by the economic downturn to contemplate a residential redevelopment of the site. Indeed Mr Rayhill invited the Court, on the basis of photographic evidence which he tendered, to infer that with the massive residential redevelopment occurring all around the subject premises, it can only be regarded as an eyesore and that indeed, there must be some political agenda behind the Council's action seeking the enforcement action.

These assertions (and they rise no higher than that) have been stoutly rejected by Counsel appearing for the Council in these proceedings. Having regard to the paucity of evidence that has been adduced by the Respondents, I am not prepared to draw the inference that the hidden agenda for the Council's present civil enforcement proceedings is to compel the Respondents to abandon their present development and instead deploy the land for residential redevelopment in accordance with what has occurred in recent years in its environs.

To draw such a conclusion, in my judgment, would be only an exercise in speculation and conjecture and not the drawing of legitimate inferences from the evidence. The only substantial evidence referred to in the Respondents' case was the one occasion when, in the course of conducting an auction, the subject premises were inspected by Council's planning officers, who appeared on the scene, took photographs and insisted upon interviewing Mr Rayhill, apparently while he was in the course of seeking to conduct an auction. A strained scenario I must say, but hardly one which justifies a conclusion that the proceedings before the Court were aimed at the Council's hidden agenda of bringing to an end the Respondents' business so that residential redevelopment might be substituted therefor!

Ultimately, the Respondents' case involves an ad misericordiam plea that it would be unjust for costs to be imposed against the Respondents which have been forced to settle the case, which in turn has only been pressed by the Council after the whole question of compliance with the relevant conditions in relation to the paving of the carparking area has lain dormant for at least 5 years in relation to the 1990 development consent, and for another 7 years if one is to backdate the continuing saga to the approval of the grocery wholesaling outlet in 1983.

All these matters raised by Mr Rayhill may have been relevant on the question of the exercise of the Court's discretion, whether or not to grant the prohibitory injunction and mandatory orders sought in the Council's proceedings. However, the interposition of the settlement and the consent orders that have been made, which provide the relief claimed by the Council against the Respondents, renders that line of reasoning simply unavailing in resolution of the outstanding question of costs. It is simply not to the point for the Court to speculate or to opine as to how the Court's discretion to grant or to withhold injunctive relief claimed in quest of enforcement of a breach of the Environmental Planning and Assessment Act 1979, would have been exercised, now that the proceedings have been regularly concluded by the consent orders that the parties collectively invited the Court to make.

Although discretionary considerations apply to the Court's power to grant or to refuse costs applications, like the discretion concerning the power to grant or decline injunctive relief, so the Court's discretion on the question of costs, is a disciplined and well settled discretion, and falls to be exercised according to established principle.

In this respect, the fundamental principle is that costs are compensatory and are designed to compensate the successful party in litigation for the costs incurred in conducting the litigation. Stated in an otherwise conventional manner, costs in class 4 proceedings in this Court usually follow the event, save for exceptional circumstances or special circumstances. Such special or exceptional circumstances certainly embrace the notion that a successful party may be denied its costs (despite its success in the litigation) if it can be properly adjudged to be guilty of misconduct in the litigation or in matters relating to the litigation occurring prior thereto.

I have considered carefully the matters relied upon by Mr Rayhill in his helpful address to the Court, but can find nothing in them which support a conclusion that the Council has been guilty of any relevant misconduct either in the litigation or before it but relating to it. The litigation history in fact is very brief. As I have earlier pointed out, the proceedings were commenced on 26 August 1998, an issues conference was held in December 1998 and within a week the parties were in earnest in settling the case, and today when the hearing commenced, the parties handed up their consent orders and they were duly made.

There is simply nothing in the litigation history which even faintly suggests the Council has been guilty of any misconduct relevant to the exercise of the discretion on costs.

Misconduct is a wider notion than misconduct in the litigation and involves misconduct in the matter giving rise to the litigation. The only matters that Mr Rayhill has drawn to the Court's attention (namely the Council's apparent invitation for the original 102 application to be made which Council refused in any event) as I have pointed out; are really more relevant to the exercise of discretion to grant or withhold prohibitory injunctive relief and that question has been rendered irrelevant by dint of the consent orders the parties have asked the Court to make. However, in any event, I do not regard the matters relied upon by the Respondents as relevantly constituting misconduct in the matter prior to the litigation being brought.

If there were the invitation (and I think there was, at least at officer level for the original 102 application to be made) it was merely an invitation where the result was not foresworn. In the event, the Council refused it. The basis for the invitation was exposed in the letter that the Council's servant wrote to the Respondent pointing that applying the Council's code, 27 spaces and not 41 spaces was what was required.

However, it is not my function in these proceedings to express a view on whether the Council's refusal of the modification application was right or wrong or sound or unsound. The fact is that it was refused and that no appeal was taken against this decision.

Another matter that I should mention in deference to Mr Rayhill's submission was the suggestion that the Respondents did not know the precise nature of the paving required by the Council. This a curious submission if I may say so because the condition, which speaks for itself, has been in existence since 1990. In terms, it does not specify the engineering specification for the paving, but carparking paving for developments is not an esoteric phenomenon. In any event, the requirement was to be in accordance with Council's standards and to Council's satisfaction.

Belatedly, and I emphasise belatedly, just before the litigation was commenced, the Respondents asked the Council's solicitors what type of paving was required. Council's solicitors replied by letter dated 8 May 1998 indicating that the Council would be satisfied with the standard of construction if the company were, inter alia, to provide the Council with a certificate from a qualified structural engineer certifying the completed pavement was suitable for the purpose of carparking.

Again with great respect I do not propose to pursue that matter other than to say that the suggestion that the Respondents were impeded in carrying out their obligation because of some lack of awareness or knowledge of the standard required by the Council's condition, provides no cogent basis either to justify the non compliance by the Respondents with their obligations or to conclude that the Council was relevantly guilty of some misconduct such as would disentitle it as the victor in the litigation to the ordinary order for costs.

Having carefully considered the extensive history and correspondence, both before and after, the commencement of the proceedings passing between the parties, I can see no foundation whatever for concluding that the Council has been guilty of relevant misconduct such as would disentitle it as the successful litigant to the ordinary incidence of the cost rule, namely that costs follow the event. I propose therefore to grant the Council's application.

The competing application by the Respondents that the Council pay their costs in the litigation lacks any reasonable basis or justification. It is indeed an exceptional case where the successful litigant is ordered to pay the unsuccessful litigant's costs. It can happen, and it has happened, but the circumstances must be patently exceptional, and in the present case, for the reasons given, I find no circumstances to justify such an exceptional order. Accordingly, that application must be refused.

Ultimately, the Court must exercise its discretion on costs on the basis of the evidence (or common facts) put to the Court and I have been considerably assisted by the facts that have been put to the Court, and by Mr Rayhill's industry in assembling the facts encompassing a long period of time. I have been considerably assisted by his presentation. Ultimately however, I have concluded that the thrust of his submission would have been more relevant to the question of the exercise of the Court's discretion to grant or withhold the prohibitory injunction. That task having been taken out of the Court's hands by dint of the consent orders that the parties sought the Court to make, much of what he has put going to the question of discretion as to how the costs power should be exercised in this case, loses momentum and lacks cogency.

In all the circumstances and for the forgoing reasons, I order the Respondents to pay the Applicant's costs in the sum agreed, or failing agreement as assessed and I dismiss the Respondents' costs application. I order the exhibits remain on the Court papers.

I HEREBY CERTIFY THAT THE PRECEDING 41 PARAGRAPHS ARE A TRUE AND ACCURATE RECORD OF THE REASONS FOR JUDGMENT OF THE HONOURABLE JUSTICE N R BIGNOLD.

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