McCrohon v P J Gann and Another

Australiawide Airlines Ltd v Aspirion Pty Ltd [2006] NSWCA 365 Fordyce v Fordham & Anor (2006) 67 NSWLR 497 Gann & Anor v Sutherland Shire Council [2008] NSWLEC 157 Gann v Sutherland Shire Council [2008] NSWLEC 1228 Kiama Council v Grant [2006] NSWLEC 96; (2006) 143 LGERA 441 Ku-ring-gai Council v Minister for Planning (No.2) [2008] NSWLEC 276 Latoudis v Casey (1991) 170 CLR 534 CASES CITED: Metricon Qld Pty Ltd and Anor v Tweed Shire Council [2008] NSWLEC 283 Newcastle City Council v Wescombe [2008] NSWLEC 301 One.Tel Ltd and Others v Deputy Commissioner of Taxation [2000] FCA 270; (2000) 101 FCR 548 Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 Palladium Mangement Pty Limited v Council of the City of Sydney [2008] NSWLEC 100 Ray Fitzpatrick Pty Limited v Minister for Planning (No.5) [2008] NSWLEC 183 Re the Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin (1997) 186 CLR 622 Shellharbour City Council v Stewart [2007] NSWLEC 727

APPLICANT Mr A Martin, solicitor of MBP Legal LEGAL REPRESENTATIVES: RESPONDENTS Mr G Newport SOLICITORS Whites Lawyers

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

JUDGMENT Introduction 1 His Honour: These Class 4 proceedings lost all utility once the Respondents were partially successful in related Class 1 proceedings. They were subsequently dismissed by agreement, and each side now seeks against the other, an order for costs. 2 In the event that I order the Respondents to pay the Applicant's costs, the court is asked to order that such costs be paid on an "indemnity basis up to and including 12 December 2007". 3 Each side respectively relies on an affidavit filed by its solicitor, to which various correspondence and other documents are annexed. Both sides have also made both written and oral submissions. The relevant Class 1 file (Matter No.07/10763) is also before the court as are the two judgments delivered in that matter - by Lloyd J on a preliminary question of law (Gann & Anor v Sutherland Shire Council [2008] NSWLEC 157) on 24 April 2008, and by Senior Commissioner Roseth on the substantive proceedings (Gann v Sutherland Shire Council [2008] NSWLEC 1228) on 20 June 2008. Background 4 The relevant factual background may be shortly described. 5 In 2004 Mr and Mrs Gann set about redeveloping their residential property at No.365 Woolooware Road, Burraneer. Mr McCrohon lives next door, at No.363. The neighbours appear to have been on good terms, with Mr McCrohon described as holding the Ganns in "favourable regard and good will". 6 On 17 February 2005, the Council granted consent to the demolition of the existing Gann house and construction of a new dwelling and associated facilities at No.365. A modification of that consent (not relevant to the proceedings) was approved on 22 July 2005. Both these approvals were given under Sutherland Local Environmental Plan 2000 ("LEP 2000") and a construction certificate was issued by private certifier on 24 July 2006, but a new plan (LEP 2006) came into effect on 29 November 2006. 7 As the development evolved, Mr McCrohon expressed concern that it was built in excess of what he understood had been approved. Photographs taken in March 2007 (Exhibit A1) certainly indicate a substantial building under construction at that stage. During November 2006, Mr McCrohon had refused use by the Ganns' builders of a shared driveway, and there were then personal discussions between the parties, prior to the commencement of more formal contact through their respective solicitors in February 2007. 8 Mr McCrohon's solicitor alleged in a letter of 22 February 2007 that the Ganns "knowingly engaged in non-complying building works", and later (on 27 March 2007) referred to the "vast extent of non-complying work". The Ganns' solicitor replied at length on 27 February, and suggested mediation. Mr McCrohon's solicitor sought the cessation of all works, access for his experts, and full plans and particulars, before he would consider mediation, but the Ganns wanted matters clarified with the Council before agreeing to that request, and undertook to cease work on those components of the work of particular concern to Mr McCrohon ("which are in issue"). 9 The Ganns claimed that a full cessation of work would cause them substantial loss and damage. They were happy to have the McCrohon objections referred to an independent expert, and to account to Council for any exceedence of their approval. They denied intentionally exceeding the approval, and contended that their works were "substantially in accordance" with the Council's approval and the construction certificate, and that any "minor changes" would have "no negative impact on neighbours or the environment". 10 In response to a complaint, the Council queried the private certifier about the matter on or about 2 March 2007, observing that the deviations from the approval appeared "significant". 11 Notwithstanding the Ganns' cooperation with the Council, and their conciliatory approach to Mr McCrohon's concerns, Mr McCrohon commenced these proceedings on 12 March 2007, but the Class 4 application was not served until 23 March. It sought (1) a series of declarations, (2) orders restraining further development, (3) orders for demolition of any works in excess of the approval, and (4) costs. 12 No interlocutory relief was sought from the Court. 13 The Ganns stopped all work and lodged a comprehensive s.96 modification application on 13 April 2007 to rectify the situation. This action had been foreshadowed on 26 March 2007, once the Class 4 application had been served. They asked the Applicant to agree that the Class 4 matter be deferred until the s.96 application was determined, and they assured the Council that they were responsive to their neighbour's concerns, and prepared to bring their development into line with the approval. 14 The Applicant's solicitors were insistent that the Ganns' s.96 application would not succeed (see letters 12 April and 24 July 2007). 15 On 19 July 2007, Council refused the s.96 application for nine stated reasons, generally based on the objectives and development standards contained in LEP 2006. The Respondent's filed their Class 1 appeal against that refusal on 8 August 2007, and then received leave to rely upon revised drawings. 16 The question of law heard by Justice Lloyd was filed on 13 March 2008 and heard on 25 March 2008. His Honour published his judgment on 24 April 2008. The Class 1 matter itself was then heard by Senior Commissioner Roseth on 3-4 June 2008. 17 The Council agreed to many of the amendments the Respondents sought, but objected to four of them, which became the principal issues to be determined by Roseth C, taking into account the changes made to the LEP, as prescribed by Lloyd J's decision. Mr McCrohon's concerns were considered by Roseth C, and dealt with in his judgment, and at least one was favourably addressed. 18 No appeal was lodged against either the decision by Lloyd J or the decision by Roseth C, and it is appropriate to quote the following (pars [36]-[37]) from Roseth C's judgment of 20 June 2008: "36 It appears that the objectors' main concern is that the house has been built higher and bigger than authorised and it therefore impacts on the views and privacy of neighbouring properties more than the approved version. The concern about height, however, appears to arise from the mistaken belief that the approved house was much lower. In fact, the difference in the level of the living room floor between the approved and the built version is only 220mm, which is not of an order that would be readily perceived. I agree with the objectors that the building is too high in relation to natural ground level; however, the height is almost the same as that which was approved. 37 I am satisfied that none of the neighbours will be materially affected by the amendments that are permitted by this decision." 19 The Class 4 matter was before the Court on several occasions while the s.96 application was before the Council, and later the Court, and the Applicant's solicitor seems also to have "appeared" whenever the Class 1 matter came up for case management. The Applicant was not a party to those proceedings and does not appear to have ever sought joinder, or representation at the hearing (see authorities discussed in Metricon Qld Pty Ltd and Anor v Tweed Shire Council [2008] NSWLEC 283), but the Applicant's correspondence repeatedly seeks a role for the Class 4 Applicant in the actual Class 1 proceedings, while declining to be involved in any mediation in the Class 4 matter itself. 20 Following the conclusion of the Class 1 proceedings with the delivery of the learned Commissioner's judgment on 20 June 2008, these Class 4 proceedings came before the List Judge (Jagot J) on 22 August 2008, and the parties agreed to their dismissal, save for the question of costs which is now before the Court. 21 The significance of the date 12 December 2007, referred to in the Applicant's submissions on costs on the question of "indemnity costs", is that the Respondents' detailed "final" plans, etc, became available to the Applicant only on that date. The law on costs 22 An order for costs is designed to adequately compensate a successful party for the expense held to be reasonably incurred, but not to punish the unsuccessful party for bringing and failing in the proceedings. Latoudis v Casey (1991) 170 CLR 534. 23 Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 ("Oshlack") makes clear that the costs power is "purely discretionary" (per Bryson JA in Australiawide Airlines Ltd v Aspirion Pty Ltd [2006] NSWCA 365 at [46]). 24 The power must be exercised "judicially", and the conduct of the litigation by and on behalf of all parties must be examined for its "reasonableness", in order to arrive at a "just" outcome in all the circumstances. 25 However, the Court in adjudicating costs must not hypothetically try the substantive proceedings (Re the Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin (1997) 186 CLR 622), and there is no absolute rule that, in the absence of "disentitling" conduct, the party seen as "successful" will necessarily succeed in achieving a compensatory costs order. See Oshlack, and Fordyce v Fordham & Anor (2006) 67 NSWLR 497. The Applicant's claim for costs 26 The Applicant submits that its Class 4 proceedings were "stymied" by the Respondents' commencement of the Class 1 proceedings, but it must be remembered that the Applicant several times contended that the Class 1 proceedings, and the s.96 application upon which they rested, were doomed to fail, and that, in the end, the Respondents were largely successful in their endeavours to obtain the necessary approval for their project and for the work done on it, by succeeding in those Class 1 proceedings. 27 The Applicant further submits that he should be awarded costs (on an indemnity basis) because:

1. The Respondents repeatedly failed to properly disclose their intended or " as built" works, at all stages of these matters prior to 12 December 2007 (see T2 L23-24, T3 L4-7, and written submissions par 6(a)). 2. The Respondents engaged in litigation " in wilful disregard of facts known to the Respondent at all times " (see T2 L27-29, and written submissions par 6(a)). 3. The Respondents engaged in " unreasonable conduct " by failing to " at least provide copies of the plans as requested prior to commencing this litigation " (see T2 L32-33), and not allowing the Applicant reasonable access for its experts (written submissions par 6(d)). 4. The Respondents, despite a " duty of candour ", refused to concede, and actually went as far as denying, that there were " non-complying works ", but subsequently so admitted by " at least the s.96 application " (see T2 L33-36, and written submissions pars 6(b), (c), and 7). 5. The Respondents prevented the Applicant from making a " meaningful objection " to their project by their " failure to include sufficient detail " in the material they provided to Council (written submissions par 6(e)). 28 Such considerations are certainly relevant on questions of indemnity costs and/or of entitling/disentitling conduct. The relevant authorities were discussed by Biscoe J in Shellharbour City Council v Stewart [2007] NSWLEC 727 at [22] and in Ku-ring-gai Council v Minister for Planning (No.2) [2008] NSWLEC 276, and by me in Ray Fitzpatrick Pty Limited v Minister for Planning (No.5) [2008] NSWLEC 183 ("Fitzpatrick") at [39]-[43], and I need not restate the principles here. 29 However, the first issue for the Court to determine is whether the Applicant is entitled to an order for costs at all. 30 The Applicant contends that he is the "successful" party in the Class 4 proceedings, on the basis of his contention that if he had not brought them, it was "likely" that the Respondents would not have pursued their s.96 application and the resulting Class 1 appeal, to render "complying" that which was not. 31 However, the Council, as the responsible public authority, was on notice of apparent non-compliance, without the necessity for Class 4 proceedings to be brought by a neighbour. 32 I am afraid I cannot accept the Applicant's contention on the facts as presented, even as presented on his own behalf. 33 He presumably thought his Class 4 proceedings were well founded, and he contended that the Respondents' s.96 application and their Class 1 appeal were not. In the end, he was wrong in his contentions, was left with nothing to pursue in the Class 4 proceedings, and chose to have them dismissed. 34 In all these circumstances I can see no basis whatever upon which I could award the Applicant his costs of the Class 4 proceedings. The Respondent's claim for costs 35 I turn, therefore, to the question of whether the Court should make a costs order against the Applicant and in favour of the Respondents. 36 Among the cases I surveyed in Fitzpatrick is One.Tel Ltd and Others v Deputy Commissioner of Taxation [2000] FCA 270; (2000) 101 FCR 548 ("One.Tel"), a good example of a case where the Court endorsed the general principle that when one party "effectively surrenders" (as the Applicant did here on 20 August) a costs order usually follows (see Burchett J at [6], and also Kiama Council v Grant [2006] NSWLEC 96; (2006) 143 LGERA 441 at [80]). 37 Where a "supervening event" (here success by the Respondents in the Class 1 appeal) "removes" the subject of the dispute at the heart of the case, a costs order may not necessarily follow (Burchett J at [6]). 38 A genuine belief in the strength of one's case, when launched, does not preclude it failing, whatever the circumstances at its conclusion. As Mr Newport submitted for the Respondent (written submissions par 26), the "supervening event" in this matter (the Respondents' success in the Class 1 appeal) was "always liable to occur and to defeat the proceedings". (See One.Tel and c.f. Palladium Management Pty Limited v Council of the City of Sydney [2008] NSWLEC 100. 39 Mr Newport further submits that it was "unreasonable" of the Applicant to commence the Class 4 proceedings so "precipitately" in March 2007 (see Newcastle City Council v Wescombe [2008] NSWLEC 301, at [16]), in view of (1) the Ganns' position, as put to the Applicant by the Respondents' solicitor, as at 27 February 2007, and (2) the decision of the Council to investigate the complaint about the works which had been done at No.365. 40 These facts predispose the Court to order costs in favour of the Respondent, provided I am satisfied that they are guilty of no "disentitling conduct". 41 On all the evidence I am so satisfied. I find no substance in the submissions detailed in par [27] above regarding the "disentitling" nature of the Respondents' conduct. They were entitled to rely on their consent and the certification, and, once it was put to them that there was a breach, they immediately sought advice and tried to work through the issues with the Council, the certifier, and the Applicant. 42 They were confronted by an aggressively adversarial stand by the Applicant and his representative, and put to the expense and inconvenience involved in defending these proceedings, on top of the costs already properly payable by them to achieve success in the Class 1 proceedings. 43 I find it just, fair and reasonable that the Respondents should recover their costs of the Class 4 proceedings on a party-party basis. Conclusion and Orders 44 The Applicant is, therefore, ordered to pay the Respondents' costs of these proceedings, as agreed or assessed, including the costs they have incurred in respect of the determination of the competing applications for costs. 45 Exhibit A1 may be returned.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.