Mosman Municipal Council v Harvey and Fitzgerald

Introduction 1This class 4 challenge was commenced by Council against a land owner (Harvey) and a private certifier (Fitzgerald) on 3 March 2010. Fitzgerald filed a submitting appearance on 16 June 2010. Like many such cases it has a long and rich history. 2The substantive dispute between the parties was ultimately resolved in an extra-curial way, but the Council has chosen not to discontinue the proceedings, nor to seek leave of the court to do so. The proceedings have now lost all utility, and when the matter came on for hearing on 8 March 2011, the Council sought no substantive relief, but pressed for costs from both respondents - a course Mr Eastman (counsel for Fitzgerald) described as both "most unusual" and "procedurally irregular", and probably designed to avoid an almost automatic costs order against it. 3Both respondents resist the Council's claim, but neither seeks costs from the other, nor from Council. Counsel for the respondents agree that the proceedings must be dismissed, once the question of costs has been resolved. 4In order to determine the question of costs, there is clear authority (Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex Parte Lai Qin ("Lai Qin") [1997] HCA 6; (1997) 186 CLR 622 per McHugh J) that the court cannot conduct a hypothetical trial of the substantive questions raised in the proceedings. Because of the complexity of many of these matters and the large amount of communication that takes place between the parties as the trial approaches, it is often difficult for the court to draw the line between a hypothetical trial of the issues and otherwise gaining an impression of the reasonableness of the behaviour on all sides of the proceedings. 5There seems to be no controversy among counsel for the parties that Lai Qin remains good authority on such matters, despite the intervention since 1997 of the Uniform Civil Procedure regime. The absence of a hearing on the merits deprives the parties and the court of the normal factor determinative of costs. In dealing with the matter at hand in Lai Qin, McHugh J acknowledged that it was necessary for him to mention some of the facts of the matter. His Honour said (at 624-625): In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties (3). To do so would burden the parties with the costs of a litigated action which by settlement or extracurial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action (4). In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation. ... Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. ... If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases. 6At 626 his Honour formed an impression that the prosecutrix had an arguable case, but not "strong prospects of success". His Honour continued: If I had to make a prediction about the outcome of her application, I would think that it would probably have failed. However, as I have said it is not the function of a court on a costs application - in most cases at all events - to make a prediction as to the outcome of a hypothetical case. It is enough that an applicant has acted reasonably. (See also Bignold J's judgment in Jan Yee Australia Pty Ltd v Woollahra Council & Anor [1997] NSWLEC 33, and my judgment in Thomson v Mosman Council ("Thomson") [1999] NSWLEC 86). 7It is, therefore, appropriate that I first sketch, in some detail, the history leading to these present proceedings, and the way in which they have been conducted. I have had the advantage of substantial material annexed to various affidavits sworn by the solicitors for the Council and the first respondent, and by the first respondent himself, and can broadly assess the parties' evidence and arguments, without conducting a hypothetical trial: Great Lakes Council v Wilkes ("Wilkes") [2010] NSWLEC 117.