Murray v Valaire

HIS HONOUR:

This is an application by the applicant for costs made pursuant to the Land and Environment Court Rules 1996, Part 15 Rule 7 which provides as follows: The Court may order the respondent to pay the costs of the proceedings where a respondent satisfies or causes to be satisfied the claim of the applicant after the proceedings have been commenced.
The applicant seeks to tender a bundle of documents which bundle contains a large amount of material to which objection is made by the respondent. No objection is made to the development consent DA24396, to the Class 4 application No. 41052 of 2000 (being the originating process in this proceedings), to the applicant's Points of Claim or to the respondent's Points of Defence.
The respondent objects, however, to the tender of other material in the bundle, which includes the various affidavits filed in the proceedings by the applicant and certain other material.
The tender of the documents is made presumably for the purpose of reading the material, including the affidavit material to which I have referred.
The principal proceedings have not continued to a conclusion. Following the commencement of those proceedings, the local council, Leichhardt Municipal Council, commenced separate proceedings against the respondent arising out of the same facts. The proceedings brought by Leichhardt Municipal Council were ultimately settled by the filing of consent orders on 30 November 2000 in which it was agreed between those parties that the Council's application be dismissed and the injunction be extinguished upon the issue of a new construction certificate relating to work being done on the respondent's land. The orders made in the proceedings brought by Leichhardt Municipal Council also had the consequence of effectively resolving the present proceedings.
The present question is the admissibility of the material in the bundle to which objection is made and in particular the affidavits which were filed in the matter. The leading authority relied upon by both parties is the judgment of McHugh J in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622. In that case McHugh J gave some useful guidelines relating to applications for costs where the proceedings have been either settled or otherwise resolved. I quote from p 624 of that judgment: In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. Where there has been no hearing on the merits, however, the court is necessarily deprived of the factor that usually determines whether or how it will make a costs order. 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. To do so would burden the parties with the cost of a litigated action which by settlement or extra curial 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.
Then his Honour continues (at 625 - 626): 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 costs of the proceedings. This approach has been adopted in a large number of cases. ... 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.
The judgment of McHugh J in Lai Qin has been consistently followed in this court, in particular by Bignold J in Hayden Theatres Pty Limited v Penrith City Council & Ors (1998) 105 LGERA 230. Bignold J expressly refers to that judgment (at 233), and after quoting extensively from McHugh J's judgment, Bignold J states (at 234): In my judgment the application of these principles to the present case leads me to the firm conclusion that the applicant's claim for costs should be refused. In so concluding I deliberately eschew all attempts to try the hypothetical action or to prognosticate the outcome of the case had it been litigated at least to the requisite level of concluding an almost certain outcome.

In Joanou v Randwick City Council (1998) 105 LGERA 237, Bignold J again referred to McHugh J's judgment in Lai Qin (at 240). Bignold J then said (at 241): Again that proposition does not support the applicant's argument that there should be no costs order awarded because, as I have ruled in the course of argument today, I was firmly of the view that it would be inappropriate for me to delve into the case to form some assessment of the strength or weakness of the case or, more particularly, the likely outcome of the case, and for that reason I declined to read the affidavits that had been filed in the case and declined to make any prognostication on the outcome of the case even though I was invited by the second respondent to find that the applicant's case was hopeless. I expressly declined to do so.
More recently Sheahan J in Thompson v Mosman Council [1999] NSWLEC 86, and in Beilby v Viney Pty Limited [2000] NSWLEC 93, referred to Lai Qin and applied it. In Beilby, Sheahan J referred to a number of authorities in this Court including, in particular, Port Stephens Shire Council v Grivas & Ors [1999] NSWLEC 135. That was another decision of Bignold J in which his Honour said, inter alia: In my opinion the council's conduct in litigation was reasonable both in commencing the litigation given the long history of the matter in dispute and sustaining it.
Bignold J continues (at para [24]): The inevitable inference to be drawn both from the comparison of the orders made by consent and the claims to relief made by the council in its originating process as amended together with the supporting documentation that has been introduced into evidence, leads to the inevitable inference that the respondents, in suffering the injunction to go against them, acknowledged the strength of the council's case. No more needs to be said about that because as the authorities indicate it is not appropriate in a disputed costs application to hypothesise or speculate as to what would have happened but for the settlement.
Sheahan J refers to his earlier judgment in Thompson v Mosman and continued at para [52]: I followed the authorities which precluded my analysing the evidence to arrive at what Bignold J described in Jan Yee Australia Pty Limited v Woollahra Council (26 March 1997, unreported) a reasonable prognosis of the fate of the litigation has it been fully litigated. Nevertheless it appears from the judgment that Sheahan J proceeded with the parties' concurrence to look through the evidence, some of which he notes may have been the subject of objection at a hearing.
In my opinion when an application for costs is made pursuant to Part 15 Rule 7 the Court must look at and compare the claims for relief made by the applicant in its originating process or its originating process as amended and then look at the result of the litigation. It should not attempt to embark upon an assessment of the strength or weaknesses of the case by examining the affidavits filed in the proceeding. The terms of the rule are reasonably clear. The Court must determine whether or not the respondent satisfied or caused to be satisfied the claim of the applicant after the proceedings have been commenced. If so then the rule is invoked.
It seems to me that the material to which objection has been made is therefore irrelevant. It is also in my opinion prejudicial. The material, or at least some of it, is of an expert nature which has not been answered in the form of evidence filed by the respondent and which may well have been answered had the matter proceeded to a hearing.
I therefore reject the tender of the material to which objection is made.
CLAY: Your Honour, my application is not limited to Part 15 Rule 7, I've never said so and when your Honour challenged me on that I expressly made it clear - I'm sorry, I obviously didn't make it clear, and Mr Parry, in dealing with his submissions indicated the power under section 69 and I have focussed also, focussed far less on that part and that rule than on the questions of the reasonableness of the parties and whatever test applies within the course of McHugh J's decision, I can point to the unreasonableness of the conduct of the respondent and seek an order for costs. So, you Honour, I apologise if I've misled your Honour but I've never limited the application to Part 15 Rule 7.
HIS HONOUR: Yes, thank you, Mr Clay. I note Mr Clay's reliance also upon the general jurisdiction to make orders for costs under section 69 of the Land and Environment Court Act 1979. Nevertheless the principles referred to by McHugh J in Lai Qin apply to the exercise of the Court's jurisdiction under that section also.

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Judgment (8 paragraphs)

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