Nadilo v Eagleton - [2021] NSWLEC 9 - NSWLEC 2021 case summary — Zoe

NSWNSWLEC

Nadilo v Eagleton

[2021] NSWLEC 9

Land and Environment Court (NSW)|2021-01-29|Before: Moore J

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At a glance

Source facts

Court

Land and Environment Court (NSW)

Decision date

2021-01-29

Before

Moore J

Catchwords

[2000] FCA 270 Ralph Lauren 57 Pty Ltd v Byron Shire Council (2014) 199 LGERA 424
[2014] NSWCA 107 Re Minister for Immigration and Ethnic Affairs
Ex parte Lai Qin (1997)186 CLR 622

Source

Original judgment source is linked above.

Catchwords

[2000] FCA 270 Ralph Lauren 57 Pty Ltd v Byron Shire Council (2014) 199 LGERA 424[2014] NSWCA 107 Re Minister for Immigration and Ethnic AffairsEx parte Lai Qin (1997)186 CLR 622

Judgment (35 paragraphs)

[1]

Introduction

Disputes between neighbours in residential settings are a not uncommon element of proceedings in this Court in a number of its classes of jurisdiction. Fortunately, they are usually not complex matters to be resolved and certainly none last as long as the legendary American feud between the Hatfields and the McCoys, a feud which ran between 1865 and 1901. Nonetheless, the disputes that arise in this Court between neighbours are often vigorously contested and evidenced by varying degrees of animosity between the parties.
Such is the position in these proceedings. The dispute was one between Ms Nadilo (the Applicant) and her neighbours (the Eagletons - the Respondents), on her north-western boundary, concerning the extent of the noise emitted by two air-conditioning units and a heat‑pump hot water heater on the property owned by the Respondents.
Initially, the Applicant commenced proceedings in the Local Court seeking a noise abatement order pursuant to the Protection of the Environment Operations Act 1997 (the POEO Act). For reasons arising from court delays in the Local Court (occasioned by the COVID-19 pandemic), those proceedings (commenced on 19 August 2019) were unlikely to be listed for determination for a considerable period of time.
As proceedings in this Court could reasonably be expected to be concluded to finality in a shorter period of time, on 5 May 2020 the Applicant commenced Class 4 proceedings in this Court seeking to resolve the dispute between her and the Respondents over the acoustic issues concerning the air-conditioners and heat pump on the Respondents' property.

[2]

The Class 4 Summons

It is appropriate, at this point, to set out the terms of the relief sought in the Class 4 Summons filed on 5 May 2020 commencing these proceedings. It will be necessary, later, to consider what was sought and the extent to which it was actually achieved. The terms of the relief sought were: 1 The Respondents , by themselves, their servants, agents and invitees be restrained from using the two air‑conditioning units on land known as YY, Wangi Wangi, NSW, being Lot [redacted] DP [redacted], within the local government area of Lake Macquarie City Council (Property), until the two air‑conditioning units are each certified to comply with; (i) State Environmental Planning Policy (Exempt and Complying Development Codes) 2008 (SEPP 2008), and (ii) Protection of the Environment Operations Act, 1997 (PEOA 1977). 2 The Respondents, by themselves, their servants, agents and invitees be restrained from using the heat‑pump water heater on the Property, until the heat‑pump water heater is certified to comply with; (iii) State Environmental Planning Policy (Exempt and Complying Development Codes) 2008 (SEPP 2008), and (iv) Protection of the Environment Operations Act, 1997 (PEOA 1997). 3 Certification of the two air‑conditioning units in accordance with Order 1 is to be certified by an independent assessor as agreed between the Applicant and the Respondents. In the absence of such agreement the Court will decide an assessor from a list of three assessors to be provided to the Court by the parties. 4 Certification of the heat‑pump water heater in accordance with Order 2 is to be certified by an independent assessor as agreed between the Applicant and the Respondents. In the absence of such agreement the Court will decide an assessor from a list of three assessors to be provided to the Court by the parties. 5 In respect of any certification in accordance with Order 3, the Respondents are to allow the assessor access to the Property, specifically access to operate the air‑conditioners, on reasonable notice. 6 In respect of any certification in accordance with Order 4, the Respondents are to allow the assessor access to the Property, specifically access to operate the heat‑pump water heater, on reasonable notice. 7 In the absence of certification of the two air‑conditioning units within 4 weeks of Order 1, the Respondents must within 6 weeks of Order 1 cause the two air‑conditioning units to be removed. 8 In the absence of certification of the heat‑pump water heater within 4 weeks of Order 2, the Respondents must within 6 weeks of Order 1 cause the heat‑pump water heater to be removed.

[3]

The Applicant's Amended Points of Claim

Leave was granted for filing an Amended Points of Claim in direction 1 in timetabling directions made by the Chief Judge on 27 July 2020 (it is to be noted that the Court's file and electronic records do not show the original Points of Claim as having been filed). The Applicant's Amended Points of Claim was filed on 31 July 2020.
The Amended Points of Claim dealt, at paragraph 20 and the particularisation in support of that paragraph, with what were claimed to be the breaches of the SEPP by the two air‑conditioning units and the heat‑pump hot water system. For present purposes, it is unnecessary to set out the terms of this paragraph of the Amended Points of Claim and its particularisation.
With respect to the issues concerning the Noise Control Regulation, this was pleaded in paragraph 21 of the Amended Points of Claim and the particularisation pleaded in support of it. This paragraph and the accompanying particularisation, together with paragraph 22 of the Amended Points of Claim, are set out below: 21 The Respondents have caused or permitted AC1, AC2 and HW to operate in contravention of the Protection of the Environment Operations (Noise Control) Regulation 2017 (PEO Regulation). Particulars (i) Offensive noise is defined in the Protection of the Environment Operations Act 1997 (PEO Act). (ii) In respect of an air‑conditioner, a relevant test for offensive noise is whether the use of an air‑conditioner is audible within any habitable room of a premises before 8am or after 10pm on any Saturday, Sunday or public holiday or before 7am or after 10pm on any other day - PEO Regulation, regulation 45(a)(i)and (ii). (iii) In respect of a heat‑pump water heater, a relevant test for offensive noise is whether the use of a heat‑pump water heater is audible within any habitable room of a premises before 8am or after 10pm on any Saturday, Sunday or public holiday or before 7am or after 10pm on any other day - PEO Regulation, regulation 53(1)(a)(i) and (ii). (iv) AC1 and AC2 are audible within habitable rooms of the Adjoining Residence within the proscribed periods. (v) HW is audible within habitable rooms of the Adjoining Residence within the proscribed periods. (vi) In causing or permitting AC1, AC2 and HW to operate contrary to the standards of the PEO Regulation the Respondents have contravened the PEO Regulation. (vii) The noise emitted by each of AC1, AC2 and HW is offensive noise. 22 The Court is empowered by s252 of the PEO Act to restrain breaches of that Act and the relevant Regulations.

[7]

The final orders and noted settlement terms

The Consent Orders made by me on 3 December 2020 incorporated a notation setting out the terms of the actions which had been taken on behalf of the Respondents to resolve the acoustic issues of concern to the Applicant. Orders were then made dismissing the proceedings and making an order (amended by me, by consent, by inserting the italicised words appearing in Order 2 below) to ensure that the ameliorative measures with respect to noise from the air‑conditioning units installed by the Respondents were maintained in the future. Costs of the substantive proceedings were reserved. The terms of the notation and the orders appear below: TERMS OF CONSENT ORDERS MADE BY THE COURT NOTATION: 1 The Court notes that the substantive dispute between the parties has been resolved by the following actions: 2 The heat‑pump water heater (HW) has been replaced with a silent electric water heater; 3 The air‑conditioner identified in these proceedings as AC1 has been relocated to an alcove near the air‑conditioner identified in these proceedings as AC2; 4 Both air‑conditioners have been enclosed by an acoustic barrier and roof structure (acoustic enclosure); 5 With that acoustic enclosure in place, AC1 and AC2 have been certified to be compliant with the following noise performance criteria specified as a development standard in clause 2.6(1)(f1) of the State Environmental Planning Policy (Exempt and Complying Development Codes) 2008 (noise criteria): (i) no more than 5dB(A) above the ambient background noise level measured at any property boundary, from 7am to 10pm (ii) not audible in habitable rooms of adjoining residence, from 10pm to 7am; 6 Certification has been achieved by all of the above actions in combination. ORDERS 1 Proceedings dismissed. 2 Without admissions, the Respondents are to ensure that AC1 and AC2 meet on an ongoing basis the Development Standards contained in clause 2.6 of the State Environmental Planning Policy (Exempt and Complying Development Codes) 2008 unless development consent is otherwise obtained. 3 Costs reserved.

[10]

Further matters in this Court

It is to be observed that, on 3 July 2020, I heard an application made on behalf of the Applicant for interim injunctive relief pending determination of the substantive issues raised in the proceedings. I granted interim injunctive relief of a more limited nature than that which had been sought by the Applicant (Nadilo v Eagleton [2020] NSWLEC 95) and ordered, at [36(3)], that there be no order for costs arising out of that hearing. As a consequence, as later discussed in my setting out the evolution of the costs orders sought by the Applicant in these costs proceedings, costs associated with those interlocutory proceedings do not require consideration further.
Second, proceedings commenced by the Respondents, by Notice of Motion filed on 17 June 2020, seeking a stay of these Class 4 proceedings pending finalisation of the Local Court proceedings were dealt with by Preston CJ on 27 July 2020. His Honour dismissed the stay application, by consent, making no order for costs in doing so.
In conjunction with those stay application proceedings, his Honour set the relevant procedural timetable necessary to effect the evidentiary and other requirements necessary to be fulfilled prior to the conducting of the final hearing in the Class 4 matter, a hearing scheduled for 3 and 4 December 2020. Although issues of compliance, or otherwise, with that timetable potentially required some later consideration, the stay proceedings do not require to be addressed further in these costs proceedings (save to the extent necessary, in setting out the evolution of the costs orders sought by the Applicant in these costs proceedings before me).
It is pertinent, at this point, to record direction 2 of the timetabling directions made by his Honour. That direction was in the following terms: 2 Pursuant to r 31.19 of the Uniform Civil Procedure Rules 2005 the respondents are granted leave to adduce expert evidence from Brad Wyber, acoustics expert, and Greg Dawson, air-conditioning expert.

[13]

The relevant provisions of the SEPP

The SEPP is a beneficial and facultative environmental planning instrument, one which permitted, if the relevant provisions of the exempt development code potentially here engaged were satisfied, installation without development consent of the heat pump and air‑conditioners.
The SEPP contains, in cl 1.5(1), definitions of various terms used in the provisions of the SEPP. Two of those definitions are relevant in the context of these proceedings. They provide an understanding of the temporal operational matters engaged for the purposes of understanding issues giving rise to the acoustic impact disputes between the Applicant and the Respondents. Those two definitional elements are in the following terms: off peak time means any time other than peak time. peak time means - (a) the time between 8:00 am and 10:00 pm on any Saturday, Sunday or public holiday, or (b) the time between 7:00 am and 10:00 pm on any other day.
For the purposes of these proceedings, the relevant elements of the exempt development code are those relating to air‑conditioning units (contained in cll 2.5 and 2.6(1)(f1) for air‑conditioning units used for residential purposes) and those relating to hot water heaters (contained in cll 2.46A and 2.46B).
The relevant air-conditioning provisions are in the following terms: 2.5 Specified development The construction or installation of an air-conditioning unit is development specified for this code. 2.6 Development standards (1) The standards specified for that development, if for residential uses only, are that the development must - (a) …, and (b) …, and (c) …, and (d) …, and (e) …, and (f) …, and (f1) be designed so as not to operate - (i) during peak time - at a noise level that exceeds 5 dB(A) above the ambient background noise level measured at any property boundary, or (ii) during off peak time - at a noise level that is audible in habitable rooms of adjoining residences, and (g) …, and (h) ….
The relevant hot water heater provisions are in the following terms: 2.46A Specified development The construction or installation of a hotwater heater or a hotwater storage tank is development specified for this code. 2.46B Development standards The standards specified for that development are that the development must - (a) …, and (a1) if it uses a heat‑pump water heater, be designed so as not to operate - (i) during peak time - at a noise level that is more than 5 dB(A) above the ambient background noise level measured at any property boundary, or (ii) during off peak time - at a noise level that is audible in habitable rooms of adjoining residences

[14]

The relevant provisions of the POEO Act

The POEO Act provides, in s 323, the power for the Governor to make regulations generally and, as nominated, with respect to the matters set out in Sch 2 to the Act. This section is in the following terms: 323 Regulations (1) The Governor may make regulations, not inconsistent with this Act, for or with respect to any matter that by this Act is required or permitted to be prescribed or that is necessary or convenient to be prescribed for carrying out or giving effect to this Act. (2) In particular, the regulations may make provision for or with respect to the matters set out in Schedule 2.
As noted immediately above, s 323 of the POEO Act specifically nominates matters that are set out in Sch 2 to that Act as being ones with respect to which regulations may be made. That schedule, in cl (3) Noise and cl 11 Time Restrictions, sets out relevant matters which may be the subject of such regulations. The elements of these clauses, relevant to these proceedings, are set out below: 3 Noise (1) Prohibiting or regulating the emission of noise from premises (whether or not those premises are a public place). 11 Time restrictions Prohibiting or regulating the carrying out of any activity, or the use or operation of any article, at any specified time for the purpose of preventing or limiting noise or other pollution.
Also requiring consideration, as a consequence of the pleadings in the proceedings, is the (potential) operation of s 252 of the POEO Act. This provision is relevantly in the following terms: 252 Remedy or restraint of breaches of this Act or regulations (1) Any person may bring proceedings in the Land and Environment Court for an order to remedy or restrain a breach of this Act or the regulations. (2) Any such proceedings may be brought whether or not proceedings have been instituted for an offence against this Act or the regulations. (3) ... (4) ... (5) ... (6) If the Court is satisfied that a breach has been committed or that a breach will, unless restrained by order of the Court, be committed, it may make such orders as it thinks fit to remedy or restrain the breach. (7) ... (8) In this section - breach includes a threatened or apprehended breach.

[15]

The relevant provisions of the Noise Control Regulation

The power provided by s 323(2) and Sch 2(3) and (11) of the POEO Act has been exercised by the making of the Noise Control Regulation. Two clauses in this regulation are relevant. The first of those provisions relates to air‑conditioners on residential premises, whilst the second of them relates to heat-pump hot-water services. These two provisions are set out below: 45 Use of air‑conditioners on residential premises A person is guilty of an offence if - (a) the person causes or permits an air‑conditioner to be used on residential premises in such a manner that it emits noise that can be heard within any room in any other residential premises (that is not a garage, storage area, bathroom, laundry, toilet or pantry) whether or not any door or window to that room is open - (i) before 8 am or after 10 pm on any Saturday, Sunday or public holiday, or (ii) before 7 am or after 10 pm on any other day, and (b) within 7 days of doing so, the person is warned by an authorised officer or enforcement officer not to cause or permit an air‑conditioner to be used on residential premises in that manner, and (c) the person again causes or permits an air‑conditioner to be used on residential premises in the manner referred to in paragraph (a) within 28 days after the warning has been given. Maximum penalty - 100 penalty units in the case of a corporation or 50 penalty units in the case of an individual. 53 Use of heat pump water heaters (1) A person is guilty of an offence if - (a) the person causes or permits a heat pump water heater to be used on residential premises in such a manner that it emits noise that can be heard within any room in any other residential premises (that is not a garage, storage area, bathroom, laundry, toilet or pantry) whether or not any door or window to that room is open - (i) before 8 am or after 10 pm on any Saturday, Sunday or public holiday, or (ii) before 7 am or after 10 pm on any other day, and (b) within 7 days of doing so, the person is warned by an authorised officer or enforcement officer not to cause or permit a heat pump water heater to be used on residential premises in that manner, and (c) the person again causes or permits a heat pump water heater to be used on residential premises in that manner within 28 days after the warning has been given. Maximum penalty - 100 penalty units in the case of a corporation or 50 penalty units in the case of an individual. (2) In this clause - heat pump water heater means a device that heats water using the energy generated from the compression of a gas.

[16]

The evolution of the costs application

The Applicant's Notice of Motion seeking her costs of these proceedings was filed on 16 December 2020. The primary orders sought were in the following terms: 1 The Respondents are to pay the Applicants costs of and incidental to these proceedings. 2 In the alternative, the Respondents are to pay the costs of and incidental to these proceedings on an indemnity basis from 5 May 2020.
As I had, in my interlocutory decision given on 3 July 2020, ordered that each party was to bear their own costs of that interlocutory hearing, I enquired of Ms Pearman whether the scope of the above proposed orders was intended (as it appeared to be framed to do) to revisit my costs determination on that occasion.
I also enquired as to whether the order was intended to encompass the costs of the interlocutory stay proceedings which had taken place before Preston CJ. Ms Pearman sought instructions on these matters and subsequently advised me that it was not intended to seek to have the costs of either of those elements of the proceedings encompassed by the costs order sought by the Notice of Motion.
As a consequence, an Amended Notice of Motion was e-mailed to my Associate proposing that the alternative substantive orders now be in the following terms: 1 With the exception of costs of, and incidental to: a. the injunction hearing dated 3 July 2020, and b. The Respondents' stay application motion listed for hearing on 27 July 2020 the Respondents are to pay the Applicant's costs of and incidental to these proceedings. 2 In the alternative, with the exception of costs of, and incidental to: a. the injunction hearing dated 3 July 2020, and b. The Respondents' stay application motion listed for hearing on 27 July 2020 the Respondents are to pay the costs of and incidental to these proceedings on an indemnity basis from 5 May 2020.
These proposed amendments were not opposed, and leave was granted to amend in the terms set out above.
As can be seen from each of these sets of proposed orders, the indemnity costs element sought in the second of each of them was proposed to operate from 5 May 2020, the date of commencement of these Class 4 proceedings.
During the course of her submissions, Ms Pearman took me to a letter from her instructing solicitor, Mr Dunn, to the Respondents' solicitor. This letter, dated 28 August 2020, contained, inter alia, what was said to be a Calderbank offer (Calderbank v Calderbank [1975] 3 All ER 333) from the Applicant proposing settlement of the proceedings on terms outlined therein. The relevant terms of the offer are later set out.
It was clear from Ms Pearman's submissions that the failure of the Respondents to accept this offer during its currency (the offer being expressed to lapse 21 days later - at 4.00 pm on 18 September 2020) provided the foundation for the Applicant's proposal for an indemnity costs element to arise from this costs proceeding.
I enquired of Ms Pearman as to what was the basis upon which indemnity costs were said to be potentially available to be ordered against the Respondents from 5 May 2020 - the date of the commencement of the proceedings. Ms Pearman indicated that that which was sought was, contrary to the relevant proposed original and amended orders, that indemnity costs were sought from the date when the Calderbank offer lapsed.
As a consequence, Ms Pearman indicated that leave was sought to amend, further, the terms of the second alternative proposed costs order. Such further amendment was not opposed by Ms Nurpuri. I indicated that, when a Further Amended Notice of Motion was provided incorporating this change, formal leave would be granted to give effect to the proposed amendment. A Further Amended Notice of Motion was subsequently transmitted to my Associate with the proposed operative orders now being in the following terms: 1 With the exception of costs of, and incidental to: a. the injunction hearing dated 3 July 2020, and b. The Respondents' stay application motion listed for hearing on 27 July 2020 the Respondents are to pay the Applicant's costs of and incidental to these proceedings. 2 In the alternative, with the exception of costs of, and incidental to: a. the injunction hearing dated 3 July 2020, and b. The Respondents' stay application motion listed for hearing on 27 July 2020 the Respondents are to pay the costs of and incidental to these proceedings on the ordinary basis from 5 May 2020 until 4pm on 18 September 2020 and on an indemnity basis from 4pm on 18 September 2020.
Leave was therefore granted to rely upon the Further Amended Notice of Motion.

[17]

The evidence on the costs application

The evidence on the costs application was contained in affidavits. The affidavits read on behalf of the Applicant were:

Two affidavits of Mr Digby Dunn, the Applicant's legal representative (dated 18 December 2020 and 25 January 2021)

The affidavits read on behalf of the Respondents were:

Two affidavits of Mr Jason Eagleton (dated 29 October and 30 November 2020); and
An affidavit of Ms Kathryn Lewis, the Respondents' legal representative (dated 18 January 2021).

Only one of these, the affidavit from Mr Eagleton of 30 November 2020, was subject to objection in its entirety. The objection to this affidavit was based on its timing, being deposed only three days prior to the originally scheduled date for the substantive hearing commencing. The Applicant's objection to this affidavit had been conveyed to the Respondents' legal representative by e‑mail dated 1 December 2020 (Mr Dunn's affidavit of 25 January 2021 at paragraph 8(c) and Annexure J). Because of this objection, no detailed evidence in response had been prepared and served for the Applicant (although Mr Dunn's affidavit of 25 January 2021 did, to some extent, respond to matters contained in the objected to affidavit).
Although the lateness of this affidavit might well have impacted on whether it would have been admitted had the substantive hearing gone ahead when scheduled, I was satisfied that the period of nearly two months (which had elapsed between its provision to the legal representative of the Applicant and the date of the costs hearing) was sufficient for any potential prejudice to the Applicant to have been cured by evidence in response and that, thus, there was no basis to reject this affidavit from Mr Eagleton.
Several of the affidavits made reference to material contained in paragraphs of other affidavits, which had been filed in the Evidence Book that had been prepared for the substantive hearing. Those elements were available to me in electronic form. Those elements, by those references, were incorporated, without objection, in the evidence for the relevant party on this costs application.
Wide ranges of material were exhibited to various of the affidavits. Necessary reference to, or quotation from, that material is made during the course of this decision.

[18]

The expert evidentiary material

I have earlier noted, the Local Court proceedings which had been commenced by the Applicant in 2019. For the purposes of those proceedings, the Applicant had commissioned Mr Davenport to provide an expert report on the noise issues pressed by the Applicant concerning the air‑conditioning units and the hot water heater. Prior to the commencement of these Class 4 proceedings, the question of non-compliance of this evidence with relevant UCPR expert evidence requirements had been raised by the Respondents' legal representative. In the context of those Local Court proceedings, Mr Dunn had advised that this would be rectified. By the time that Mr Davenport's material came to be served in the Class 4 proceedings, it had been rendered compliant with those formal requirements of the UCPR.
I have earlier noted that, on 27 July 2020, the Chief Judge had granted the Respondents leave to adduce expert evidence, with Mr Brad Wyber being the person nominated on behalf of the Respondents to give expert acoustic evidence. The expert evidence from Mr Wyber was directed to be served by 19 October 2020 and a Joint Expert Report was required to be served by 16 November 2020.
Mr Eagleton's affidavit of 29 October 2020 records, at paragraph 19, that further noise testing of the air‑conditioning units was carried out on 14 October 2020. The report of that testing (annexed to the affidavit at "R") was dated 18 October 2020 and was prepared by Mr Wyber. On page 4 of that document, Mr Wyber expresses conclusions concerning noise levels. However, Mr Wyber concluded the report by describing his qualifications (at page 6) in the following terms: Air conditioning and refrigeration technician with 32 years industry experience. Contractor license 153726C. ARTKI C licence AU34502. FPAS accreditation F050364A. I have been involved with numerous air‑conditioning and ventilation noise correction projects in various local government areas.
By e-mail of 27 July 2020, Mr Dunn sought, inter-alia, to be provided with Mr Wyber's contact details in order to pass them on to Mr Davenport to enable contact to be established between them.
On 6 August 2020, the Respondents' legal representative advised, inter alia, that those details would not be provided, as it was appropriate that all communication occur through the parties' legal representatives. On 14 August 2020, Mr Dunn advised the Respondents' legal representative that the request for Mr Wyber's contact details was solely for the purposes of enabling the two acoustic experts to communicate directly with each other to make the necessary lot‑logistical arrangements for attending the site to carry out the required testing (Annexures D, F and H of Mr Dunn's affidavit of 16 December 2020).
However, on 2 November 2020, an expert report from Mr Rodney Stevens of Rodney Stevens Acoustics Pty Ltd was filed with the Court. On 3 November 2020, the Registrar granted leave for the Respondents to rely on Mr Stevens for the purposes of expert acoustic evidence.
As a consequence, the joint conferencing between Mr Davenport and Mr Stevens (as the now involved acoustic experts) was not finalised until 17 November 2020. A copy of this Joint Expert Report formed Annexure N to Mr Dunn's affidavit of 16 December 2020. The Joint Expert Report records, at paragraph 10, noise levels from the air‑conditioning units at relevant locations as measured on 27 October 2020. At paragraphs 11 and 12 of the Joint Expert Report, the following agreed positions are recorded: 11 Noise levels are 2 dB above SEPP 2008 criteria during the daytime and 7 dB above the SEPP 2008 criteria during the evening. 12 Noise levels from individual air‑conditioning units are likely to exceed peak SEPP 2008 criteria during the evening.

[21]

The bedroom window(s) "red herring"

I have earlier noted that I had declined to reject Mr Eagleton's affidavit of 30 November 2020 on the basis of the timing of its preparation being too proximate to the date set for the substantive hearing of the dispute between the parties (had this necessitated going to trial). However, although the affidavit was not rejected on this basis, it is also necessary to consider the extent to which it might be given any weight in these costs proceedings (because of matters addressed by it being irrelevant, in the circumstances).
This aspect of the affidavit requires consideration as the affidavit raised matters relating to whether or not audibility, in the Applicant's bedroom, of the challenged equipment which had been installed by the Respondents only arose as a consequence of alterations to the fenestration of the Applicant's bedroom.
The propositions arising from this affidavit, summarised in short compass, were that: 1. The existing bedroom fenestration at the time the Applicant purchased her house comprised two windows facing the Respondents' property; 2. These windows had been replaced by the Applicant with a single window; 3. This alteration to the fenestration of the Applicant's bedroom arose as part of a series of additions and alterations made to the Applicant's property where those required development consent from the local council; and 4. Such development consent had not been obtained.
Although some discussion took place concerning this during the course of exchanges between me and counsel during the costs hearing, I am satisfied that, whatever might be the truth or otherwise of what lay behind these assertions (the correct evidentiary position being contested), the fenestration of the Applicant's bedroom is, in reality, a distraction - a "red herring" not requiring consideration or conclusion in these proceedings.
The question of fenestration arrangements in the Applicant's bedroom is clearly irrelevant because, taking the Applicant's case at its highest for this purpose, the Applicant's bedroom is clearly a habitable room for the purposes of cl 45 of the Noise Control Regulation. For reasons later explained, matters of audibility in the Applicant's bedroom would have given rise to an evidentiary contest between the two acoustic experts had the matter gone to trial.
The resolution of such contest would have been necessarily antecedent to the addressing the question of whether audibility in the Applicant's bedroom, if established, resulted from alterations to the Applicant's bedroom fenestration. Only after answering these two questions could the issue arise of whether audibility resulted from the implementation of works requiring development consent in circumstances where such development consent might not have been obtained.
For present purposes, it is also unnecessary to engage with the question of whether or not proceedings alleging breaches of the SEPP (in the quite narrow terms pleaded in these proceeding) would also leave at large the question of whether or not some potential failure to obtain development consent was capable of engagement in these proceedings, when nothing contained in the Respondents' Points of Defence pleaded such a position as a response to the Applicant's pleadings of the breaches of the SEPP.
Forensically fascinating although such an interpretive and factual excursion that might be, it is, fortunately, not one remotely potentially engaged in these proceedings - given the conclusion I later reach concerning the matters pleaded on behalf of the Applicant concerning alleged breaches of the Noise Control Regulation.
I am also satisfied that this is the correct position because, as earlier set out, the SEPP provides, by the definitions of "peak" and "off-peak" times (as applicable to acoustic impacts concerning the Respondents' contested equipment), for testing times in a fashion that differentiates them by setting different acoustic testing locations for each of these time periods. As can be seen from those definitions, one mandated acoustic testing location is at the property boundary, whilst the other is whether or not the contested equipment is audible in a habitable room (here, relevantly, the bedroom of the Applicant's dwelling).
An examination of Mr Davenport's acoustic testing report dated 7 April 2020 clearly discloses that the contested equipment was acoustically non-compliant at the boundary between the parties' properties when tested during the time period relevant for testing at that location. The subsequent testing undertaken during the pendency of these Class 4 proceedings culminated in the position earlier extracted from the Joint Expert Report of Mr Davenport and Mr Stevens.
There is no suggestion made that there had been any change made to the air‑conditioning units in a fashion which increased their acoustic output as measured at the property boundary at the relevant measuring time.
As a consequence, from the commencement of these proceedings until the undertaking of works to the air‑conditioning units that enabled the issue of the compliance certification for them, those units were non-compliant with the requirements of the SEPP, thus establishing an initial and ongoing valid basis for complaint by the Applicant concerning their acoustic impacts based on non‑compliance with the SEPP.
In these circumstances, the fenestration of the Applicant's bedroom is an irrelevance and is to be ignored.

[22]

The Applicant's offer of August 2020

I have earlier noted the fact that, by letter dated 28 August 2020, an offer (said to be a Calderbank offer) was communicated by the Applicant's solicitor to the legal representative of the Respondents. It is now appropriate to set out the entirety of the relevant elements of that letter.
As can be seen from that which is reproduced below, the offer outlined the practical operative elements of the offer; an explanation as to the reasons advanced on behalf of the Applicant as to why the Respondents should accept the offer; setting out the time period (21 days) during which the offer was open to be accepted by the Respondents; and the procedural triggering notation of the offer being a Calderbank one capable of being relied upon for the purposes of a costs application such as this.
The relevant elements of the 28 August 2020 letter were in the following terms: Our client hereby offers to settle this case by entry of Consent Orders to the following effect: 1. Respondents to remove their current heat‑pump water heater and replace it with a standard electric hot water service which does not have a fan or pump, within 14 days of the date of order. 2. Respondents relocate the air‑conditioning unit known in these proceedings as AC1 from its current location to a position adjacent to the current location of the air‑conditioning unit known as AC2, within 28 days from the date of order. 3. Respondents enclose AC1 and AC2 in an acoustic enclosure designed by a qualified acoustic consultant to achieve a noise level that does not exceed 5 dB(A) above the ambient background noise level measured at the closest point on the nearest property boundary, such enclosure to be installed within 42 days from the date of order. "Ambient background noise level" is to be regarded as 30 dB(A) for this purpose, in keeping with the off-peak average background noise level adopted in the report of Martin Davenport dated 22 May 2020 (Table 3, paragraph 43 and Table 5 note 1). 4. Upon certification by a qualified acoustic consultant that the acoustic performance set out above is satisfied upon testing with both AC1 and AC2 operating at maximum capacity, the Applicant will accept this performance as satisfying all criteria under the State Environment Planning Policy (Exempt and Complying Development Codes) 2008 and the Protection of the Environment Operations (Noise Control) Regulation 2017. 5. Certification of the acoustic performance set out above is to be certified by an independent assessor as agreed between the Applicant and the Respondents. In the absence of such agreement the Court will decide an assessor from a list of three assessors to be provided to the Court by the parties. 6. AC1 is not to be operated between the time of relocation until said certification, except for the purpose of testing in the process of said certification. 7. The Court notes that following said certification the parties will enter into a Deed to the effect that none of the signatories to that Deed will take any further action in respect of the subject matter of these proceedings. The Court also notes the agreement of Mr Matt Nadilo to be a signatory to that Deed. 8. If there is no agreement regarding costs, the question of costs is to be set down for hearing by the Court. 9. The hearing dates on 3-4 December are vacated You will note that the timing for replacement of the water heater in this proposal differs from that contained in our open letter yesterday regarding the injunction hearing. This is due to the significant difference in the available time before the relevant hearing dates and the different nature of each hearing. For the reasons set out in that other letter, we anticipate that the water heater may have already been replaced before the expiry date of this offer and/or by the time any consent orders are made in accordance with this settlement proposal. However, the water heater has been included in this offer to ensure that an acceptance of the offer comprises a complete resolution of all matters the subject of these proceedings. If the water heater has already been replaced, proposed order 1 can simply be noted accordingly. This offer represents a genuine attempt to resolve the issues in dispute between the parties in an efficient, timely, practical and cost-effective manner without continuation of litigation to a defended hearing, and provides a significant benefit to your clients in terms of certainty regarding compliance with the relevant planning laws to the effect that no further action will be taken against them in relation to these noise issues, while also avoiding the difficulty and potential uncertainty regarding satisfaction of the off-peak "audibility" noise test. The proposal also provides a significant benefit to your clients in saving the following costs, noting that the only expert evidence obtained to date is that served by the Applicant: Obtaining their own expert acoustic evidence, including joint reporting - Legal representation and expert witness fees for a 2 day contested hearing - Liability for the Applicant's legal costs and witness expenses for that 2 day hearing In light of the current timetable for preparation of evidence for the hearing, this offer remains open until 4pm on Friday 18 September 2020. This offer is made in accordance with the principles of Calderbank v Calderbank. We put you on notice that if this offer is not accepted, the Applicant will seek to rely upon this letter in further support of an application for indemnity costs. We look forward to hearing from you.
Although the present costs application is opposed by the Respondents on a number of bases, as later explained, no submission was made on their behalf suggesting that the above set out offer was, in any technical formal fashion, incapable of being regarded as a potentially valid Calderbank one.

[24]

The Applicant's costs position

The Applicant relied on the summary of principles set out by Preston CJ in Kiama Council v Grant (2006) 143 LGERA 441; [2006] NSWLEC 96, at [80], with this summary being in the following terms: Summary of principles 80 The principles that emerge from these cases are that in a civil enforcement or judicial review case where there has been no hearing on the merits: (a) where one party effectively surrenders to the other party by: (i) discontinuing without the consent of the other party; or (ii) giving undertakings to the Court or submitting to the Court making orders against the party substantially in the terms or to the effect claimed by the other party; the proper exercise of the costs discretion will ordinarily be to make the usual order as to costs, unless there is disentitling conduct on the part of the other party; and (b) where some supervening event or settlement so removes or modifies the subject of the dispute that no issue remains except that of costs, the proper exercise of the costs discretion will ordinarily be to make no order as to costs unless: (i) one of the parties has acted so unreasonably that the other party should obtain the costs of the action; or (ii) even if both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried so that the party should obtain the costs of the action.
In this context, it is to be observed that, in adopting this summary, his Honour set out the discussion by McHugh J in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997)186 CLR 622; [1997] HCA 6 (Lai Qin), at 624 and 625, and comments by Burchett J in OneTel Limited v Commissioner of Taxation (2000) 101 FCR 548; [2000] FCA 270 as providing a proper basis for understanding the approach which had been taken in this Court on the question of whether or not to order costs in Class 4 of the Court's jurisdiction.
This approach, adopted by Preston CJ in those proceedings at first instance in Kiama Council v Grant, was, more recently, considered by the Court of Appeal in Ralph Lauren 57 Pty Ltd v Byron Shire Council [2014] NSWCA 107; (2014) 199 LGERA 424 (Ralph Lauren). Preston CJ wrote the judgement in Ralph Lauren (with Beazley P and Ward JA agreeing). His Honour canvassed the broad principles governing costs orders in circumstances such as these at [20] to [34].
Ms Pearman submitted that, when tested against these approaches, the Applicant's position fits squarely within their boundaries and provides the necessary basis upon which I should conclude that the Applicant is entitled to a costs order in her favour.
The specific factual propositions advanced in support of this submission can be set out comparatively briefly. These are: 1. The substantive outcomes set out in the notation to the Consent Orders made by me on 3 December 2020 (as earlier set out) make it clear that there was an effective surrender or capitulation by the Respondents with respect to all the matters pressed by the Applicant from the commencement of the Class 4 proceedings; 2. The Applicant had an entirely proper basis for commencing the proceedings, a basis that was made known to the Respondents prior to the commencement of the proceedings by service of the expert report of Mr Davenport of 7 April 2020; 3. It was appropriate that I should conclude that the Applicant would inevitably have been successful in the proceedings and that, in this context, reaching such a conclusion did not require me to undertake any hypothetical consideration of the merits of the Applicant's case, as the agreement between the acoustic experts (earlier set out) clearly established that there was no dispute that this was the case; 4. Although the Respondents did not, ultimately, rely on the report prepared by the (then) approved acoustic expert for the Respondents, his acoustic readings conducted on 17 September and 14 October 2020 demonstrated that the air‑conditioning units were acoustically non‑compliant (Mr Eagleton's affidavit of 29 October 2020 at Annexure R); 5. The Applicant's conduct, as disclosed in the correspondence between the parties' legal representatives, throughout the course of matters leading up to the scheduled (but rendered unnecessary) final hearing dates was entirely reasonable, including the Applicant's preparedness to provide access to her property for the purposes of the Respondents' acoustic experts undertaking noise testing for the purposes of obtaining results to be assessed against the requirements of the SEPP. This approach included permitting the Respondents' second acoustic expert access to the Applicant's property prior to leave being granted to the Respondents to rely on expert evidence from this new expert; 6. Citing Preston CJ in Ralph Lauren at [26], Ms Pearman submitted that the effective surrender by the Respondents, as a consequence of the rectification works carried out and the giving of the ongoing undertaking (albeit one without admissions), demonstrated the unreasonableness of the Respondents' conduct; 7. The replacement of the heat‑pump hot water heater with a new acoustically compliant hot water system, coupled with the fact that the additional acoustic measures applied to the air-conditioning units (resulting in certification of compliance being issued) only occurring very late in the process leading up to the scheduled final hearing dates, meant that the Respondents were clearly unreasonable in their approach to the Applicant's concerns, concerns which provided a proper foundation for the commencement of these Class 4 proceedings.
The position, overall, advanced by Ms Pearman in support of the Applicant's proposal that I should "otherwise order" was encapsulated in paragraphs 76 and 77 of her written submissions in the following terms: 76 Had the Respondents properly engaged with the Applicant's evidence at an earlier date within the Proceedings, and by appointing a properly qualified acoustic expert, the Proceedings could have been resolved at earlier date than the first day of the hearing. The Respondents were in possession of the relevant evidence prior to the first return date of the Proceedings on 5 June 2020. 77 The notation to the consent orders made by the Court on 3 December 2020 records the manner in which the proceedings have been resolved. The notation demonstrates that the Proceedings have been resolved substantially in accordance with the prayers for relief sought by the Applicant in the Summons commencing the Proceedings.
It is to be noted that Ms Pearman's submissions did not expressly address the elements of the relief pleaded in the 5 May 2020 Summons concerning compliance with the POEO Act and the Noise Control Regulation.
In this regard, although Mr Wyber noted air‑conditioning unit audibility in the Applicant's bedroom (affidavit of Jason Eagleton of 29 October 2020 at Annexure R, page 57), this is not relevant as the acoustic evidence proposed to be relied upon at trial by the Respondents was from Mr Stevens and there is no evidence that Mr Wyber's report had been re-served on behalf of the Applicant for any purpose.
Matters concerning the POEO Act and the relevant Noise Control Regulation provisions made pursuant to it will require subsequent consideration.

[25]

The Respondents' costs position

There is no disagreement advanced on behalf of the Respondents with the broad framework of principles within which this costs application is to be measured. However, in her written and oral submissions, Ms Nurpuri explained why the Respondents submitted that there was no proper basis for any costs order to be made in favour of the Applicant.
Without meaning any disrespect to her, she explained the Respondents' general position succinctly in her written submissions at paragraphs 16 to 21. These paragraphs were in the following terms: 16 The relief sought by the Applicant included that of a restraining nature in relation to the use of the heat‑pump water heater and the air‑conditioning units until such time as certification had occurred with the with the State Environmental Planning Policy (Exempt and Complying Development Codes 2008 (Exempt SEPP) and the Protection of the Environment Operations Act 1997 (POEO Act). 17 The Respondents filed their Points of Defence on 30 October 2020. In particular, the Points of Defence identified critical issues with the Applicant's pleadings and the references to the POEO Act, such that no breach of the POEO Act had been made out by the Applicant. Despite this, the Respondents at all times acted reasonably in the proceedings. 18 Notwithstanding measures that had been undertaken in 2019 and early 2020, advice received from Lake Macquarie City Council on multiple occasions confirming compliance with the Exempt SEPP, and attempts made to resolve the dispute outside of Court, between August and November 2020, the Respondents undertook further works to the heat‑pump water heater and air‑conditioning units at considerable expense to appease the Applicant. 19 Part of the works undertaken by the Respondents included the replacement of the heat‑pump water heater to a silent version. 20 The Respondents did not sit idle and await the conclusion of the proceedings, but rather took proactive steps in order to resolve the dispute, despite the position they took in response to the Summons and Amended Points of Claim. 21 The Respondents contend, having regard to the following matters, that the Applicant's Motion ought be dismissed: (a) There has been no unreasonable conduct on the part of the Respondents in the proceedings. (b) The Respondents have taken proactive steps since 2019, and throughout the course of the proceedings, to address the Applicant's complaints despite having been informed by Council on numerous occasions that the development on the Land was compliant with applicable planning instruments. (c) The Respondents engaged and cooperated with requests to conduct noise testing on numerous occasions. (d) There has been no hearing on the merits, and in light of the pleadings, it is not a matter in which it can be said that the Applicant would have almost certainly succeeded in the relief sought if the matter had been fully tried.
As can be seen above, although not developed to any great extent in her oral submissions, Ms Nurpuri proposed, in her written submissions, at paragraph 17, that no breach of the POEO Act had been made out by the Applicant.
Although her written submissions proposed that the Applicant should be ordered to pay the Respondents' costs of the proceedings, I noted that, during the course of the hearing, Ms Nurpuri proposed that the appropriate costs order of the substantive proceedings should be that each party bear its own costs.

[29]

Matters arising concerning the POEO Act and the Noise Control Regulation

I have earlier set out the relevant provisions of the POEO Act and the Noise Control Regulation as are potentially engaged for the purposes of paragraphs 21 and 22 of the Applicant's Amended Points of Claim and the response to those elements set out in the Respondents' Points of Defence.
Consideration of these matters is necessary because, in her written submissions, Ms Nurpuri advanced the proposition that the Applicant could not have succeeded with respect to these POEO Act‑based elements pressed on behalf of the Applicant. This proposition, I am satisfied, is correct. It is necessary to explain why.
In this context, it is appropriate to note that, in paragraph 21(b) of the Respondents' Points of Defence, it is correctly noted that a party cannot be charged with a breach of cl 45 of the Noise Control Regulation unless an authorised officer has given a warning in the fashion that can be seen in cl 45(b), as earlier set out. To that extent, the defence response on this point is correct. It is also irrelevant.
The lack of relevance arises as a consequence of s 252(2) of the POEO Act (also earlier set out) and the express definition in s 252(8) of the term "breach" to include "apprehended breach". For present purposes, it is sufficient to note that restraining an apprehended breach of the cited term in the Noise Control Regulation does not mean that all elements necessary for conviction of the offence are established in their entirety; it is sufficient that the triggering factual basis for complaint is potentially capable of being established in its entirety.
In the present circumstances, on Mr Davenport's evidence (although, it is to be acknowledged, contested by that of Mr Stevens as earlier set out), there would have been a reasonable (if contestable) basis upon which to advance the proposition that the noise from the Respondents' air-conditioning units was audible in the Applicant's bedroom. However, critically for that which I am presently considering, this is not an uncontroverted position as Mr Stevens' evidence disputed this proposition.
There is, therefore, no proper basis upon which I can now find that, had the matter gone to trial, it was inevitable that I would have concluded that an apprehended breach of cl 45 of the Noise Control Regulation would have been established. The absence of inevitability of such a conclusion (such absence being the necessary consequence of Mr Stevens' written evidence set out in paragraph 18 of the Joint Expert Acoustic Report with Mr Davenport) means that, for the purposes of the present costs application, a hypothetical trial which is forbidden by Lai Qin would have needed to be undertaken by me.
Even if I was minded to do so (which I am not), there is no valid basis on the evidence presently before me that could have enabled me to find that the Applicant would have established, at trial, a proper basis upon which I could have concluded that the apprehension of a breach of cl 45 of the Noise Control Regulation had been established.
Even if I was prepared to assume, with respect to the heat‑pump hot water system and its removal and replacement with silent technology (an event which took place before Mr Stevens and Mr Davenport undertook their joint acoustic testing on 27 October 2020), that the noise from it could have given rise (whether by itself or in combination with the air-conditioning units) to such an apprehended breach of the Noise Control Regulation, that would not have been sufficient to give rise to a conclusion at trial that the circumstances which would have then existed (being the audibility or otherwise of the air-conditioning units in the Applicant's bedroom) was inevitable on the basis of the disagreement shown in the expert acoustic evidence earlier set out.

Nadilo v Eagleton

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (35 paragraphs)

Parties

Cases Cited (15)

Cited By (1)