Newcastle City Council v Winwood

5 There is no final order disposing of the proceedings at present. As development consent for demolition of the entire house in question has now been granted by the Council it says that it intends to discontinue these proceedings but has not yet formally done so. The Respondent's counsel argues that it has not consented to the discontinuance and considers the matter could have proceeded to be determined on its merits. Chronology of events 6 A chronology of events was provided to the Court by the Council. A truncated version of relevant dates is as follows:

April 2002 Respondent and his de facto partner become the registered owners of the subject property. 22 April 2002 Respondent is directed by Bob Boyce of Newcastle City Council to cease unauthorised construction work on subject property and apply to the Applicant for development consent. 30 October 2002 Respondent lodges a development application DA 02/2426 for renovation works on the subject property.

14 November 2002 Development consent is granted for DA 02/2426.

20 March 2003 Mark Dwyer (Building Inspector for Applicant) attends subject property to inspect works for the underpinning of the south wall of the dwelling.

25 August 2003 Mark Dwyer attends the subject property and carries out an inspection of the works for the purposes of providing a report. The inspection is undertaken at the request of the Manager of Development Assessment at Newcastle City Council - Mr Brent Knowles.

21 February 2004 The verandah structure on the front of the subject property is demolished by the Respondent. Ian Richardson from Newcastle City Council attends the subject property and speaks to the Respondent.

4 March 2004 The Applicant instructs Sparke Helmore Lawyers to write to the Respondent seeking an undertaking for the reinstatement of the verandah.

12 March 2004 Class 4 Application is filed in the Land and Environment Court. …

23 June 2004 Written undertaking given by the Respondent not to do any further works at the subject property. …

21 October 2004 A development application DA 04/2439 for the complete demolition of the subject building was received by the Applicant. …

2 February 2005 Call-over before Pain J - both parties represented. Undertaking not to demolish communicated to the Court. Further adjournment granted so that Applicant could determine DA 04/2439.

22 February 2005 Applicant granted consent to DA 04/2439. 7 There were a large number of callovers both via telephone and in person before the Court during the course of the matter.

Evidence 8 The Council relied on affidavit evidence from: · Mr Paul Jayne, the Council's solicitor, sworn 24 March 2005; · Paragraphs 1, 7 and 8 of Mr Ian Richardson, Council's Environment Protection Officer, sworn 12 March 2004; · Paragraphs 1, 7 and 8 of Mr Mark Dwyer, the Council's Senior Development Officer, sworn 27 July 2004.

9 The Council's affidavit evidence consisted mainly of conversations that council officers had with the Respondent prior to the commencement of the proceedings, and correspondence from the Council's solicitor to the Respondent during the proceedings.

10 The Respondent relied on the affidavit evidence of: · Mr David Winwood, sworn 30 November 2004; · Mr John Mark Ramsland, sworn 18 October 2004.

11 The Respondent also relied on the affidavit evidence of Mr Jayne, Mr Richardson and Mr Dwyer and the following Council witnesses: · Ms Ulrike Hora, sworn 27 July 2004; · Mr Geoffrey Douglas, sworn 12 March 2004; · Mr Colin Penfold, sworn 27 July 2004. Relevant Provisions 12 The power for the Court to make an order for costs is found in s 69 of the Land and Environment Court Act 1979 ("the Court Act"). Section 69(2)(a) of the Court Act provides:

13 Part 15 r 7 of the Land and Environment Court Rules 1996 ("the Rules") provides:

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 Council's submissions 14 The Council submitted that there were three independent grounds that supported an order for costs in the favour of the Council in these proceedings: (i) Part 15 r 7 of the Rules; (ii) The ground described by Bignold J in Jan Yee Australia Pty Limited v Woollahra Council (1997) NSWLEC 33; and (iii) The ground described by McHugh J in Re Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin (1997) 186 CLR 622.

Ground 1 15 The Council submitted that its Class 4 Application dated 12 March 2004 the Council sought the regularizing and making safe of unauthorised demolition work and the restraining of likely future unauthorized demolition work by the Respondent. For the purposes of Pt 15 r 7 of the Rules, the Council argued that the circumstances demonstrated that an important part of the Council's claim was satisfied. The Council argued that as the Respondent agreed to an undertaking that he would not demolish the building the subject of these proceedings, the Council's claim had been satisfied. As the Council had achieved the substantive result it had sought it should therefore be entitled to its costs pursuant to Pt 15 r 7.

Ground 2 16 In Jan Yee, Bignold J observed that a reasonable basis for a costs order in favour of the Council would exist where: … the proceedings were justifiably commenced, justifiably continued, justifiably settled, and in all probability would have succeeded…

17 The Council argued that the facts demonstrated the reasonableness of the Council commencing litigation. On 4 March 2004, prior to commencing the proceedings, the Respondent sent correspondence requesting that the Respondent give an undertaking to the Council to reinstate the demolished verandah structure. On 12 March 2004, the Council commenced proceedings after the Respondent failed to give such an undertaking. The Class 4 proceedings were brought in the context that there was evidence provided by Council officers that the Respondent was responsible for the demolition of the verandah, the Respondent did not have development consent for that demolition work and that there was a perceived risk of further unauthorised demolition works. The Class 4 proceedings were also brought in the context that the Respondent had made admissions contained in the affidavit of the Respondent sworn 30 November 2004 that he had undertaken work without development consent, had been directed by the Council to cease work and put in a development application and had given an undertaking not to do further work.

18 The Council also submitted that the chronology of events during the proceedings demonstrates that the proceedings were justifiably continued. According to the Council, it could also be said that in all likelihood the Council would have succeeded given that the Respondent had previously given an undertaking to refrain from further unauthorised demolition and the fact that the Respondent provided only an explanation for his actions and failed to provide a legal defence to the proceedings.

Ground 3 19 In Lai Qin, McHugh J at 624 stated: 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. When there has been no hearing on the merits, however, a 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 costs 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…

20 The Council submitted that in light of the chronology of events, the Respondent had acted unreasonably pursuant to Lai Qin and should, accordingly have its costs for the proceedings.

The Respondent's submissions Ground 1 21 In relation to ground 1 the Respondent sought to answer the claim for costs under Pt 15 r 7 of the Rules by raising three matters. Firstly the Respondent alleged that the claim of the Council had not been satisfied. Secondly, the Respondent submitted that the Council had denied the Respondent natural justice. Thirdly, the Respondent relied on the common law defence of necessity.

Ground 2 22 In relation to ground 2, the Respondent submitted, firstly, that the proceedings were not justifiably commenced because the Council was not acting reasonably in requiring the Respondent to give an undertaking to restore the demolished verandah and to refrain from further unauthorised work. Secondly, the Respondent argued that the proceedings were not justifiably continued on the basis of the Respondent's illness during the course of the proceedings. This illness required that the Respondent be committed as an involuntary patient for several weeks. Thirdly, the Respondent submitted that as his assertion that the verandah was a danger to himself and others was not properly investigated by the Council before proceedings were commenced, the proceedings had not been justifiably commenced or continued.

Ground 3 23 In relation to ground 3, the Respondent argued that it had not acted unreasonably in the proceedings and that the Council had acted both unreasonably and outrageously throughout the proceedings. Primarily, this is because the Council, even whilst being urged by the Respondent to do so, had not properly investigated that the verandah was unsafe and therefore had to be demolished. 24 Further, the Respondent argued he should have his costs as he did not act unreasonably because the verandah was unsafe and his demolition of it was justified in the circumstances. Nor was the Council reasonable in determining that he was likely to demolish the rest of the house before obtaining development consent. His view that the whole house would need to be demolished because of its poor state has in any event been vindicated as the Council has now agreed to its demolition.

Finding 25 I have broad discretion, to be exercised judicially, to award costs under s 69 of the Court Act. There has been no final determination of the issues in this case so that there is no result on the "merits" which can guide a costs decision. The usual rule that the winner receive its costs cannot therefore apply here.

Ground 1 26 Ground 1 raises the issue of whether the Council's claim has been satisfied. It is not the case that consent orders have been entered into which in some way reflect the orders and declarations sought by the Council. Rather what the Council relies on is that by virtue of the successful application for development consent for demolition of the house by a prospective buyer, the property now having been sold, the illegal demolition of the verandah has been "regularised". Further, demolition of the house can take place in accordance with a development consent. The relief sought in the Class 4 application is a declaration that the Respondent had carried out development without development consent, an order that the Respondent be restrained from carrying out or causing to be carried out any further demolition of the property unless development consent was obtained, and orders for reinstatement of the demolished verandah. The Council's claim has not been completely satisfied in these circumstances. The history of this matter suggests that a major issue for the Council was the need to ensure that the verandah was reinstated as much as the need to prevent further demolition of the house. That has not been achieved. 27 The Council has been successful in part in that it did obtain an undertaking from the Respondent that he not undertake any further demolition work without obtaining development consent. I do not consider the Council is entitled to all its costs by virtue of the application of Pt 15 r 7. Ground 2 28 Were the proceedings justifiably commenced, continued and settled? (see Jan Yee). It is necessary to consider the chronology of events in this matter as set out at par 5. This shows that proceedings were commenced on 12 March 2004 after the Respondent, having demolished the verandah without development consent, failed to give an undertaking to the Council not to demolish the rest of his house. Given the conversations with the Respondent attested to by the Council officers before the proceedings commenced, I consider the proceedings were justifiably commenced. An undertaking that the Respondent would not demolish the building was given through his solicitor in June 2004 and again to the Court in October 2004. The development application for demolition of the building was lodged in October 2004 and development consent granted on 22 February 2005.

29 Given the basis on which the proceedings were commenced and that now the building is to be entirely demolished, albeit with development consent, I do not consider that the proceedings are "justifiably settled" in the sense that the Council has decided to discontinue the matter without the agreement of the Respondent where it has not achieved all it sought in the Class 4 proceedings. I do not therefore consider the Council's costs ought be paid in full. Ground 3 30 The principles in Lai Qin that where there has been no determination on the merits but one party has nevertheless acted so unreasonably that the other party should obtain its costs, has also been relied on by the Council. It is necessary to look at the conduct of the proceedings rather than any of the "merit" issues in determining reasonableness. The Respondent was admitted as an involuntary and voluntary patient to hospital from 30 April 2004 to 28 May 2004 and continued to experience difficulties for several months thereafter. I do not think the circumstances of this case suggest that the Respondent has acted so unreasonably that the Council should obtain its costs on this basis. For much of the proceedings the Respondent has had medical complaints which I consider would have impaired his ability to participate meaningfully in the proceedings. Given his personal circumstances his behaviour has not been unreasonable.

Respondent's claim for costs 31 Much of the Respondent's case was conducted by way of rebuttal of the Applicant's case.

32 I do not accept that these are criminal proceedings in any way, nor do I accept that the common law defence of necessity applies in proceedings of this nature. These are civil enforcement proceedings commenced pursuant to s 123 of the Environmental Planning and Assessment Act 1979.

33 The major factor relied on by the Respondent is that his behaviour on 21 February 2004 in demolishing the verandah was entirely justifiable because of the danger it posed to any person on the site and possibly the public on the nearby footpath. No expert evidence has been produced to support that assertion. Rather the Respondent has relied on what he says is the failure of the Council to fulfil its responsibility to attend the premises and assess the Respondent's claim that the demolition was necessary on the grounds of safety. I do not consider the Council is under any such obligation to do so.

34 I do not consider there was any denial of natural justice by the Council before proceedings were commenced in the sense that notice was given of the proceedings to the Respondent so that if an undertaking had been given at that time presumably these proceedings would not have commenced.

35 It is not immediately apparent to me that the Respondent was likely to be successful if this matter did proceed to a hearing, as was submitted by his counsel. There does not appear to be any basis on which the Respondent can be awarded his costs. 36 Taking into account all the issues before me, while I consider the proceedings were reasonably commenced, the Council's claim was only partially satisfied and the matter is being unilaterally discontinued. Further, the Council has decided to allow the demolition of the building although it is in a heritage conservation area. I consider that the Respondent has given candid evidence about his actions at the house and his personal difficulties which I also take into account. Given that costs are not punitive but rather compensatory (see Latoudis v Casey (1990) 170 CLR 534) it is still appropriate that the Council receive some of its costs. I consider the Council should receive half its costs of the proceedings. 37 As neither party has been entirely successful in its costs application, I consider each party should pay its costs of the hearing of the costs application.

Orders 38 The Court orders that:

1. That the Respondent pay half the Applicant's costs of the proceedings.
2. Each party is to pay its costs of the costs hearing on 31 May 2005.

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