Palerma Pty Ltd v Liverpool City Council

SOLICITORS Marsdens Law Group

JUDGMENT: IN THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES 10259 of 2002

20/02/2003 PALERMA PTY LTD Applicant v LIVERPOOL CITY COUNCIL Respondent Judgment

1 By notice of motion filed on 10 October 2002 the respondent ("the council") seeks an order that the applicant pay the costs of these proceedings. History of proceedings 2 On 25 March 2002 the applicant appealed to the Court from the refusal of the council to grant development consent for landfill on land known as 1-67 Orange Grove Road, Liverpool ("the land"). The land is used as a privately owned golf course. 3 The first callover took place on 9 April 2002 and on 26 April 2002 the council filed its statement of issues. A second callover took place on 30 April 2002 at which there was no appearance by the applicant. A third callover took place on 14 May 2002 and on that day, by consent, the hearing of the appeal was fixed for 26 and 27 September 2002. 4 The applicant or its directors had instituted three other proceedings in this Court which were related to the subject land and which were unresolved during the currency of these proceedings. One of such proceedings (proceedings 10167 of 2002) was instituted by Mr Edmond Parilo who is a director of the applicant in these proceedings. In proceedings 10167 of 2002 Mr Parilo appealed against council's refusal of a development application but such proceedings were discontinued on 29 July 2002. The discontinuance resulted from the imminent sale of the land by the applicant. 5 Following the discontinuance of proceedings 10167 of 2002, the solicitors for the council wrote to the solicitor for the applicant on 12 August 2002 enquiring whether, in view of the discontinuance of such proceedings the applicant would be continuing with the present proceedings. Such letter states, inter alia:- We note that you indicated in proceedings 10167 of 2002 that the land the subject of those proceedings was being sold, and it was on that basis that your client discontinued those proceedings. We note that the land the subject of Proceedings 10167 of 2002 involves the same land as the land the subject of Land and Environment Court Proceedings 10255 of 2002. In order to prevent our client incurring any unnecessary legal costs, would you please advise us by 5.00pm on Thursday 15 August, 2002, whether your client intends to proceed with the appeal the subject of Proceedings 10255 of 2002. 6 No reply was received to such letter and accordingly the council prepared itself for the hearing date. On 12 September 2002 it filed and served its statements of evidence and bundle of documents. On 18 September 2002 the council wrote to the applicant's solicitor advising that because of the failure of the applicant to comply with the Court's timetable it would object to the applicant relying on any expert reports at the hearing. 7 On 25 September 2002, being the day prior to the date fixed for hearing, the solicitor for the applicant forwarded a message by facsimile to the council's solicitor which relevantly states:- We confirm that an application will be made on 26 September 2002 to withdraw the above proceedings in that the subject property has been sold. We note your advices that an application will be made for costs. Such application will be opposed. We enclose a copy of our letter to the Court, sent by facsimile today. 8 On 26 September 2002 the proceedings were listed before Commissioner Brown. Such proceedings were thereupon discontinued by the applicant without the consent of the council. Council's submissions 9 The council makes its application for costs pursuant to Pt 11 r 5 of the Land and Environment Court Rules 1996 ("the Court Rules") which provide: 5(1) If a party to any proceedings discontinues them in whole or in part, the Court may, on the application of another party, order the discontinuing party to pay the costs of any party against whom the discontinued claim was brought and who does not consent to the discontinuance. (2) The costs payable to a party under any order made under this rule are to be the costs of the party occasioned by the discontinued claim and reasonably incurred before service of the party of notice on the discontinuance. (3) Nothing in this rule limits the Court's power to order costs if proceedings are withdrawn under rule 2.

10 Additionally the council submits that s 69(2) of the Land and Environment Court Act 1979 ("the Court Act") grants discretion to the Court to award costs and that par 10 of the Land and Environment Court Practice Direction 1993 ("the Practice Direction") provides the guide to the usual practice of the Court as to costs relating to planning and building appeals. That is, costs will not be awarded unless there are exceptional circumstances. The council submits that the conduct of the applicant in these proceedings has been such as to incur unnecessary expense and that such conduct constitutes "exceptional circumstances" justifying an order for costs being made in its favour. 11 The council relies upon the observations of Bignold J in Manly Wharf Pty Ltd v Manly Council (1997) 98 LGERA 245 and in Kentgreen Dural Pty Ltd v Hornsby Shire Council (1999) 103 LGERA 219. In each matter the Court ordered costs against the discontinuing party pursuant to Pt 11 r 5 of the Court Rules. Relying on these authorities the council submits as follows: It is accepted that the discontinuance of proceedings without the consent of the other party is either an exceptional circumstance or an established exception to the Court's practice which, without more, would normally be expected to result in an order for costs in favour of the non-consenting party. 12 The council further claims that the applicant's conduct in the proceedings was unreasonable. Council relies upon Menangle Sand & Soil Pty Ltd v Wingecarribee Shire Council (2000) 108 LGERA 209 wherein Lloyd J considered the principles relating to the award of costs where a discontinuance of planning and building appeals occurs. His Honour said, inter alia:- (c) a relevant consideration in every case is whether the discontinuance was reasonable conduct on a part of the discontinuing party in the circumstances of the case, such as to negate the ordinary cost consequences of a discontinuance of the proceedings. Such conduct may be based on some action by the other party to the litigation or some supervening event beyond the parties' control. The council submits that there was no " supervening event beyond the parties' control" which led to the discontinuance in these proceedings. Instead the discontinuance resulted directly from the applicant's deliberate choice. 13 The council submits that there was no misconduct on its behalf in the litigation which disentitles it from an award of costs in its favour as discussed in Manly Wharf at p.249-250.

Applicant's submissions 14 The applicant submits that the council should have been aware, by the discontinuance of proceedings 10167 of 2002 that the subject land was being sold and that the discontinuance of these proceedings was inevitable. Accordingly it submits that whilst there may have been some confusion caused by the currency of the four proceedings instituted by the applicant, or its associates, the council should have been aware that the hearing of these proceedings would not take place. 15 Additionally the applicant relies upon the decision in Chris Lonergan & Associates v Byron Shire Council [1998] NSWLEC 78 wherein Pearlman J determined that the withdrawal by an applicant in the proceedings shortly before a date fixed for hearing did not necessarily entitle a respondent to an order for costs. Findings 16 Section 69(2) of the Court Act relevantly provides:- (2) Subject to the rules and subject to any other Act: (a) costs are in the discretion of the Court, (b) the Court may determine by whom and to what extent costs are to be paid and … 17 The power granted to the Court is therefore unlimited, except that the discretion invested in the Court cannot be exercised capriciously: see Oshlack v Richmond River Council (1998) 193 CLR 72 per McHugh J at p 96; Latoudis v Casey (1990) 170 CLR 534 per Mason CJ at p. 541, 544-545 and Dawson J at p. 558. An order for the payment of costs is made to compensate a party for the costs which it has incurred, and is not punitive (see Oshlack per McHugh J. at p. 97; Chris Lonergan per Pearlman J at p.2). 18 The discretion conferred by s 69(2) of the Court Act is not to be constrained by the Practice Direction as discussed by the New South Wales Court of Appeal in Maurici v Chief Commissioner of State Revenue (2001) 51 NSWLR 673. Handley JA (at p. 686) determined that the Land and Environment Court Practice Direction 1993 par 10A could not operate as a rigid rule to constrict the Court's discretion. Accordingly the power of the Court to award costs remains unfettered subject only to the requirement that such power be exercised judicially: see Misra v Campbelltown City Council No.2 [Costs] [2002] NSWLEC 63.

19 In Manly Wharf Bignold J described the proper relationship between the Practice Direction and Pt 11 r 5 of the Court Rules "as providing the relevant guidance to the exercise of broad judicial discretion vested in it by s69". His Honour stated at p. 249:- Ordinarily costs will be awarded against a discontinuing party because the discontinuance of the proceedings either (a) satisfies the exceptional circumstances test within the meaning of the Court's Practice Direction or (b) operates as an established exception to that Practice Direction. His Honour's judgment expressly recognises that there are circumstances where such an order would not follow, namely where the discontinuance reflects a " compromise or settlement" of the applicant's claims or if " the party against whom the proceedings have been discontinued…has been guilty of any relevant misconduct in the litigation." : see Manly Wharf at p. 249-250. The Court respectfully adopts such observations. Additionally, the Court adopts the findings of Pearlman J in Chris Lonergan, namely that discontinuance could not " always" constitute an exceptional circumstance entitling the non-discontinuing party to award of costs in its favour. 20 Accordingly there is no rule that discontinuance automatically entitles the non-discontinuing party to an award of costs. In Kentgreen Dural at p.224 Bignold J held that the question to be determined is whether the conduct of the discontinuing party had been sufficiently "reasonable" "to negate the 'ordinary' cost consequences of a discontinuance of proceedings.". 21 The Court does not accept the applicant's contention that the council should have been on notice that discontinuance was inevitable following the termination of proceedings 10167 of 2002. Council's letter of 12 August 2002 specifically asked for clarification of the applicant's intentions in respect of proceedings 10167 of 2002, but council failed to receive an answer. In the absence of any response, council acted prudently in its preparation for a hearing. 22 In answer to the applicant's submissions that it believed that the purchaser may have wished to maintain the proceedings, no such belief was communicated to council, and no excuse is offered for the failure to respond to the council's letter. 23 The applicant's reliance upon Chris Lonergan is misplaced. In that decision the applicant who discontinued at short notice took action immediately he discovered that his solicitors had not actively pursued the proceedings. Accordingly such decision is distinguishable on its facts. In this instance the converse applies. That is, the specific enquiry of the council should have motivated the applicant to respond. 24 The Court finds that the conduct of the applicant from 12 August 2002 was unreasonable. It owed a duty to the other party to the litigation to advise it of the doubt which it claimed existed, so that arrangements could have been made to vacate the hearing date. Instead it permitted the council to believe that the hearing would take place and impliedly knew that council would be incurring costs in the preparation for the hearing. Such conduct also constitutes "exceptional circumstances". Accordingly costs will be awarded in favour of the respondent pursuant to Pt 11 r 5 of the Court Rules, from 12 August 2002.

Orders 25 The Court therefore orders that:

1. The applicant pay the costs of the respondent of the proceedings from 12 August 2002.
2. The applicant pay the costs of this motion.
3. The exhibits be returned.

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