Palladium Management Pty Limited v Council of the City of Sydney

Australiawide Airlines Ltd v Aspirion Pty Ltd [2006] NSWCA 365 CASES CITED: Kiama Council v Grant (2006) 143 LGERA 441 One.Tel Ltd v Deputy Commissioner of Taxation (2000) 101 FCR 548 at 553 Re Minister for Immigration and Ethnic Affairs and Anor; ex parte Lai Quin (1997) 186 CLR 622

APPLICANT Mr P Rigg (solicitor) SOLICITOR LEGAL REPRESENTATIVES: Deacons RESPONDENT Mr P Clay SOLICITOR Maddocks

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

40840 of 2007 Palladium Management Pty Limited v Council of the City of Sydney

EX TEMPORE JUDGMENT 1 Her Honour: The Applicant discontinued these Class 4 proceedings on 13 February 2008 without the Council's consent. The hearing of the matter had been set down for 15 February 2008. The proceedings concern premises known as the Palladium at 102 Miller Street Pyrmont. The Council now seeks its costs under Rule 42.19 of the Uniform Civil Procedure Rules 2005 (UCPR) which apply in this Court. That provides: (1) This rule applies to proceedings that are discontinued by the plaintiff, as referred to in rule 12.1. (2) Unless the court orders otherwise or the notice referred to in rule 12.1 (2) otherwise provides, the plaintiff must pay such of the defendant's costs as, at the date on which the notice of discontinuance was filed, had been incurred by the defendant in relation to each claim in respect of which the proceedings have been discontinued. 2 The declaration sought in the amended Class 4 application was: A declaration that Development Consent Z96-00095 dated 21 February 1996 for the demolition of existing warehouse and development of a 7 to 10 storey residential building comprising 262 units (6 x bedsits, 37 x 1 bed, 215 x 2 bed, 4 x 3 bed) and 408 basement carspaces, authorises the use of Lot 151, 102 Miller Street, Pyrmont, for the office use comprising residential property management services including letting, general property management and sales service for units in Strata Plan 61131.

History of proceedings 3 The Applicant has been granted three development consents for the premises known as the Palladium as follows:

(i) Z96-00095 dated 6 March 1997 which was for "Demolition of existing warehouse and development of a 7 to 10 storey residential building comprising 262 units (6 x bedsits, 37 x 1 bed, 215 x 2 bed, 4 x 3 bed) and 408 basement carspaces". The area now known as Lot 151 was not referred to as a separate lot in the consent but was indicated on plans as an office/reception area. No specific condition of consent referred to it. That development consent is the subject of these proceedings. (Lot 151 was created when the strata title scheme for the premises was approved). (ii) D/2007/9 dated 12 June 2007 for "Use of reception/office (Lot 151) for caretaking and common property building management, 24 hour concierge services, residential property management services including leasing and sales but only to property within the Palladium". Under Condition 3 there was a trial period for the use which expired on 18 December 2007. This condition was deleted following an application under s 96 of the Environmental Planning and Assessment Act 1979 (EP&A Act) made by the Applicant to the Council on or about 28 November 2007. It was granted by the Council on 31 January 2008. (iii) D/2006/1774 dated 18 December 2006 for "Use of the reception/office area (Lot 151) for letting, property management and real estate sales within the building" and limited to twelve months so that it expired on 18 December 2007. 4 A letter sent by the Applicant's solicitors on 22 May 2007 to the Council stated that: We refer to the development consent Z96-00095 which issued on 21 February 1996 for, inter alia, the use of as a reception/office area. The property is used for caretaking and common property building management, 24 hour concierge services and residential property management services including letting, general property management and sales service for the benefit of the owners of the strata units in the abovementioned Strata Plan. We assert that this use is permitted under development consent Z96-00095 and that the operator of Lot 151 is not bound or restricted by the terms of development consent D2006/1774.

The letter gave notice that proceedings would be commenced in seven days if the Council did not respond confirming that asserted use of Lot 151 was accepted. 5 The letter of 22 May was responded to by the Council's solicitors letter of 25 May 2007 stating that instructions were being sought. Further details of the Applicant's concerns were raised in the letter from its solicitor dated 4 June 2007. That letter focused on the scope of the office activities engaged in on Lot 151. After further correspondence proceedings were commenced on 30 August 2007 and Points of Claim filed 16 October 2007. The amended Class 4 Application with the declaration set out in par 2 was filed on 26 September 2007. 6 In a letter of 13 November 2007 the Applicant's solicitor referred to instructions to lodge an application under s 96 for a modification of D/2007/9 and also referring to these proceedings on foot. In a letter of 21 November 2007 the Council's solicitor replied that the modification of consent D/2007/9 and the consent the subject of these proceedings were unrelated. 7 The next letter from the Applicant's solicitor to the Council was dated 13 February 2008 and is the same date the Notice of Discontinuance was filed. That letter is the first time the development consent D/2007/9 and its modification to delete the time limit in condition 3 is referred to as related to these proceedings. The modification is stated to be the reason why it is unnecessary to continue with these proceedings.

Council's submissions 8 The Council submitted that because the declaration sought in these proceedings uses the word "including", it sought the use of Lot 151 for managing, letting and sales in premises in addition to the Palladium building. That is not an issue related to D/2006/1774 which was referred to in correspondence from the Applicant's solicitor dated 22 May 2007 before proceedings were commenced. Nor is it related to D/2007/9 which was modified under s 96 of the EP&A Act by deleting the time limitation in condition 3. 9 Further the latter consent was not referred to as relevant to these proceedings before they were commenced. The first time these were mentioned was in the Applicant's solicitor's letter sent on the same day the Notice of Discontinuance was filed on 13 February 2007. Further the application for modification was made after these proceedings were commenced on 30 August 2007. The s 96 modification is not a relevant supervening event which would deprive the Council of its costs. It is not an approval identical to the subject matter of these proceedings which rendered these proceedings futile in a legal sense. 10 The Applicant could have clarified the nature of the proceedings at any time and particularly following the Council's solicitor's letter of 21 November 2007. That letter stated that these proceedings and the modification of D/2007/9 were not related. The hearing could have been postponed, for example, to enable the modification application to be processed. Applicant's submissions 11 The Applicant's solicitor submitted that the s 96 modification application in relation to D/2007/9 means that effectively there was no point in continuing these Class 4 proceedings once that was approved. That is a supervening event which has resulted in the proceedings being no longer necessary. The subject matter of the modification application and these proceedings is identical. Costs should not therefore be awarded to the Council. 12 It is clear that the declaration sought in the amended Class 4 application is related to use of Lot 151 only in connection with property management of units within the Palladium building and not in relation to other premises as the Council argued. Finding 13 UCPR r 42.19 applies to the circumstances before me. In Australiawide Airlines Ltd v Aspirion Pty Ltd [2006] NSWCA 365 Bryson JA (McColl and Basten JJA concurring) held in relation to r 42.20(1) (which is similar to r 42.19) that Re Minister for Immigration and Ethnic Affairs and Anor; ex parte Lai Quin (1997) 186 CLR 622 is not readily applicable to decisions under that rule concerning McHugh J's observation that the proper exercise of the costs discretion where there is no "event" will usually mean that the Court will make no order as to costs, at [48]. His Honour also quoted Burchett J in One.Tel Ltd v Deputy Commissioner of Taxation (2000) 101 FCR 548 at 553 where he distinguished between cases where one party effectively surrenders to the other and those cases where there is some supervening event which removes the subject matter of the proceedings so that there may be difficulty in discerning how costs should be awarded. His Honour stated that the provisions of r 42.20 "enhance the initial disposition towards ordering the plaintiff to pay the defendant's costs; but there is no close control over the discretion of the Court to order otherwise…", at [54]. 14 This decision suggests that r 42.19 provides an initial basis for consideration of the exercise of discretion but that the Court continues to have broad discretion to determine how costs should be awarded. The general discretionary matters considered in Kiama Council v Grant (2006) 143 LGERA 441 and the principles summarised at [80] are relevant in that consideration. In this case the Applicant discontinued without the Council's consent two days before the hearing. The Applicant argues there was a supervening event which removed the subject of the dispute (see Kiama at [80(b)]). The Council argues that r 42.19 suggests that the initial approach is that costs ought be paid in these circumstances unless discretionary factors suggest otherwise. There are no such discretionary factors. Further the circumstances here are the same as those referred to in Kiama at [80(a)] as the Applicant has discontinued without consent and should pay the Council's costs. 15 When the correspondence sent before and during the proceedings and the three development consents the subject of submissions (identified earlier in par 3) are considered the meaning of the declaration sought by the amended Class 4 application is unclear. The Council submitted the declaration sought approval to use Lot 151 for property management beyond the Palladium building because of the word "including". The Applicant argued that it was intended to seek approval for use for the purposes specified in it for the Palladium building only, effectively for an indefinite period. That interpretation is not reflected in the declaration or Points of Claim, not surprisingly perhaps, but nor is it clear from the correspondence sent before proceedings were commenced that that was the purpose of seeking the declaration. 16 A third interpretation is that the word "including" is seeking to clarify the office activities to be conducted in Lot 151 for the Palladium building only of "letting, general property management and sales service". As identified above, consent Z96-00095 did not provide any specific conditions for the use of the area now known as Lot 151 but it was described as an office/reception area on the plans approved by the Council as part of the grant of that consent. The correspondence sent by the Applicant's solicitor before the proceedings to the Council supports such an interpretation, particularly the letter dated 4 June 2007. However, the letter from the Council's solicitor dated 22 May 2007 referred to the limits in D/2006/1774. That consent was limited to activities in Lot 151 specified as "letting, property management and real estate sales" within the Palladium building and also was a limited twelve month consent. 17 Whatever the intended meaning of the declaration and the Points of Claim when these were filed, in the case argued on this costs application by the Applicant's solicitor the fundamental issue sought to be clarified by these proceedings is said to be the time limit on the consent in D/2006/1774 rather than the limit of property management activities including sales and letting within the Palladium building. That intended approach is unclear on the pleadings and was not specified in correspondence sent before proceedings were commenced. 18 Further the correspondence from the Applicant's solicitor sent before the proceedings made no reference to D/2007/9 as being a related consent. The first mention of that development consent as being connected to these proceedings is the Applicant's solicitors letter dated 13 November 2007 to which the Council's solicitor responded by stating that consent had no connection to these proceedings. The Applicant's solicitor's letter dated 13 February 2008, the same day that the Notice of Discontinuance was filed, referred to D/2007/9 and explains why the approval of the s 96 modification application was relevant to these proceedings. Given its lateness in the context of these proceedings, it cannot assist in determining the basis of the proceedings identified in earlier correspondence.

19 I agree with the Council's submission that the approval of the modification application of D/2007/9 is not a supervening event relevant to the subject matter of these proceedings as disclosed in the pleadings and the correspondence between the parties up to 13 February 2008. The declaration sought in the Class 4 proceedings is broader than the s 96 modification of D/2007/9. The Council stated in its letter of 22 November 2007 that development consent D/2007/9 was unrelated to these proceedings and the Applicant did nothing to suggest to the contrary until the Notice of Discontinuance was filed. Further the basis stated in correspondence for commencing these proceedings was to overcome the limitations in D/2006/1774. In these circumstances the decision to discontinue was a commercial one and while appropriate if the utility of these proceedings was at an end from the Applicant's perspective, the s 96 modification consent was not directly related to the legal issues in this case. It is not a supervening event suggesting that costs ought not be awarded.

20 As stated in Australiawide Airlines referred to above in par 13, the initial basis for considering a costs application is that identified in the UCPR r 42.19 and discretionary considerations while broad are now informed by the rule as the starting point. Considering r 42.19, there are no discretionary matters which suggest that the Applicant should not pay the Council's costs incurred at the date on which the Notice of Discontinuance was filed. I consider the Council should have its costs paid by the Applicant under r 42.19 of the UCPR and will so order. 21 In terms of the costs of this application for costs, I have not heard specific argument on the matter. Given that the Council has been successful the order would usually be that its costs be paid by the Applicant but before so ordering I will ask the Applicant if it wishes to make submissions in relation to the awarding of costs of the costs argument.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.