Sader v Elgammal

The amended summons

1. The amended summons filed on 9 June 2023 showing tracked changes from the summons filed on 1 February 2023 is reproduced below: Definitions In this Summons: 2021 Consent means development consent DA 2020/0430 granted on 7 October 2021 by the Council for demolition works and construction of a dwelling house on the Site. 2021 Consent As Modified means the 2021 Consent as modified by development consent modification MOD2022/0136 on 20 October 2022 for development on the Site described therein as "demolition works, construction of a dwelling house (existing boathouse and swimming pool to be retained). The amendments seek to change levels, openings, stairs and fencing and add an external stair and solar panels". Council means the Georges River Council. Construction Certificate means Construction Certificate CCC-26BOW/2021 issued by the Second Respondent on 17 November 2021. External Works Footing Plans means the engineering plans identified as such and prepared by AE Consulting Engineers Revision C dated 1 November 2022. Landscape Plans means landscaping plans and specifications prepared by Dapple Designs, Revision F Dated 21/10/2022, Reference Number LP 01, Sheet 1-9 inclusive. Modification Construction Certificate means construction certificate CCC- 26BOW/2022MOD issued by the Second Respondent and dated 3 November 2022 (as further modified by certificate CCC-26BOW/2022MOD/1 and dated 10 February 2023). EPA Act means Environmental Planning and Assessment Act 1979. Site means Lot 13 DP 14844 located at 26 Bowden Crescent, Connells Point. Relief Claimed 1 A declaration pursuant to section 6.8(2) of the EPA Act that the Modified Construction Certificate has no effect because it was issued after the building work to which it related was physically commenced on the Site to which the 2021 Consent As Modified applies. 2 Alternatively to order 1, a declaration pursuant to section 6.32 of the EPA Act that the plans and specifications or standards of building work specified in the Modification Construction Certificate are not consistent with the 2021 Consent As Modified for the relevant building work, and, to the extent that it incorporates the Landscape Plans and the External Works Footing Plans the Modification Construction Certificate is invalid and of no effect. 3 Further and alternatively to order 2, declarations that: A declaration that 1a) the Landscape Plans depict the erection of buildings and/or the carrying out of works that constitute development requiring development consent, in circumstances where no development consent has been sought or obtained for those works. 2b) A declaration that, contrary to section 4.2(1) of the EPA Act, the Landscape Plans do not comply with the 2021 Consent As Modified in that they: a)i. propose works outside the boundaries of the Site in breach of condition 30; b)ii. depict new retaining walls in breach of condition 33; and c)iii. depict new building works not approved by the 2021 Consent As Modified. 3 Alternatively to order 2, a declaration pursuant to section 6.32 of the EPA Act that the plans and specifications or standards of building work specified in the Modification Construction Certificate are not consistent with the 2021 Consent As Modified for the relevant building work, and, to the extent that it incorporates the Landscape Plans, the Modification Construction Certificate is invalid and of no effect. 4 A declaration that the First Respondent has carried out building works without development consent or a construction certificate in breach of sections 4.2(1) and 6.7(1) of the EPA Act including but not limited to the construction of dincel walls or retaining walls in the foreshore building area adjacent to the staircase to the pool deck., the construction of a walkway on the south-western boundary of the Site, and the construction of piles, beams and floor to the boathouse. 5 An order that unless authorised by a further development consent, the First Respondent by himself, his employees, servants and agents be restrained from carrying out any further building work: a) described in the Landscape Plans; or a)b) described in the External Works Footing Plans; or b)c) on land below the MHWM or land owned by the State of NSW; or c)d) in relation to which there is no applicable development consent. 6 An order that the First Respondent by himself, his employees, servants and agents be restrained from carrying out any building work not in accordance with the plans referred to in and forming part of the 2021 Consent As Modified. 7 An order that the First Respondent, by himself, his employees, servants and agents a) within 7 days cease the carrying out of: i. any building work referred to in the Landscape Plans; i.ii. any building work referred to in the External Works Footing Plans; ii.iii. any building work on the Site which is not in accordance with the plans referred to in and forming part of the 2021 Consent As Modified; and iii.iv. any building work on the Site in respect of which there is no applicable development consent; and b) within 28 days remove, demolish and rectify: i. all buildings, works and structures referred to in order 4 above; and ii. any building work carried out in reliance on the Landscape Plans including the construction of a walkway on the south-western boundary of the Site; iii. any building work carried out in reliance on the External Works Footing Plans including the construction of retaining walls; and c) and dispose of any residual building material following demolition at an authorised waste facility. 8 An order that the First Respondent by himself, his employees, servants and agents be restrained from carrying out any further building work unless and until: a) he obtains a development consent for that building work; and b) he obtains a construction certificate in respect of that building work; and c) he submits to the Georges River Council a landscape plan which is compliant with the 2021 Consent As Modified pursuant to condition 24 of the 2021 Consent As Modified and in accordance with order 8 of Duggan J made in Sader v Elgammal [2022] NSWLEC 107 on 30 September 2022. 9 An order that the Respondents pay the Applicants' costs of these proceedings on an indemnity basis. 10 Such other or further orders as the Court sees fit.

Evidence

1. The applicants tendered a statement of agreed facts dated 24 May 2024 (the SOAF) and a bundle of documents which included planning documentation and correspondence between the parties.
2. The first respondent read the affidavit of Mr Yasser Elgammal dated 13 May 2024 which annexed a stop work order dated 1 February 2023 and the summons in the Council proceedings filed on 2 February 2023.

Factual background

1. The following recitation of the factual background is derived from the SOAF and the Court's inspection of the documents relied upon by the parties.

Planning approval background

1. On 7 October 2021, Georges River Council granted development consent DA 2020/0430 for demolition works and construction of a dwelling house on the site (the 2021 development consent).
2. On 17 November 2021, the second respondent issued construction certificate 26BOW/2021 headed "Construction Certificate Filed: 24/05/2024 19:53 PM 2 Notice of Determination", together with the documents referred to in that document (the construction certificate) (CC 1.0).
3. On 25 August 2022, in the 2022 Sader v Elgammal proceedings Duggan J delivered judgment and declared that the construction certificate was invalid to the extent that it incorporated the plans identified in item 4 of the list of approved plans and specifications, namely landscape designs, prepared by Dapple Designs, Issue D dated 21/10/2021, reference number LP 01, sheet numbers 1-12 inclusive (landscape plan rev D).
4. On 30 September 2022, Duggan J made final orders (including order 8) in the 2022 proceedings as follows (emphasis added): 1. The Court orders that the First Respondent be restrained from undertaking any work pursuant to, in reliance on, or described in the Landscape Plans prepared by Dapple Designs, Issue D dated 21/10/2021, Reference Number LP 01, Sheet Numbers 1-12 inclusive (Landscape Plans) or otherwise acting upon the Landscape Plans. … 4. The Court orders that, within six months of the earlier of the date of these orders or the date upon which an occupation certificate in respect of the works constructed pursuant to Development Consent DA 2020/0430 granted on 7 October 2021 by the Georges River Council (DC) is issued (Occupation Certificate), the First Respondent must demolish: a. The concrete slab and the low concrete wall between the mean high water mark and the approved dwelling house on the north-east corner of the site being Lot 13 in DP 14844 located at 26 Bowden Crescent, Connells Point NSW (the Site) adjacent to 28 Bowden Crescent, Connells Point (Northern Slab); and b. The concrete slab constructed on the south-west corner of the Site adjacent to 24 Bowden Crescent, Connells Point (Southern Slab) and referred to In the Judgment. 5. ln the event that, within six months of the date of these orders or the date upon which an Occupation Certificate is obtained, the First Respondent obtains a building information certificate pursuant to s6.25 of the Environmental Planning and Assessment Act 1979 in relation to the portion of low concrete wall adjacent to the Northern Slab, and referred to in order 4(a), circled in red and blue on Attachment A to these orders, demolition of that portion of the wall is not required. 6. The Court orders that the First Respondent be restrained from placing any building or construction materials or plant or machinery upon either of the Northern Slab or Southern Slab whilst they remain on the Site. 7. The Court orders that, during the demolition ordered pursuant to order 4, the First Respondent make safe: a. the existing excavated rock face adjacent to the boundary between the Site and the land owned by the Third Respondent; and b. the portion of the Site between the proposed dwelling house and the boundary between the Site and the land owned by the Third Respondent. 8. The Court orders that the First Respondent submit and obtain a construction certificate for a detailed landscape plan consistent with the DC and reflecting the existing landform and the existing natural rock at the Site following the demolition by the First Respondent of portions of the natural rock face. …
5. On 20 October 2022, Georges River Council approved a modification application of the 2021 development consent for development on the site, described as demolition works, construction of a dwelling house (existing boathouse and swimming pool to be retained). The amendments sought to change levels, openings, stairs and fencing and add an external stair and solar panels (the 2021 development consent, as modified).
6. On 3 November 2022, the second respondent issued modified construction certificate CCC-26BOW/2022MOD (the modified construction certificate) in relation to the 2021 development consent, as modified (CC2.0). The modified construction certificate did not refer to or stamp any landscape plans.
7. On 10 February 2023, the second respondent issued construction certificate CCC-26BOW/2022MOD/1 (CC2.1). In the list of approved plans and specifications, CC2.1 included "Landscape Plans BY dapple designs Number 1-9 dated 21/10/2022 Job No. 200385" (landscape plans rev F). The landscape plans rev F plans were not stamped by the second respondent.
8. On 13 February 2024, the second respondent issued construction certificate CCC-26BOW/2022MOD/1 (CC2.2). CC2.2 did not include reference to any landscape plans. It was agreed that CC2.2 removed from the construction certificate (CC1.0): 1. landscape plan rev F; and 2. external works sections and details plan.
9. It was also agreed that construction certificates CC2.1 and CC2.2 included the same stamped plans.

The proceedings and the related Council proceedings

1. On 1 February 2023, the applicants commenced these proceedings. On the same day, Georges River Council issued a stop work order to the first respondent.
2. On 2 February 2023, Georges River Council commenced the Council proceedings, seeking similar relief to that sought by the applicants in prayers 1, 2, 4, 6 and 7 of the summons, including challenging the validity of construction certificate CC2.0.
3. On 9 June 2023, the applicants filed and served an amended summons and points of claim in these proceedings. On 7 July 2023, the Court ordered these proceedings and the Council proceedings proceed to mediation.
4. On 20 July 2023, the parties agreed to orders referring the proceedings and the Council proceedings to mediation on 7 December 2023.
5. On 5 December 2023, Georges River Council filed a notice of discontinuance in the Council proceedings. The notice of discontinuance provided as follows: 1. The Applicant discontinues the whole of the proceedings. 2. The Applicant does not represent any other person. 3. Each active party consents to the discontinuance.
6. The terms of the notice of discontinuance were that each party is to bear their own costs.
7. On 7 December 2023, the parties to these proceedings participated in a mediation before Peatman AC. On 19 March 2024, that mediation was terminated.

Dismissal of these proceedings

1. On 22 March 2024, the Court made orders by consent dismissing these proceedings and set a timetable for the argument on costs.

Issues

1. The issues which arise for determination on the application for costs are as follows: 1. whether the removal of landscape plan rev F from CC2.2 was a "capitulation" by the first respondent; and 2. whether the first respondent acted unreasonably in defending the proceedings.

Outcome

1. For the reasons that follow, I have determined that there will be no order as to costs of the proceedings, and no order as to the costs of the costs hearing.

Relevant legislation

1. Section 98 of the Civil Procedure Act 2005 (NSW) (CPA) provides as follows in relation to the Court's discretion as to costs: 98 Courts powers as to costs (1) Subject to rules of court and to this or any other Act - (a) costs are in the discretion of the court, and (b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and (c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis. (2) Subject to rules of court and to this or any other Act, a party to proceedings may not recover costs from any other party otherwise than pursuant to an order of the court. (3) An order as to costs may be made by the court at any stage of the proceedings or after the conclusion of the proceedings. …
2. Rule 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) provides as follows in relation to the general rule that costs follow the event: 42.1 General rule that costs follow the event Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs.
3. Rule 42.20(1) of the UCPR provides in relation to the dismissal of proceedings (emphasis added): 42.20 Dismissal of proceedings etc (1) If the court makes an order for the dismissal of proceedings, either generally or in relation to a particular cause of action or in relation to the whole or part of any claim, then, unless the court orders otherwise, the plaintiff must pay the defendant's costs of the proceedings to the extent to which they have been dismissed.

Relevant legal principles

1. The CPA is the statutory source of the court's power to award costs, and confers on the court full power to determine by whom, to whom and to what extent costs are to be paid, on what basis, and at any stage of proceedings: s 98. [2] The court has a discretion to exercise that power, having regard to the scope and purpose of the CPA. However, the discretion must be exercised on a principled and judicial basis. [3] Consistency is an essential aspect of the exercise of judicial power. [4]
2. The general rule is that if the court makes any order as to costs, it is to order that costs follow the event, unless it appears that some other order should be made: r 42.1 of the UCPR. This general rule founds a "reasonable expectation" on the part of a successful party of being awarded costs against the unsuccessful party. [5]
3. Rule 42.20(1) of the UCPR provides that if the court makes an order for the dismissal of proceedings, either generally or in relation to a particular cause of action or in relation to the whole or part of any claim, then, unless the court orders otherwise, the plaintiff must pay the defendant's costs of the proceedings to the extent to which they have been dismissed.
4. In Slattery v Dunn (No 3) [6] at [50]: The presumptive rule is more difficult to apply when there has been no hearing on the merits and the proceedings have been resolved by either the applicant abandoning the claim or the respondent capitulating. In these circumstances the Court is deprived of the factor that usually determines whether, or how, it will exercise its discretion to award costs (Ballina Shire Council v Leadbeatter [2023] NSWLEC 12 at [74]).
5. In Re The Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin [7] (Lai Qin), McHugh J said at 624-625 in relation to the exercise of the discretion to award costs where there has been no hearing on the merits (citations removed, emphasis added): 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 extracurial 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. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise power and that the plaintiff had no reasonable alternative but to commence a litigation. Thus, for example, in R v Gold Coast City Council; Ex parte Raysun Pty Ltd, the Full Court of the Supreme Court of Queensland gave a prosecutor seeking mandamus the costs of the proceedings up to the date when the respondent Council notified the prosecutor that it would give the prosecutor the relief that it sought. The Full Court said that the prosecutor had reasonable ground for complaint in respect of the attitude taken by the respondent in failing to consider the application by the prosecutor for approval of road and drainage plans.
6. After setting out the applicable principles, McHugh J held that there should be no order as to costs.
7. The principles were recently summarised by Robson J in Ballina Shire Council v Leadbeatter and Anor [8] (Leadbeatter) at [75]-[76], referred to by Pepper J in Slattery v Dunn (No 3) at [52], as follows: 75 In summary, the absence of a hearing on the merits of the proceedings will usually mean that the Court will make no order as to costs, subject to a qualification that even where parties have acted reasonably, costs may be awarded if the Court is satisfied that one party "was almost certain to have succeeded if the matter had been fully tried", adopting the well-known comments of McHugh J in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 at 624-625; [1997] HCA 6 ('Ex parte Lai Qin'). 76 Further, the circumstances leading to the discontinuance of the proceedings and the conduct of the parties are relevant in the exercise of the Court's discretion: Ralph Lauren 57 Pty Ltd v Byron Shire Council [2014] NSWCA 107; (2014) 199 LGERA 424 at [20]-[34]. The position may be different where a respondent simply capitulates: Nadilo v Eagleton [2021] NSWCA 232; (2021) 250 LGERA 89 ('Nadilo') at [12], [89], [94].
8. The parties in their written submissions made extensive reference to Nadilo v Eagleton [9] (Nadilo), a decision of the Court of Appeal which involved a dispute between neighbours relating to two air conditioning units and a heat pump water heater which interfered with the amenity of the applicant's home by emitting noise. The applicant claimed that the installation and operation of the air conditioning units and hot water heater were in breach of State Environmental Planning Policy (Exempt and Complying Development Codes) 2008 (NSW), s 4.2 of the Environmental Planning and Assessment Act 1979 (NSW) (EPA Act), and cll 45(a) and 53(1)(a) of the Protection of the Environment Operations (Noise Control) Regulation 2017 (NSW) (Noise Control Regulation). Before the final hearing, the parties agreed to consent orders which included that the proceedings be dismissed. By that time, the substantive dispute had been resolved by the respondents replacing the hot water heater and moving one, and enclosing both, of the air conditioning units.
9. In Nadilo, Preston CJ of LEC said as follows at [93]-[94]: The proper inquiry was to look to the substance not the form of the relief sought in the summons. When this is done, it can be clearly seen that the applicant succeeded in achieving in substance the relief she had sought. The present matter involved "a clear winner", to use the words of Burchett J in ONE.TEL Ltd v Commissioner of Taxation (2000) 101 FCR 548 at [7]. Establishing that the applicant would inevitably have succeeded is necessary, but insufficient; there needs also to be the extra circumstance that the respondents' conduct in defending the proceedings up to the time they agreed to the primary judge making consent orders was unreasonable: Ralph Lauren 57 Pty Ltd v Byron Shire Council at [1], [2], [23], [26], [27], [33], [108]. Again, this question of the unreasonableness of the respondents' conduct needs to be viewed practically and substantively, not by focusing on the precise terms of the summons or the pleadings.
10. In the same case, Brereton JA at [12], (Meagher JA at [1] agreeing), said as follows in relation to the need to demonstrate unreasonableness to obtain an "order otherwise" pursuant to r 42.20(1): Like Burchett J in ONE.TEL, I do not consider that in circumstances where one party effectively capitulates, rendering further litigation unnecessary, without any element of compromise, it is necessary to demonstrate "unreasonableness" to obtain an "order otherwise". However, if there were such a requirement, the respondents' persistence in defending the proceedings, rather than availing themselves earlier of any opportunity to avoid the applicant incurring costs, would satisfy it. The respondents had every opportunity to avoid the applicant incurring costs: they could have installed compliant machinery in the first place; they could have rectified it before proceedings were commenced; they could have rectified it promptly after proceedings were commenced; and they could have conceded at any earlier stage of proceedings that they were bound to rectify it. To defend the proceedings rather than to take any of those steps was, in the relevant sense and context, unreasonable.
11. The Court of Appeal in Nadilo, Brereton JA (Meagher JA at [1] agreeing) held at [10] that there was a "clear winner": … The practical result of the case is that the machinery is now noise compliant, and the respondents are bound by order of the Court to keep it compliant in the future. There was no question of compromise; the respondents simply ultimately surrendered: they undertook the works required to render the offending machinery compliant, and had it certified as compliant. Once they did so, the applicant had achieved what she had always sought in the proceedings, rendering further prosecution of the proceedings pointless.
12. In the result, the orders of the primary judge were set aside, and the respondents ordered to pay the costs of the proceedings in this Court and of the costs motion in the Court of Appeal.
13. In Slattery v Dunn (No 3), Pepper J at [56] said in relation to the difference between Brereton JA (Meagher JA agreeing) and Preston CJ of LEC in the passages extracted above as follows: This sentiment is difficult to reconcile with the decision in Ralph Lauren 57 Pty Ltd v Byron Shire Council [2014] NSWCA 107; (2014) 199 LGERA 424 (at [23]-[27], [33] and [108]). Nevertheless, Nadilo being later in time and binding on me, I will apply it.
14. Here, the applicants submitted, in reliance on the reasons of Brereton JA in Nadilo at [12] (Meagher JA at [1] agreeing), that it was not necessary to demonstrate unreasonableness to obtain an "order otherwise" pursuant to r 42.20(1) in circumstances where one party effectively capitulates without any element of compromise, making further prosecution of the litigation unnecessary. However, if there were such a requirement, "the respondents' persistence in defending the proceedings, rather than availing themselves earlier of any opportunity to avoid the applicant incurring costs, would satisfy it". [10]
15. In relation to Nadilo, the first respondent submitted that that case was distinguishable as there was a "clear winner", not a complete dismissal of the claim, with the Court of Appeal there making an order requiring the respondents to ensure on an ongoing basis that the air conditioning units met the relevant regulatory standards. In Nadilo, the first respondent submitted, there was no question of compromise. The respondents "simply ultimately surrendered".

Whether the removal of landscape plan rev F from CC2.2 was "a capitulation"

Applicants' submissions in relation to whether the removal of landscape plan rev F from CC2.2 was "a capitulation" by the first respondent

1. Having identified the applicable principles, I next set out the parties' submissions in relation to whether the removal of landscape plan rev F from CC2.2 was "a capitulation" by the first respondent.
2. The applicants submitted that "the core issue permeating" the 2022 proceedings before Duggan J and these proceedings was the continued reliance by the first respondent on landscape plans prepared by Dapple Design (both rev D and rev F), and that concerns regarding landscape plan rev F permeated the correspondence and pleadings. They submitted that the outcome that they sought to achieve was to ensure that the first respondent did not rely on landscape plan rev F, and rather sought development consent for any redevelopment and/or building works of the terrace and supporting natural rock face on the foreshore of the Georges River.
3. The applicants submitted that they sought to achieve that outcome by proposed declarations and orders that: 1. landscape plan rev F was inconsistent with the 2021 development consent, as modified, which would have "the effect of the plans being set aside from the relevant certificate" (prayer 2 of the amended summons extracted above at [9]); 2. "reliance on" landscape plan rev F was in breach of the 2021 development consent which would have had "the effect of a restraining order" (prayer 3 of the amended summons extracted above at [9]); 3. certain works in landscape plan rev F had already been carried out in breach of the EPA (prayer 4 of the amended summons extracted above at [9]); and 4. due to the early timing of the works in landscape plan rev F (further detailed in the external works footing plan), CC2.1 was invalid (prayer 1 of the amended summons extracted above at [9]). If the certificate as a whole was found to be invalid, this would also have had the effect of ensuring that landscape plan rev F could not be relied upon.
4. In response to the case pleaded by the applicants, landscape plan rev F (and the external works footing plan) was removed from the construction certificate. The effect, the applicants submitted, was that there was no longer any authorisation permitting the first respondent to carry out the works described in landscape plan rev F, including: 1. an extended rectilinear treatment of the terrace area cantilevering out in an easterly direction over the rock face supported by vertical retaining walls necessitating the removal of the rock face adjacent to the mean high water mark (MHWM); 2. a perpendicular edge of the north-east corner of the terrace area below the MHWM and on Crown land; and 3. concrete reinforced slabs west of the dwelling house adjacent to Bowden Crescent.
5. The applicants submitted that a building information certification (BIC) (as to which see Division 6.7 of the EPA Act) could not be a supervening event because it did not cure any inconsistency with a construction certificate, and only applies to a council and not to a neighbour or a court. Further, the first respondent had indicated that development consent would be sought in relation to the final landform of the terrace and rock form at the rear of the dwelling on the site. It was "axiomatic" that the applicants had achieved the object of the proceedings, and that the abandonment of landscape plan rev F was a "capitulation", rendering further litigation unnecessary, without any element of compromise. [11] In the words of Preston CJ of LEC in Nadilo at [85]: "[t]he applicant's success was to be evaluated not by a close comparison of the precise terms of the orders made by the Court by consent of the parties and the prayers for relief in the summons, but rather by looking to the substance of the outcomes sought and obtained by the applicant."
6. In circumstances where the outcome sought by the applicants to ensure that the first respondent did not rely on landscape plan rev F was achieved by the removal of landscape plan rev F, being a capitulation by the first respondent, it would be unjust for the applicants not to be awarded their costs. [12]

First respondent's submissions in relation to whether the removal of the landscape plans rev F from CC2.2 was a capitulation

1. The first respondent submitted that the "fundamental premise" of the applicants' argument in relation to capitulation was reliance by the first respondent on landscape plan rev F. That, it was submitted, should not be analysed from the chronology of events in isolation, but required an analysis of the relief sought in the summons and the amended summons.
2. The summons filed on 1 February 2023 sought relief largely in relation to landscape plan rev F. However, on 9 June 2023, the relief sought was amended "in no minor way", with prayer 1 of the amended summons becoming the primary claim. That claim, and related prayer 4, was to the effect that the first respondent had physically commenced work depicted in the construction certificate, thereby rendering the construction certificate invalid: "That claim was abandoned when the proceedings were dismissed". The claims pertaining to landscape plan rev F were expressed to be secondary or "in the alternative" to the primary claim.
3. It would be incorrect, the first respondent submitted, to characterise the central issue as reliance on a landscape plan, or that the outcome of the proceedings achieved what the applicants had sought. The applicants abandoned a fundamental element, the primary claim in prayer 1 of the amended summons, and did not achieve the outcome they had sought. Unlike the position in Nadilo, they obtained no orders and no relief at all.
4. Further, without enquiry into the prospects of success of the applicants' claims, it could not be said that the abandonment of landscape plan rev F was a capitulation. Nothing in the act of modification of a construction certificate could be "construed as an admission of invalidity of an earlier construction certificate". It was sufficient to say that removal of landscape plan rev F and the external works sections and details plans did not otherwise alter the works approved by CC2.1. In those circumstances, it could not be said that there was any capitulation by the first respondent.
5. Further, the first respondent submitted, the outcome could be said to be "something of a compromise". The primary claim in prayer 1 and the consequential orders sought were abandoned by the applicants and the secondary claim fulfilled by the first respondent agreeing, without admissions, to delete all references to landscape plan rev F in the construction certificate.
6. Despite the "danger of intruding into disputed facts", in order to respond to the applicants' submissions, it was necessary to understand the gravamen of the alternative claim. The "essence of the claim" was in correspondence from the applicants' solicitor dated 12 December 2023 which asserted that "the [landscape plan rev F] show many of the same features depicted in [landscape plan rev D] (which were found by the Court to be inconsistent with the [development consent]". That assertion was submitted to be based upon a misreading of the construction certificate and the annotated landscape plan rev F. The construction certificate itself was stamped with the following note: "the scope of works approved under this constructions (sic) certificate Modification CCC-26BOW/2022MOD/1 include annotated landscape plan only". Further, the landscape plan, while appearing in the list of approved plans, was not stamped by the certifier.
7. The first respondent next referred to the applicants' contention that because CC2.2 removed landscape plan rev F completely, they had achieved the outcome they sought because there was no longer authorisation permitting the first respondent to carry out the works described in landscape plan rev F. Properly understood, the first respondent submitted, there never was such authorisation because the matters extracted above at [53] were not included as annotated works in landscape plan rev F: 1. First, the references in the applicants' submission at [53] were to works shown on landscape plan rev D which had already been declared invalid by Duggan J, and landscape plan rev D did not assist in understanding what was shown to be approved by CC2.1 in landscape plan rev F. 2. Secondly, landscape plan rev F should not be understood by reference to the colouring on the plan but, as stated in CC2.1, by reference only to the annotated works.
8. In relation to the annotations on landscape plan rev F, the first respondent submitted that: 1. landscape plan rev F did not extend the terrace area in an easterly direction cantilevering over the rock face, rather the annotations stated: "Existing landform after rock excavation and slab removal", and "New concrete hob along the perimeter of the new cut rock face with 1m high balustrade on top"; 2. landscape plan rev F did not approve a perpendicular edge to the north-east corner terrace. The reference on the plans to "[r]endered masonry retaining wall beneath glass balustrade" was struck through, as were the references "[n]ew retaining wall to be constructed in its original location as detailed below" and "1m high frameless glass balustrade to rear lawn level"; and 3. landscape plan rev F did not approve a concrete reinforced slab west of the dwelling adjacent to Bowden Crescent, rather showed "pavers with gravel between".
9. To the extent to which the Court was invited to embark on an assessment of the prospects of success, the first respondent submitted that the proceedings were commenced on a "false premise", and that the matters referred to at [53] above were not approved by landscape plan rev F. The Court should not, in any event, embark on a hypothetical trial, it being sufficient to conclude that it was "by no means certain" that the applicants would have succeeded in relation to their interpretation of landscape plan rev F and CC2.1.

Whether the first respondent acted unreasonably in defending the proceedings

Applicants' submissions in relation to whether the first respondent acted unreasonably in defending the proceedings

1. In relation to whether the first respondent acted unreasonably in defending the proceedings, the applicants submitted that the conduct of the first respondent was unreasonable by persisting in its defence of the proceedings for over a year and by relying on landscape plan rev F which was almost identical to landscape plan rev D which was set aside by Duggan J on 30 September 2022 in the 2022 proceedings brought by the same applicants.
2. The applicants submitted that the first respondent persisted in his defence of the proceedings for over a year whilst at the same time gradually remedying the subject matter of the applicants' complaint. He did not act promptly to modify the relevant construction certificate, thereby availing himself of the opportunity to avoid the incurring of costs by the applicants. This was unreasonable and grounds for a costs order. [13] On the reasoning of the majority in Nadilo, if the Court finds that the applicants achieved the outcome they sought in bringing the proceedings, it was not necessary to demonstrate unreasonableness. [14] Notwithstanding this, if there be such a requirement, as Brereton JA said in Nadilo at [12]: However, if there were such a requirement, the respondents' persistence in defending the proceedings, rather than availing themselves earlier of any opportunity to avoid the applicant incurring costs, would satisfy it. The respondents had every opportunity to avoid the applicant incurring costs ... they could have rectified it promptly after proceedings were commenced; and they could have conceded at any earlier stage of proceedings that they were bound to rectify it. To defend the proceedings rather than to take any of those steps was, in the relevant sense and context, unreasonable.
3. The applicants submitted that by his conduct and correspondence, the first respondent resisted the relief sought in the proceedings from the date of pre-litigation notification on 20 January 2023 until CC2.2 was issued on 13 February 2024. During this period, he exchanged correspondence with the parties, applied for and obtained a BIC in respect of certain works, and amended the construction certificate on two occasions to respond to the matters raised by the applicants in the proceedings. When the first respondent amended the construction certificate in February 2023 in response to these proceedings and the Council proceedings, he could have removed landscape plan rev F. Instead, the plans were expressly incorporated into CC2.1 "to remove any doubt as to whether they were part of the certificate". This "resulted in a significant increase in the pleaded case against him", and was the "very antithesis" of the step he took a year later to remove the plans from the construction certificate entirely.
4. It was also unreasonable, the applicants submitted, for the first respondent to rely upon a set of landscape plans that were almost identical to those set aside by the Court in previous proceedings, and to defend these proceedings for "well over a year". On 30 September 2022, in the 2022 proceedings, Duggan J made orders requiring the first respondent to submit and obtain a construction certificate for a detailed landscape plan consistent with the 2021 development consent, "and reflecting the existing landform and the existing natural rock at the site following the demolition by the first respondent of portions of the natural rock face". The first respondent never did so, instead: 1. relied on architectural plans with "obsolete features", including a rear retaining wall, stairs and rock face that had already been demolished by him; 2. submitted landscape plan rev F to his certifier again prepared by Dapple Designs and "almost identical" to rev D; 3. carried out the construction of building works (being the dincel retaining walls and side pathway) before any further construction certificate was issued, likely in breach of ss 4.2 and 6.7 of the EPA Act and order 1 of Duggan J's orders; 4. did not respond appropriately to pre-litigation correspondence from the applicants; 5. applied in February 2024 to modify the construction certificate to expressly incorporate landscape plan rev F; and 6. resisted the relief sought in these proceedings for one year.
5. This conduct was submitted to be in defiance of Duggan J's orders in the 2022 proceedings, and "egregious and unreasonable". A "simple comparison" between landscape plan rev D and landscape plan rev F shows their "marked similarities", and a comparison with the approved architectural plans shows their "marked differences". The finding was "inescapable" that, for the purposes of s 6.32 of the EPA Act, the plans and specifications or standards of building work specified in the certificate were not consistent with the development consent for the building work. The applicants were "almost certain" to have succeeded on their inconsistency claim under s 6.32 of the EPA Act. Accordingly, it did not matter whether or not the applicants would have succeeded in "their early commencement claim" had the matter been fully tried.

First respondent's submissions in relation to whether the first respondent acted unreasonably in defending the proceedings

1. The first respondent submitted that the assertion that he unreasonably persisted in his defence was "simplistic and incorrect". Very few formal steps were taken by either party in the proceedings. No points of defence or evidence was filed. All directions and orders were made by consent, including an order agreeing to mediation together with the proceedings brought by Georges River Council. Following a resolution in the Council proceedings, these proceedings were also resolved.
2. The submission that the first respondent could have resolved the proceedings at an earlier stage by removing landscape plan rev F from the construction certificate ignored the fact that, even after the mediation, the applicants maintained the position, even as late as March 2024, that the removal of landscape plan rev F did not resolve the litigation. Unlike in Nadilo, a compromise agreement reached between two parties could not be regarded as a "capitulation". There was no unreasonable defence of the proceedings and no "belated" remedying of the complaint to warrant departing from the ordinary course of making no order as to costs where there has been no hearing on the merits.
3. Even if enquiries were to be made as to the matters alleged by the applicants, there was no timeframe by which the first respondent was to submit and obtain a construction certificate for a detailed landscape plan consistent with the development consent and reflecting the existing landform and the existing natural rock at the site, as required by order 8 of Duggan J's orders in the 2022 proceedings set out above at [16]. The site remains an unfinished construction site, and the first respondent only needs to obtain consent when he seeks to carry out works beyond the approved footprint. The fact that he had not yet done so could not lead to a finding of unreasonableness.
4. Further, the first respondent submitted, that even though, in the absence of a hearing of the substantive matter, it should be unnecessary to address each of the matters asserted by the applicants, he submitted as follows: 1. There was no claim in the summons or amended summons that the construction certificate was invalid because it relied on architectural plans with "obsolete features". The architectural plans approved by all versions of the construction certificates were never challenged. 2. The Court would not accept that landscape plan rev F was "almost identical" to rev D. 3. The claim that the first respondent carried out building works "before construction certificate was claimed", but such claim was abandoned by the agreed dismissal of the proceedings. 4. There was no evidence of an "inappropriate response to pre-trial correspondence". The only correspondence before the filing of the summons was a letter from the applicants' solicitor dated 20 January 2023 and a follow-up email dated 28 January 2023. That letter was responded to in detail by the first respondent's solicitor. That the applicants' allegations were denied was not unreasonable conduct. 5. The modification of a construction certificate does not amount to capitulation. 6. The "resistance of relief" for one year was "simplistic" and ignored the chronology of the proceedings and the absence of any filed defence and evidence.
5. The applicants identified no unreasonable conduct on the part of the first respondent, except for the length of time the proceedings took to resolve. But that length of time was not caused by any active conduct on the part of the first respondent. Further, while misconduct or unreasonable conduct in the context of a costs application must relate to the litigation itself, [15] where the alleged unreasonable conduct is the subject matter of the substantive dispute about which no findings have been made, the Court would be "loath" to embark on such enquiries. Absent findings in the substantive matters pleaded, the Court could not conclude that the first respondent's conduct was unreasonable. The issue of the construction certificate by the certifier was not conduct of the first respondent, but of the certifier (second respondent), and ambiguities in the construction certificate ought not be construed as misconduct of the first respondent. Accordingly, there was no basis for the Court to depart from the ordinary course of making no order as to costs.

Other discretionary factors

1. In relation to other discretionary factors, the first respondent submitted that there was another reason why the Court would not be persuaded to make an alternative costs order.
2. On 2 February 2023, one day after the commencement of these proceedings, Georges River Council commenced proceedings against the first respondent (and the certifier, second respondent). The relief sought by Georges River Council was "nearly identical" to that sought by the applicants. Despite Georges River Council being "the most appropriate enforcer" of any breaches of the EPA Act, the applicants "launched" these proceedings "in advance of Council". While the first respondent acknowledged that any person is entitled to bring proceedings to enforce planning law, there was a means by which the applicants could have minimised their costs by waiting a reasonable time for Georges River Council to act, and allowing Council's proceedings to "run their course".
3. This, the first respondent submitted, seemed to have been acknowledged by an email communication from the applicants' solicitors on 7 June 2023 which stated that "[o]n the assumption that leave is granted to the Applicants to rely on the Amended Summons and the Points of Claim are subsequently filed, it appears that there is considerable duplication in the issues raised against the Respondents in these Proceedings with proceedings issued by Georges River Council … we consider that the parties should be given time to reconcile the stated case and pleadings in both sets of proceedings". And, the first respondent submitted, in contrast, the Council proceedings were resolved with no order as to costs.

Conclusions in relation to costs

1. In determining whether to make an order as to costs where there has been no hearing on the merits and the moving party no longer wishes to proceed with the action, it is necessary that the matters be assessed by the court on the basis of known and undisputed facts to avoid trying a hypothetical action. As is clear from Kiama Council v Grant, [16] there is a distinction between an effective surrender by one party to the other which ordinarily would attract the usual costs order, and a settlement, supervening event or an extra-curial activity that so removed or modified the subject matter of the dispute that no issue remained except that of costs where ordinarily no costs order would be made.
2. In this case, on the material before the Court, I am not persuaded that there was an effective surrender by the first respondent. Nor am I satisfied that the applicants were "almost certain to have succeeded if the matter had been fully tried": Lai Qin at 624-625. There was, on the material before me, no "clear winner". In this regard, I accept the first respondent's submission that the decision of the Court of Appeal in Nadilo is distinguishable.
3. As submitted by the first respondent, in Nadilo, there was not a complete dismissal of the claim. In Nadilo, in addition to noting that the respondents had taken action that resolved the subject matter of the litigation, the primary judge made an order requiring the respondent to ensure that the air conditioning units met, "on an ongoing basis", the relevant regulatory standards. [17] As Brereton JA observed at [10] (Meagher JA agreeing), there was a "clear winner". There was no question of compromise, the respondents "simply ultimately surrendered". At [93], Preston CJ of LEC also said that there was a "clear winner". There was unilateral action by the respondent to rectify the breach (at [10] and [95]), and, by consent, a permanent restraining order made by the court.
4. I find, as submitted by the first respondent, that although the summons filed on 1 February 2023 sought relief largely in relation to landscape plan rev F, the amended summons filed on 9 June 2023 amended the relief sought in a not insignificant way. Prayer 1 of the amended summons seeks: A declaration pursuant to section 6.8(2) of the EPA Act that the Modified Construction Certificate has no effect because it was issued after the building work to which it related was physically commenced on the Site to which the 2021 Consent As Modified applies.
5. That claim, and related prayer 4, are to the effect that the first respondent had physically commenced work depicted in the construction certificate such as to render the construction certificate invalid. In the amended summons, the claim in prayer 2 in relation to landscape rev F was expressed to be in the alternative to the primary claim in prayer 1.
6. I am conscious of the undesirability of intruding into disputed facts, and descending into an analysis of the relief sought in the summons and the amended summons. I am aware of the admonition in Lai Qin at 624-625 to avoid embarking on a hypothetical trial and assessing the prospects of success of the relief sought in prayer 2 of the amended summons. However, to the extent it be permissible on a hearing of this kind in relation to costs, for the reasons advanced by the first respondent recorded at [61] above, I am not satisfied that the matters sought to be relied upon by the applicants at [51] above were approved by landscape plan rev F.
7. I do not find, to the extent that to it be necessary to do so, that landscape plan rev F was almost identical to landscape plan rev D. Each of landscape plan rev D and landscape plan rev F is reproduced below:
8. It follows that subject to the question of reasonableness, I would find that the parties pay their own costs of the proceedings.
9. If, contrary to Nadilo (Brereton JA, Meagher JA agreeing), reasonableness is a requirement, I am not satisfied that the first respondent acted unreasonably. Where consideration shifts to the question of unreasonableness of conduct, in Nichols v NFS Agribusiness Pty Ltd [18] (Nichols) Payne JA (Meagher JA agreeing) at [27] and [33] (applying the principles articulated in Edwards Madigan Torzillo Briggs Pty Ltd v Stack [19] at [5] (Davies AJA) (Mason P and Meagher JA agreeing)) said: The Court must be satisfied there has been a marked difference in the reasonableness of the actions taken by the parties so that it can be said that one should be rewarded for its reasonable actions and the other should suffer a detriment in costs.
10. In Nichols, Basten JA said at [8] that if the question of whether a party has acted unreasonably can only be assessed by reviewing "large swathes of evidence" and "resolving on a tentative basis disputed questions of fact", the task "should not be embarked upon". [20]
11. If it be necessary to consider reasonableness, I am not satisfied that the first respondent acted unreasonably in persisting in his defence of the proceedings. No points of defence were filed. Nor was any evidence filed. It is evident from a perusal of the Court file that all orders and directions were made by consent. These proceedings were resolved on 22 March 2024 following a resolution of the Council proceedings on 5 December 2023.
12. I have addressed above the first respondent's reliance in his defence of the applicants' claim in relation to his reliance on landscape plan rev F, and the amended summons filed on 9 June 2023. For the reasons given, I have found that the removal of landscape plan F from the construction certificate did not amount to "a capitulation" by the first respondent. I am not satisfied, if it be necessary, that there was any unreasonable defence of the proceedings.
13. Further, whilst having regard to the authorities it ought not be necessary to consider each of the matters relied on by the applicants at [66] above in support of their contention that the conduct of the first respondent was in defiance of Duggan J's orders and "egregious and unreasonable", I essentially accept the submissions of the first respondent recorded at [71] above in relation to the reasonableness or otherwise of his conduct.
14. As to other discretionary factors relied upon by the first respondent, namely the commencement by Georges River Council of proceedings against the first respondent one day after the commencement of these proceedings, this is not a factor bearing upon my present determination of the question of costs.

Costs of the costs application

1. The applicants and the first respondent both submitted that they are entitled to the costs of the costs argument.
2. Rule 42.1 of the UCPR provides that costs follow the event.
3. I have made no order as to costs of the proceedings. I likewise make no order as to the costs of the costs hearing.

Conclusion and orders

1. The Court makes the following orders: 1. No order as to costs of the proceedings. 2. No order as to the costs of the costs hearing.

Endnotes

1. See Sader v Elgammal Duggan J at [17].
2. Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 (Oshlack); Hamod v State of NSW [2011] NSWCA 375 at [813] (Beazley JA) (Giles and Whealy JJA agreeing).
3. Northern Territory v Sangare (2019) 265 CLR 164; [2019] HCA 25 (Northern Territory v Sangare) at [24] (Kiefel CJ, Bell, Gageler, Keane and Nettle JJ); Williams v Lewer [1974] 2 NSWLR 91 at 95.
4. Northern Territory v Sangare at [24] (Kiefel CJ, Bell, Gageler, Keane and Nettle JJ); cited in Woollahra Municipal Council v Cameron (No 2) [2024] NSWLEC 66.
5. Oshlack at [67] (Gaudron and Gummow JJ) and at [137] (Kirby J); Northern Territory v Sangare at [25] (Kiefel CJ, Bell, Gageler, Keane and Nettle JJ).
6. [2024] NSWLEC 110 (Slattery v Dunn (No 3)) at [50] (Pepper J).
7. (1997) 186 CLR 622 at 624-625; [1997] HCA 6 (McHugh J).
8. [2023] NSWLEC 12 at [75]-[76] (Robson J); cited in Slattery v Dunn at [52] (Pepper J).
9. (2021) 250 LGERA 89; [2021] NSWCA 232 (Nadilo).
10. Nadilo at [12] (Brereton JA) (Meagher JA agreeing).
11. Nadilo at [12] (Brereton JA) (Meagher JA at [1] agreeing).
12. Nadilo at [10] (Brereton JA) (Meagher JA at [1] agreeing), [85] and [89] (Preston CJ of LEC).
13. Nadilo at [12] (Brereton JA) (Meagher JA agreeing), [94] and [97] (Preston CJ of LEC).
14. Nadilo at [12] (Brereton JA) (Meagher JA agreeing).
15. Australian Wildlife Ark Limited v Secretary, Department of Planning and Environment [2023] NSWLEC 139 at [123] (Preston CJ of LEC) citing Oshlack at [69] (McHugh J).
16. (2006) 143 LGERA 441; [2006] NSWLEC 96 (Preston CJ of LEC)
17. Nadilo at [3] (Brereton JA).
18. (2018) 97 NSWLR 681; [2018] NSWCA 84 at [27], [33] (Payne JA) (Meagher JA agreeing).
19. [2003] NSWCA 302 at [5] (Davies AJA) (Mason P and Meagher JA agreeing).
20. Nadilo at [47] (Brereton JA) (Meagher JA at [1] agreeing); see also Knox Farms Pty Limited v Upper Lachlan Shire Council [2023] NSWSC 1601 at [43] (Peden J). 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. Decision last updated: 29 November 2024