Solicitors:
Maddocks Lawyers (Applicant)
Milad S Raad & Associates (First, Second and Third Respondents)
File Number(s): 2017/00248463
[2]
Judgment
Before the Court is a Class 4 matter in which the only outstanding issue is costs. Strathfield Municipal Council ('Council') seeks an order that the respondents pay its costs of the proceedings. The respondents contend that in the circumstances there should be no order for costs.
The proceedings relate to an injunction sought by Council to prevent what it contended was the carrying out of development without consent in contravention of s 76A of the Environmental Planning and Assessment Act 1979 (NSW) ('EP&A Act'). I ordered an interim injunction to that effect in Strathfield Municipal Council v Michael Raad Architect Pty Ltd (No 1) [2017] NSWLEC 105 ('First Judgment'), and confirmed that injunction until further order of the Court in Strathfield Municipal Council v Michael Raad Architect Pty Ltd (No 2) [2017] NSWLEC 119 ('Second Judgment').
The interim relief related to work purportedly carried out pursuant to development consent DA0405/176/03 ('the first consent'). Council had become aware that work was about to be undertaken that would have constructed a single-level basement car park where the first consent provided for a two-level basement car park. I adopt and do not repeat the summary of the facts contained in the First Judgment and Second Judgment.
Since the relief provided in my Second Judgment was granted, the single-level basement car park that was the subject of the injunction has been approved by order of this Court in Class 1 appeal proceedings in Michael Raad Architects Pty Ltd v Strathfield Municipal Council [2018] NSWLEC 1019 ('the Class 1 proceedings'). These proceedings have therefore been rendered otiose insofar as the claims articulated in the Summons, which originally sought a declaration that the work was unlawful and consequential mandatory injunctive relief, are now neither pressed nor apposite.
Council seeks costs in these proceedings. It submits that it was successful on every point, brought the proceedings in the public interest in circumstances where there was a serious issue to be tried, and the respondents should not be rewarded for commencing the work without consent in what it describes as a "calculated risk" on their part.
The respondents submit that Council's submissions overlook the principles about the character of interlocutory proceedings, that there has been no determination by the Court that the works undertaken or proposed to be undertaken were unlawful, that the respondents did not act unreasonably in seeking to defend the application for interlocutory relief, and that therefore there should be no order as to costs in the proceedings. The respondents seek their costs of this costs claim.
Both parties accept that costs are at the discretion of the Court as per s 98(1)(b) of the Civil Procedure Act 2005 (NSW). The presumptive rule is that costs follows the event unless it appears to the Court that some other order as to costs should be made (Uniform Civil Procedure Rules 2005 (NSW) ('UCPR') r 42.1). The respondents observe that another presumptive rule is that costs of interlocutory proceedings are costs in the cause (UCPR r 42.7).
For the reasons that follow, I find that Council is entitled to its costs of the proceedings.
First, I consider that the ordinary rule that costs should follow the event is applicable. Whilst it is true that there was no declaration of the kind which was sought by Council, Council did successfully obtain an injunction and the work was properly approved in the Class 1 proceedings. Council achieved its aim in these proceedings of ensuring that environmental laws were properly followed.
Secondly, I note that the respondents cite r 42.7 as the presumptive rule in the case of an interlocutory injunction. However the rule that costs of an interlocutory hearing be costs of the cause does not necessarily assist the respondents in circumstances where the proceedings have been rendered otiose, as they have been in this case by the decision in the Class 1 proceedings.
Thirdly, whilst the respondents correctly submitted that I found in the Second Judgment that there was a serious question to be tried, and that the injunction was granted in order to preserve the status quo (at [46]), I do not necessarily accept that it follows there should be no order as to costs.
The respondents made reference to the decision of McDougall J in Patakas v Bevan (No 2) [2017] NSWSC 303 ('Patakas'). At [6], his Honour noted "the difficulty of recognising where, in an interlocutory application in which the facts and merits that will ultimately be resolved are often not able to be decided, where the interests of justice lie, seems to me to underlie the position stated in r 42.7."
Council observed that McDougall J went on to say at [7] that an applicant should have its costs of an interlocutory application where opposition to the application was "so wrong-headed as to require" that order to be made.
To that effect, Council cited two passages of the Second Judgment. First, it referred to par [35], where I observed:
There is some dispute in relation to Mr Broune's evidence, however on balance, I find the respondents' evidence unsatisfactory given the nature of the works constructed thus far, and find that Mr Broune's evidence is to be preferred. In the circumstances I accept his evidence and find that the works presently undertaken are most likely to be unauthorised such that there is clearly a serious question to be tried.
The other passage relied on by Council was at par [47], where I observed:
On the evidence before me, it appears that the respondents' conduct, although understandable from a practical, result-driven objective, did involve work which Council (and indeed the certifier), has not approved. I accept that there is a Modification Application that is pending, however the mere fact that that which is being undertaken can be deconstructed if the Modification Application is not forthcoming is not persuasive. The respondents clearly took a calculated risk in undertaking this further work, however the Court should not countenance what appears to be a flouting of the planning regime simply because the respondents are prepared to take what is said to be a commercial risk.
In the circumstances, I find that the respondents undertook work which was a calculated risk in response to which Council properly brought and conducted the interlocutory application and was successful.
Fourthly, I accept that in bringing these proceedings, Council was acting in the public interest. Whilst I also accept the respondents' submission that acting in the public interest is "not a sword by which the costs of so acting can be recovered from respondents" in circumstances where no final determination is reached, I consider that the injunction was necessary to uphold the planning laws of the State (Second Judgment at [45]), and that this is a factor which supports the making of the costs order sought by Council.
Fifthly, although the respondents submitted that the strength and legitimacy of their contentions with respect to the balance of convenience question were demonstrated by the outcome of the Class 1 proceedings, I do not consider that to be a factor in their favour. As Council observed, the fact that it was necessary to obtain the consent sought in the Class 1 proceedings demonstrates rather that Council was justified in its decision to seek a declaration and injunction in respect of the work.
Sixthly and finally, I do not accept the respondents' submission that they acted reasonably at all times. I do not criticise their conduct during the course of the proceedings, but in seeking to take a risk with respect to the planning regime to the extent that work was undertaken that was not in accordance with their consent, I find that their conduct was such as to warrant Council receiving its costs of the proceedings.
For the above reasons, I therefore find that the respondents should pay Council's costs.
[3]
Orders
The Court orders that:
1. The respondents are to pay the applicant's costs of the proceedings as agreed or assessed.
[4]
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: 12 April 2018