TL & TL Tradings Pty Ltd v Parramatta City Council

TL & TL Tradings Pty Ltd v Parramatta City Council - [2017] NSWLEC 142 - NSWLEC 2017 case summary — Zoe

[12]

The jurisdictional issue

After I handed down my decision on the substantive merits of the Company's application (given on 28 November 2016), further work was required to be undertaken to finalise the POM and to settle an agreed form of orders - orders that would expressly incorporate the terms of that POM.
That work was concluded by 20 December 2016, when those documents were provided to me. Critically, the orders and the POM were provided in electronic form. Provision of them electronically enabled their loading, that day, to the Court's electronic record-keeping system. That loading effected what is, for formal legal purposes, described as the entry of those orders, a concept engaged by the relevant provision of the UCPR upon which Dr Smith relied as the foundation of his jurisdictional objection. The relevant provisions of the UCPR upon which Dr Smith relies are Pt 36 r 36.15(3A) and (3C) in combination, provisions in the following terms: 36.16 Further power to set aside or vary judgment or order (1) The court may set aside or vary a judgment or order if notice of motion for the setting aside or variation is filed before entry of the judgment or order. (2) …. (3) .... (3A) If notice of motion for the setting aside or variation of a judgment or order is filed within 14 days after the judgment or order is entered, the court may determine the matter, and (if appropriate) set aside or vary the judgment or order under subrule (1), as if the judgment or order had not been entered. (3B) … (3C) Despite rule 1.12, the court may not extend the time limited by subrule (3A) or (3B). (4) ….
As I have noted, the orders in the substantive proceedings were entered for the purposes of this rule on 20 December 2016. The costs application made by the Company's legal representatives was filed on 19 July 2017. Self‑evidently, this date of lodgement is significantly outside the 14-day period permitted by the above set out rule - a time period, if applicable, not permitted to be extended.
It was Dr Smith's position that this rule provided the only statutorily available avenue by which the Company could seek to agitate any further matters potentially arising for consideration (such as this costs application).
Mr Gadiel put a contrary position. The commencing point for his submissions on the jurisdictional contest was that, in the orders of 20 December 2016, the question of costs was not addressed in that there was no order, of any nature, on this point.
I interpolate that this was unsurprising for two reasons.
The first is that, simply, neither party proposed to me, during the substantive phase of the proceedings, that I should make any order (of any nature whatsoever) concerning costs.
The second is that, as the substantive proceedings were ones arising in Class 1 of the Court's merit jurisdiction, the "fair and reasonable" test arises for consideration on costs applications in such proceedings. The practice generally in the Court has been that, in the comparatively infrequent circumstances when costs applications are made in such merit proceedings, they are made by a separate and subsequent Notice of Motion. This practice arises as the overwhelming majority of Class 1 merit appeals are determined by Commissioners and Commissioners do not have the power to make costs orders.
However, Mr Gadiel proposed to advance the proposition that a proper interpretation of s 98(3) of the Civil Procedure Act 2005 provided an available avenue for the Company to make this costs application. This provision is in the following terms: 98 Courts powers as to costs (1) ... (2) ... (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. (4) ... (5) ... (6) ...
To the extent to which matters of discretion might be involved concerning the time between the entry of the orders and the making of the costs application, it was the Company's position that there were valid reasons for the delay and that, therefore, any such discretion ought be exercised in the Company's favour.

[14]

Introduction

First, it is appropriate to set out the relevant terms of Pt 3 r 7 of the Court Rules. It is as follows: 3.7 Costs in certain proceedings (1) This rule applies to the following proceedings (except for appeals under section 56A of the Act): (a) all proceedings in Class 1 of the Court's jurisdiction, (b) … (c) … (i) … (ii) … (iii) … (iv) … (v) … (vi) … (vii) … (2) The Court is not to make an order for the payment of costs unless the Court considers that the making of an order as to the whole or any part of the costs is fair and reasonable in the circumstances. (3) Circumstances in which the Court might consider the making of a costs order to be fair and reasonable include (without limitation) the following: (a) that the proceedings involve, as a central issue, a question of law, a question of fact or a question of mixed fact and law, and the determination of such question: (i) in one way was, or was potentially, determinative of the proceedings, and (ii) was preliminary to, or otherwise has not involved, an evaluation of the merits of any application the subject of the proceedings, (b) that a party has failed to provide, or has unreasonably delayed in providing, information or documents: (i) that are required by law to be provided in relation to any application the subject of the proceedings, or (ii) that are necessary to enable a consent authority to gain a proper understanding of, and give proper consideration to, the application, (c) that a party has acted unreasonably in circumstances leading up to the commencement of the proceedings, (d) that a party has acted unreasonably in the conduct of the proceedings, (e) that a party has commenced or defended the proceedings for an improper purpose, (f) that a party has commenced or continued a claim in the proceedings, or maintained a defence to the proceedings, where: (i) the claim or defence (as appropriate) did not have reasonable prospects of success, or (ii) to commence or continue the claim, or to maintain the defence, was otherwise unreasonable.
For the reasons which follow, only r 3.7(3)(d) potentially arose for consideration but, on a proper understanding of the process for and outcomes of the merit proceedings, it is not necessary to go further than the analysis that follows.

[15]

Introduction

The case advanced by Mr Gadiel for the Company was based on the way the Council had framed its case before and at the substantive hearing and therefore the way that the Company had had to meet that case.
The Council's case can be understood from the issues that it raised in its SOFAC in which, in six contentions (the first five of which were particularised), the Council said gave rise to issues warranting refusal of the application. At this point, it is appropriate to reproduce the terms of each of those six contentions without reproducing the entirety of the matters particularised with respect to the first five of them. The six contentions pressed by the Council were in the following terms: 1. The application should be refused because the impacts from the subject premises during the three-year trial period establish that the development is unacceptable and would not warrant the continued use as a brothel. 2. The application should be refused because of the inability to safely manage the subject premises as a brothel. 3. The application should be refused because the proposal is inconsistent with the objectives and requirements of cl 5.6 of the Parramatta Development Control Plan 2011 (PDCP). 4. The application should be refused because the proposal fails to satisfy, amongst other things, cl 6.9 of the Parramatta Local Environmental Plan 2011. 5. The application should be refused because the proposal does not meet the zone objectives for the IN1 - General Industrial zone under the Parramatta Local Environmental Plan 2011. 6. The application should be refused because approval of the proposed development is not in the public interest, having regard to Contentions 1 to 5 above and the objection received during the notification period.
A complete PDF copy of the Council's SOFAC, filed on 11 May 2016, is reproduced as Annexure A to this decision. The SOFAC had been tendered in the substantive proceedings and was again tendered in these costs proceedings - becoming Exhibit A.
In essence, the position advanced by Mr Gadiel was that, effectively, the entirety of that which was pressed by the Council as warranting refusal was based on past conduct of the operators of the brothel (including the drug‑dealing by the former operator) and that this approach was impermissible for the reasons explained by Preston CJ in Jonah Pty Limited v Pittwater Council (2006) 144 LGERA 408; [2006] NSWLEC 99 (Jonah).
Whilst it would have been permissible, he submitted, for the Council to rely on past conduct (to the extent that the past conduct related to potentially legitimate planning issues and not impermissible matters such as the drug‑dealing by the former operator) these matters should have been addressed by contentions proposing that they could have been dealt with by conditions of consent rather than warranting refusal as the Council had pleaded.
To the extent that the Council purported to rely on matters that were unrelated to matters of proper planning consideration, that position was fundamentally flawed and was untenable. It should not have been pleaded by the Council in the first instance.

[23]

Introduction

One significant aspect of what took place during the substantive hearings, and in the period leading up to it, related to the POM that ultimately formed the basis for the granting of the further two-year trial period.
First, it is to be observed that the original trial period that followed from the original decision by Brown C in 2010 had, as the operating regime for that trial period, a POM that applied to it. This was the POM referred to in the third particular to the Company's Contention 8 in its SOFAC (as earlier set out).
As Mr Gadiel properly acknowledged on the second day of this costs hearing, I observed, during the course of the site inspection on 24 May 2016, that further improvements were required to the POM in order to render the POM properly acceptable if a further trial period was to be permitted (see [49] of my earlier decision). Indeed, during the course of the site inspection, a variety of matters raised by me, or on behalf of the Council, concerned matters which required to be addressed by either modification to the POM or by additions to it.
Mr Daintry's expert planning report, dated 3 July 2016, had, annexed to it, a new draft POM and the annexures proposed to be attached to, and incorporated in, that POM. Mr Daintry's draft POM was dated 11 July 2016. He proposed incorporation into the plan the documents that were annexures to it. It is to be observed that the documents proposed to be incorporated in Mr Daintry's draft plan, by express reference and requirement to be annexed to it, were some two centimetres thick and were to be in addition to the 40 operative pages of Mr Daintry's draft itself. It is not necessary to list the annexures - however, given that the POM and the annexures were proposed to be translated into Cantonese and Mandarin, the utility of such a tome was questionable and required, subsequently, to be dealt with.
During the course of the site inspection, Mr Daintry also acknowledged a number of areas where improvements might be made, whilst, with respect to other areas, it was clear that these might require either further consideration by the relevant experts or determination by me.
After the site inspection, the Council replaced Mr Fryar, the consultant town planner who had been engaged by the Council for the purposes of these proceedings, with Mr Mead, a new town planning consultant who subsequently took part in the joint conferencing process and gave evidence on behalf of the Council during the hearing.
Mr Mead subsequently prepared an expert report and took part in the joint conferencing with Mr Daintry and the Council's Crime Prevention Officer, Mr Williams. Leading Senior Constable Ashton also took part in this joint conferencing (although Leading Senior Constable Ashton did not, subsequently, give oral evidence). Two joint expert reports arose from the joint conferencing.
The joint conferencing led to agreement about further improvements to be made to the proposed POM.
Although the way the Council pursued its case during the hearing was that the modification application should be refused and no further trial period should be permitted for the brothel, nonetheless, the Council's evidence and submissions were also directed to what the Council considered to be remaining inadequacies in the revised POM.
Mr Daintry had acknowledged, in his preparation for these proceedings, that the earlier POM was inadequate. He prepared his draft POM, a document that was appended to his expert report for these proceedings.
Following the joint conferencing and first joint expert report, Mr Daintry prepared a revised draft POM, dated 1 August 2016. This became Exhibit P in the merit proceedings.
As a consequence, at the commencement of the resumed hearings, there was a revised POM that then provided the foundation for the concurrent evidence between Mr Daintry, Mr Mead and Mr Williams during the course of the resumed hearing.
During the course of this concurrent evidence, further improvements were agreed to be appropriate to be made to the revised draft POM. I do not propose, in this decision, to set out those changes; they are adequately dealt with in my earlier decision, principally between [120] and [131].
It is sufficient to indicate that the changes which came out of the questioning of those witnesses (including questioning by me concerning matters such as the extent to which documents were proposed to be translated into both Mandarin and Cantonese) would have made it clear that the then revised proposed POM advanced on behalf of the Company at the commencement of the substantive hearing in October 2016 was not a document which had any possibility of resulting in the granting the amendment application sought to found a further trial period for operation of this brothel.
At the end of the evolution of the matters that would need to be incorporated in the POM arising out of the concurrent evidence, the Council maintained its position that the proposed further trial period should be rejected.
However, the Council's position was also that, if I were minded to grant a further trial period, a number of further changes needed to be made both to the POM and to the length of the new trial period. Critically, the Council's position was that, at three years, any further trial period was too long and was inconsistent with the PDCP (although the PDCP did not, strictly, apply as I was dealing with the modification application, nonetheless, it was an appropriate matter for consideration under the public interest heading in s 79C(1)(e) of the Environmental Planning and Assessment Act (the EP&A Act)).
Although the Applicant had proposed that there be a security guard employed on Friday and Saturday evenings, the position of the Council was that this was inadequate and that a security guard should be on duty at all times while the brothel was trading, if I was to permit a further trial period.
Whilst a good deal of the Council's evidence was directed to impermissible matters proposing that past unlawful conduct as a basis of refusal (contra to the decision by Preston CJ in Jonah that past unlawful conduct might be used as a basis for informing future conditions of consent, but that past unlawful conduct could not be used as a basis for refusal), a deal of this evidence also provided an appropriate evidentiary landscape to permit my consideration of both general POM issues and, specifically, the extent to which it would be appropriate to require the engagement of a security guard whilst the brothel was trading.
In this context, I readily acknowledge, whilst a good deal of the evidence given by Mr Williams was both misplaced and irrelevant, nonetheless, there was some relevant material which was informative of issues requiring my determination.
On the question of employment of a security guard, not only was it necessary for me to determine when such a person would be employed but it was also necessary for me to specify what should be the patrolling pattern and frequency for that person (see my earlier decision at [209] to [226]).

[25]

The outcome of the contested merit hearing

There are a number of matters to be observed concerning the outcomes of the contested merit element of the application to modify the 2010 development consent to permit a further trial period for the operation of the brothel. These are set out below.

For the Council, although it consistently maintained the position that no further trial period should be permitted, it failed on this position. However, as the "flip side" of the matters upon which the Company failed, it had considerable and significant success on matters of fundamental detail in the POM and on the length of the further trial period.
For the Applicant, it: • succeeded in obtaining a further trial period but not of the length for which the original amendment application had contended; • was forced to modify, extensively, the POM initially advanced as the basis upon which a further trial period should be approved (the Brown C approved POM). Indeed, a completely new draft was required. This new draft required modifications( including ones responding to inadequacies in Mr Daintry's initial draft POM acknowledged by him as requiring to be addressed); • failed to persuade me that I ought not adopt the position advanced by the Council about the times during which a security guard should be required to be employed at the premises. In this regard, the position advanced by the Council was accepted by me.

Although it can be seen that the adoption by me of an "amber light" approach (see [50] of my earlier decision and Ali v Liverpool City Council [2009] NSWLEC 1327 at [120]) resulting in the granting of a further trial period, it is fair to say that the length of the trial period and, especially, the operational basis upon which the further trial period was granted differed significantly from that for which the Applicant had originally sought approval from the Council.
Two things are readily apparent from my earlier decision.
First, although the Applicant did obtain a further trial period, it did so only on terms that were significantly (indeed, radically) different from those which it desired.
Second, of fundamental importance in these costs proceedings, any fair reading of my earlier decision makes it blindingly obvious that: 1. had an "amber light" approach not been adopted; but 2. the approach which was taken by the Court when I was first appointed to it of deciding whether or not a proposal should be approved on a solely "red light/green light" basis, this modification application would have been doomed to failure (and, moreover, deservedly so because of the defects in the application as it was at the beginning of the proceedings).
On this basis, there is no rational basis upon which I could consider that the outcome of the merit proceedings was "the event" sought by the Company - indeed, the Company's result when viewed against that which it had sought at the beginning of the proceedings was, at best, only partial success.
Although an unsuccessful party can be ordered to pay the entirety of the costs of the successful party even though the successful party did not succeed on all issues (James v Surf Road Nominees Pty Ltd (No2) [2005] NSWCA 296 at [32], Roads and Traffic Authority v McGregor & Anor (No2) [2005] NSWCA 453 at [17]), in these proceedings, the evidentiary unfolding of the parties' position was so intermingled, and the evolution of the POM so fundamental to the Council's case (and, absent the "amber light" approach, such a fundamental barrier to the Company's success), that severing issues into win/lose categories would be impossible.
Further, although there are circumstances where an "issue by issue" approach may produce a fairer result than the traditional rule can come into play (Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No2) [2008] FCAFC 107 at [5] - noting that the use of "fair and reasonable" in the passage cited is not used in the same sense as in the Court Rules), that is not here the position, given that, on the contested issues requiring my merit determination on an "amber light" basis, the Company failed on each of them.
It therefore follows that there is no rational basis upon which it would be "fair and reasonable" to contemplate making any costs order against the Council.

[26]

Costs of the costs application

Costs applications made in Class 1 proceedings are not subject to any "fair and reasonable" test before costs are awarded to the successful party on that costs application (Grant v Kiama Municipal Council [2006] NSWLEC 70 at [74]). As the Council has been completely successful in resisting this costs application, the presumptive position is that it will have its costs of the costs application awarded on an ordinary basis - that is, "as agreed or assessed".
However, Dr Smith submitted to me that, based on an offer made by the Council, by letter dated 23 August 2017, the Council should have its costs on an indemnity basis from the expiry of the unaccepted offer made to the Company. The offer was made in the following terms: Withdrawal of motion In light of the above, your client's notice of motion must fail and to avoid any unnecessary legal costs of the parties, we invite your client to withdraw the motion immediately. In the event that your client withdraws its motion, our client offers not to seek an order for costs against your client for costs incurred to date. This offer remains open for 14 days, namely until close of business on 6 September 2017. However, if your client's motion proceeds to hearing and our client is successful in defending the motion, we place you on notice of our intention to rely upon this letter in support of an application that your client pay our client's costs for the motion on an indemnity basis consistent with Calderbank v Calderbank [1075] 3 All ER 333.
The offer was not one made on the formalised basis provided for in Pt 42 Div 3 of the UCPR but was, as noted in its terms, a Calderbank offer (Calderbank v Calderbank [1975] 3 All ER 333).
There are two tests required to be satisfied before the failure of a party to accept an offer made on this basis will be liable for the offering party's costs on an indemnity basis from the time of expiry of the offer that had been made (Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [8]). Those tests are: 1. there was a genuine offer of compromise, and 2. it was unreasonable for the offeree not to accept it.
It is, therefore, necessary for me to assess whether or not these tests were satisfied under the circumstances.
This requires me to assess whether or not that which was offered by the Council constituted a real and genuine benefit to the Company and, conversely, a real and genuine compromise by the Council. The relevant element of the offer as earlier set out was that the Council would forgo its costs incurred prior to the discontinuance of the proceedings by the Company if the matter did not go to hearing. As can be seen from the date of the offer (23 August 2017); the date of its expiry (6 September 2017); and the first day of this costs hearing, it is reasonable to expect that virtually all, if not all, the Council's pre-hearing legal preparation costs would have been incurred prior to the expiry of the offer. However, it is to be observed that the Council's solicitors have not intimated, in any quantified fashion, what might be the financial benefit to the Company if the Company was to accept the offer that had been made.
On balance, I am satisfied that, despite the failure of the Council to provide any indicative quantification to the Company of what might be the costs' benefit to the Company if it was to have accepted the offer, the absence of such indicative quantification does not render the offer unreasonable. The Council's solicitors' letter provides a clear basis on which the Company's solicitors could reasonably infer that the costs the Council was prepared to forgo were not trifling.
I now turn to whether it was unreasonable not to have accepted the offer. I am satisfied, for the reasons that follow, that it was unreasonable not to accept it.
I have reached this conclusion because the letter containing the Council's offer had set out, in some detail, the nature of the defence upon which the Council proposed to rely in defending this costs application. The elements of the 23 August 2017 letter setting those matters out is reproduced as Annexure B to this decision.
In particular, as I have earlier set out, the Council expressly laid out the three bases upon which the Council proposed to argue, on the question of costs, why the Company could not be regarded as having succeeded on the primary contested matters in the merit proceedings.
Although not precisely couched in the terms of an analysis of what constituted "the event" in defining the outcome of the proceedings (as discussed in Sze Tu), nonetheless, the Council clearly, concisely and precisely articulated three fundamental bases (at (7) of the letter) why it could not be said that the Company had succeeded in a sufficiently comprehensive fashion even to lay the foundations for the potentiality of a successful costs application.
For the reasons earlier set out, this costs application was doomed from the instant of its lodgement.
Although, as also earlier set out in some detail, the Council did not succeed in the merit proceedings in resisting the Company being granted any further trial period for its brothel, nonetheless, the shorter length of the granted trial period than that sought by the Company and the conditions through the significantly revised POM under which it was to be permitted to be undertaken were quite different and more restrictive than had been the position advanced on behalf of the Company at the commencement of the merit proceedings.
I am, therefore, satisfied that all the preconditions for the awarding of indemnity costs to the Council were met by the terms of the offer made in the Council's solicitors' letter of 23 August 2017.
It therefore follows that the Company is to be required to pay the Council's costs of this costs application on an indemnity basis.

At a glance

Court

Decision date

Before

Source

Judgment (29 paragraphs)

Parties

Cases Cited (14)

Cited By (1)