Vaughan v Byron Shire Council

Judgment 1HER HONOUR : By notice of motion dated 5 September 2011 the plaintiffs appeal from the decision of Harrison AsJ granting leave to the defendant to file an amended defence (Vaughan v Byron Shire Council [2011] NSWSC 824). They also appeal from her Honour's order that they pay the defendant's costs of the motion it being submitted that her Honour did not afford them an opportunity to be heard and for that reason the costs order should be set aside and on reconsideration the issue of costs determined in their favour. 2The appeal is brought pursuant to r 49.4 of the Uniform Civil Procedure Rules (UCPR). In the circumstances of this case it is necessary for the plaintiffs to demonstrate error in the exercise of her Honour's discretion. Counsel's written submissions, which were directed to the identification of error of this kind, were supplemented with the additional argument that her Honour's order that an amended defence be filed and served in the form proposed by the defendant was productive of error of a different kind. He submitted that paragraph 11, arguably the most significant of the three contentious paragraphs in the amended defence, included a clause which states a proposition contrary to law and the appeal should be allowed for that reason. That paragraph reads as follows: 11. In answer to paragraph 46, the Defendant admits the consent operated in rem in respect of the Vaughan property by reason of the declaration made by the Land and Environment Court on 1 February 2010 but otherwise does not admit the paragraph. (emphasis added) 3The consent to which the paragraph refers is a development consent granted by the defendant in 2001 in respect of land owned by the plaintiffs authorising the construction of coastal protection works. The plaintiffs submitted that the consent operated in rem not because (or by reason of) the declaration in the Land and Environment Court of February 2010 but by reason of the terms of the consent as at the date of its issue and that paragraph 11 is defective for that reason. 4Even if this is an error properly comprehended by an appeal under r 49.4, I made clear my view during the hearing that a simple edit of the paragraph would remove the offending clause and, assuming the exercise of her Honour's discretion survived challenge on other grounds, the amended defence would be unassailable since it otherwise appeared to me to identify and clarify the matters in dispute. The defendant's counsel consented to a further amendment of paragraph 11 in the way I proposed. The plaintiffs' counsel opposed the amendment. He submitted that were I satisfied that paragraph 11 was defective the appeal should be upheld and the defendant required to make fresh application to amend by the filing of a notice of motion in the ordinary way. While the plaintiffs are entitled to pursue their claim against the defendant with determination, they are not entitled to take a tendentious or combative approach to the litigation. Since I have resolved the appeal adverse to the plaintiffs for other reasons, it is not necessary that I say more about counsel's instructed position on the issue of the amendment of paragraph 11. I propose to permit paragraph 11 to be edited. Both parties would, however, be well advised to reflect upon their obligations under s 56(3) of the Civil Procedure Act 2005 in the further conduct of the litigation. 5The plaintiffs bring proceedings in negligence claiming loss and damage consequent upon what they contend to be either the defendant's failure to grant a development consent for the construction and maintenance of certain coastal protection works, namely a geobag revetment (a wall of sandbags) on or near their property at Belongil Beach, Byron Bay, or because it unreasonably took steps to enjoin them from undertaking that work, thereby exposing the property to storm damage. 6The statement of claim is a comprehensive pleading consisting of 168 paragraphs. It details a lengthy history of the attention the defendant Council has given (or, as the plaintiffs would contend, failed to give) to the impact of coastal erosion by tides and storms, including the advice it has received from government agencies from time to time and the expert reports it has commissioned with a view to effecting a long term Coastal Management Plan for Belongil Beach and surrounding areas. A very significant number of admissions are made and maintained in the amended defence which extends to 68 paragraphs. Only three paragraphs were the subject of contention in the proceedings before her Honour. Other amendments were made by consent. 7The amendments which were opposed are conveniently set out in her Honour's judgment at [15] - [23] each of which has the effect of withdrawing an admission made in the defendant's filed defence: ( i) Paragraph 46 of the statement of claim and paragraph 11 of the amended defence [15] Paragraph 46 of the statement of claim pleads: "46. The Consent operated in rem in relation to the Vaughan property and had the effect that the plaintiffs were entitled to do the things permitted by the Consent on their own land." [16] Paragraph 11 of the flied defence pleads the defendant: "11.1 admits the matter pleads but will refer to the pleaded and associated documents for their full meaning and effect; 11.2 does not admit that the Consent operated to obviate the requirement for other licences, permits, permissions or approvals." [17] Paragraph 11 of the proposed amended defence reads: "11. In answer to paragraph 46, the Defendant admits the consent operated in rem in respect of the Vaughan property (by reason of the declaration made by the Land and Environment Court on 1 February 2010) but otherwise does not admit the paragraph." (ii) Paragraph 84 of the statement of claim and paragraph 33 of the amended defence [18] Paragraph 84 of the statement of claim pleads: "84. At all material times, including on and from 20 May 2009, the Council knew or ought or have know that the plaintiffs were entitled to do works authorised by the Consent on their own property. Particulars (i) Council knew or ought to have know that the Consent operated in rem ." [19] Paragraph 33 of the flied defence pleaded: "The Defendant admits paragraph 84 of the Statement of Claim." [20] Now paragraph 33 of the proposed amended defence the Council denies paragraph 84 of the statement of claim. (iii) Paragraph 144 of the statement of claim and paragraph 57 of the amended defence [21] Paragraph 144 of the statement of claim reads: "144 At all material times, by reason of the Consent and the development undertaken by the Council in purported compliance with the Consent, the Council was obliged to carry out development and works at the Manfred Street Site strictly in accordance with the GHD Report and the plaintiffs were able but not obliged to carry out such things on the Vaughan property." [22] Paragraph 57.1 of the flied defence pleaded the defendant: "57.1 denies any obligation to undertake works 'strictly' in accordance with the GHD Report; 57.2 repeats the matters pleaded in answer to paragraph 46 above; 57.3 otherwise admits paragraph 144." [23] Paragraph 57 of the amended defence reads: "57 In answer to paragraph 144 the Defendant: 57.1 ... 57.2 does not admit that compliance with Condition 1 of the Consent required the Council Wall to be constructed in exact and complete conformity with figure 4.20 being Annexure A t the GHD Report or with Section 3.5 of the GHD report entitled, Design and Construction Elements; 57.3 repeats the matters pleaded in answer to paragraph 46 above; 57.4 otherwise denies paragraph 144." 8One of the discrete questions raised on the appeal is whether her Honour erred in applying the principled approach articulated in SLE Worldwide Australia Pty Ltd v Wyatt Gallagher Bassett Pty Ltd [2005] NSWSC 816 where application is made by a party for leave to withdraw an admission. The plaintiffs contend that although her Honour cited the relevant authority she either failed to apply the appropriate test by failing to take into account material considerations or she acted upon a wrong principle. 9Each of the three contentious paragraphs in the amended defence either directly or indirectly concern the effect and scope of the development consent granted by the Council on 8 November 2001. The plaintiffs submitted that her Honour misunderstood or misapplied the principle that a development consent operates in rem by attaching to the land to which it relates for the benefit of the owners and occupiers of the land. They submitted that by allowing the amendments her Honour must be taken to have regarded the development consent as personal, that is not attaching to the land but entitling only the recipient of the consent to act upon it. They maintained this submission despite her Honour's acknowledgment of the binding effect of the authorities to the contrary cited at [12] and [13] of her judgment. 10The plaintiffs submitted that her Honour's erroneous appreciation of the legal effect of a development consent infected the exercise of her discretion and that a fresh determination of the application to amend would necessarily result in leave being refused. In order to deal with that submission it is necessary to refer to the history of dealings between the Council and the plaintiffs. 11The development consent was granted by the defendant in November 2001 in its capacity as the consent authority, to itself, as proponent of the development to which the consent related. It was common ground that an interim sandbag wall constructed by the Council pursuant to the consent failed in front of the plaintiffs' property due to unprecedented weather events in May 2009 and that their property (and other properties) were unprotected from damaging wave action as a result. Thereafter the plaintiffs sought to undertake works of various kinds on their land to prevent further erosion but (so it was argued by the Council) did so in such a way that other properties on Belongil Beach were likely to be adversely effected, including property owned by the Council. 12Proceedings were brought in the Land and Environment Court in 2009 concerning the development consent, including whether it applied to the plaintiffs' property and, if so, whether it operated in rem entitling the plaintiffs to legally carry out the works they proposed ( Byron Shire Council v Vaughan, Vaughan v Byron Shire Council [2009] NSWLEC 88). In September 2009 the Council successfully restrained the plaintiffs from undertaking any erosion protection works that might have been provided for in the development consent until further order having persuaded the Court that were they to undertake any remedial work on their property in isolation it would be potentially productive of adverse impacts on neighbouring properties. 13In February 2010 those proceedings were settled with consent orders being made without admission. The proceedings in this Court were commenced in November 2010. The plaintiffs' case in this Court relies upon the orders made in the Land and Environment Court, it being contended by them that the erosion protection work they wished to undertake was comprehended by the development consent and that the defendant acted unreasonably in preventing them from undertaking that work. 14Harrison AsJ extracted the orders made in the Land and Environment Court in full in her judgment at [8]. For present purposes it is sufficient to cite them in part only: "By consent and without any admission by the parties, the COURT: In proceedings 40342 of 2009