Walker v Siasat

Relevant costs rules 7Rules 42.19 and 42.20 of the Uniform Civil Procedure Rules 2005 (UCPR) provide: 42.19 Proceedings discontinued (1) This rule applies to proceedings that are discontinued by the plaintiff, as referred to in rule 12.1. (2) Unless the court orders otherwise or the notice referred to in rule 12.1 (2) otherwise provides, the plaintiff must pay such of the defendant's costs as, at the date on which the notice of discontinuance was filed, had been incurred by the defendant in relation to each claim in respect of which the proceedings have been discontinued. ... 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. ...

Background 8The DA was approved on 17 December 2012 and a s 96 (under the Environmental Planning and Assessment Act 1979) modification on 11 January 2013. Letters were sent to the Council by Mr Walker's solicitor identifying alleged errors in the approval of the DA on 1 February 2013, 1 March 2013 and 15 March 2013. The Council responded that it did not consider the development consent was invalid. Letters were sent by Mr Walker's solicitor to Mr and Mrs Siasat raising concerns with the DA approval on 7 February 2013, 1 March 2013 and 15 March 2013. No reply was received to these. Proceedings were commenced on 28 March 2013 to fit within the three month period referred to in s 101, which ended in April 2013. On 19 July 2013 another warning letter was sent to Mr and Mrs Siasat's solicitor to which there was no reply. An undertaking was requested failing which it would be necessary to take proceedings seeking an interlocutory injunction. No undertaking was offered. An interlocutory injunction preventing work by Mr and Mrs Siasat was granted by the Court on 29 July 2013. The matter was prepared for hearing with the filing of affidavits including the affidavit sworn by Mrs Siasat dated 11 September 2013 in which she referred to obtaining a CDC. 9Numerous letters were sent after the commencement of proceedings and after Mrs Siasat obtained a CDC. Mr Walker's solicitor's letter to the Council's solicitor dated 2 September stated: ... we are instructed to invite the third respondent [the Council] to file a submitting appearance in the proceedings. We make that submission for the following reasons: ... 10The Council's solicitor's letter to Mr Walker's solicitor of 3 September 2013 stated: Council chose to defend these proceedings when it entered an appearance and that position has not changed and is not affected by the subsequent discussions between the private landowners. ... If the proceedings do return to Court, the Council will defend its position as it considers that the legal tests have not been appropriately identified in your client's points of claim, nor will they be satisfied on the evidence that will be available to the Court. The Council remains concerned at the time and cost being spent on the proceedings, now being, in essence, a private mediation of a dispute between two neighbours. When and if this matter proceeds to hearing, council will be raising this along with other concerns as to the conduct of the proceedings and the reasonableness of the costs of those proceedings. 11Mr Walker's solicitor's letter to Mr and Mrs Siasat's solicitor dated 12 September 2013 stated: However, you did indicate during the mediation process that the first and second respondent would not be relying upon the complying development certificate (CDC) in the proceedings. That position has now changed. As of yesterday's date, Mrs Siasat has formally advised that she proposes to commence work, as owner/builder, relying upon the CDC to provide her authority to do so. 12I note the parties agreed to waive the usual privilege in relation to the contents of the mediation process in relation to the above letter. 13Mr Walker's solicitor's letter to Mr and Mrs Siasat's solicitor also dated 12 September 2013 stated: We understand Mrs Siasat's affidavit to indicate that the first and second respondents propose, in a way that is not clear at this stage, to utilise complying development certificate No 198/13 (CDC) (issued by Accredited Inspection Services Pty Limited (AIS), to commence and continue work that has already been commenced under development consent 10.2012.222.1, granted by the third respondent on 17 December 2012. The affidavit appears to indicate that works that have already been carried [sic] by Mr and Mrs Siasat under the development consent will now be continued under the CDC. ... Your clients' actions have introduced very complex issues into the proceedings, which the applicant will be required to address. In all probability, amendments will be required to each of the amended summons and points of claim. 14Mr Walker's solicitor's letter to the Council's solicitor dated 12 September 2013 proposed amendments to the summons (no reference to the CDC is made). 15Mr Walker's solicitor's letter to Mr and Mrs Siasat's solicitor dated 20 September 2013 stated: The notice relates to the works that will be undertaken in accordance with the Complying Development Certificate 198/13 (CDC), granted by Accredited Inspection Services Pty Limited (AIS) as Principal Certifying Authority (PCA) of the development. ... Our client accepts that it is appropriate to very carefully consider the utility of the further conduct of the proceedings. It was for this reason that Mr Cork foreshadowed to the Court last week that the proceedings may come to an end. ... In our submission, this is not lawfully possible. Your clients must elect whether they are continuing work on the site under the development consent (which has already been taken up, with the works physically commenced) or whether they will re-commence work under a new consent, being the CDC. 16Mr and Mrs Siasat's solicitor's letter to Mr Walker's solicitor dated 25 September 2013 stated: We have been instructed to put a Calderbank offer to you (Calderbank v Calderbank (1975) 3WLR 586): Our clients are willing to sign a discontinuance or consent orders dismissing the proceedings on the basis that each party pays their own costs. 17Mr Walker's solicitor's letter to Mr and Mrs Siasat's solicitor dated 1 October 2013 stated: Our difficulty in respect of this aspect of the matter is that we again do not understand the point that is made. You have correctly identified the mechanisms by which a development consent may be surrendered. However, your clients have given no indication that they propose to surrender the development consent granted by Kiama Council on 17 December 2012 (development consent). ... The proceedings can be brought to an end on the following basis: 1. Your clients immediately surrender the development consent, in accordance with s104A of the EP&A Act. 2. Your clients agree to pay the applicant's costs of the proceedings as agreed or assessed. 18The Council's solicitor's letter to Mr Walker's solicitor dated 18 November 2013 stated: Further, Council takes the position that the issue of the complying development certificate has made the proceedings redundant, and accordingly that the costs that have been incurred, and will continue to be incurred, in proceeding to a hearing will be unreasonably imposed on the Council. Accordingly, Council puts all parties on notice that, by virtue of the substantial costs incurred to date in the proceedings, and as a result of further costs being incurred in exploring matters of settlement between the private landowners, and in pursuing allegations that are doomed to fail both substantively and due to the issues of the complying development certificate, Council is of the view that the circumstances are significantly distinguishable for those explained in Cutcliffe v Lithgow City Council [2006] NSWLEC 463. 19The Council's solicitor's letter to Mr Walker's solicitor also dated 18 November 2013 stated: This correspondence does not lead us to believe the Applicant's claim against Council has any utility. Further, it is clear that this matter is capable of resolution in the course of negotiation between the Applicant and the First and Second Respondents, as clearly demonstrated from the penultimate paragraph of Mr Cork's letter dated 1 October 2013. If the Applicant discontinues proceedings without further delay, Council is willing to pay its own costs of proceedings to date. 20Mr and Mrs Siasat's solicitor's letter to Mr Walker's solicitor dated 13 December 2013 stated: We have been instructed to adopt a similar position as the council: If the Applicant discontinues proceedings without further delay, the First Respondent and the Second Respondent are willing to pay their own costs of proceedings to date. This offer is subject to the discontinuance taking place on or before 19th December 2013. If that event does not take place we are instructed to reply to your letter on 20th December 2013 and to seek costs from that point onwards on an indemnity basis and we will seek to rely upon this correspondence as a basis of that claim.

Mr Walker's submissions 21Mr Walker obtained the relief he sought in the proceedings namely that DA No 10.2012.222.1 as modified was surrendered. While not literally the terms of the declaration sought in the further amended summons the substance of the relief was obtained by him. The surrender of the development consent was a surrender in the proceedings. As the successful party he should be awarded costs per Kiama Council v Grant [2006] NSWLEC 96; (2006) 143 LGERA 441 at [49], [56], [72]; Ralph Lauren 57 Pty Ltd v Byron Shire Council [2014] NSWCA 107; (2014) 199 LGERA 424 at [23], [28], Cutcliffe v Lithgow City Council [2006] NSWLEC 463; (2006) 147 LGERA 330 at [13]. The CDC had no impact on the legal issue of the validity of the development consent in the proceedings. The fact the CDC existed did not affect the proceedings, particularly in the absence of the Respondents making any move to include it in the proceedings formally. For example, it was not raised as part of any defence. While it was referred to in correspondence between the parties' solicitors that did not alter the circumstance that Mr and Mrs Siasat did not offer to or surrender the development consent at any stage until the discussions which occurred at the end of the first day of hearing which resulted in the consent orders being made, despite that being explicitly raised in correspondence before the hearing. 22Alternatively, the Respondents behaved unreasonably in the litigation and that justifies an order for costs in Mr Walker's favour. Each of the Respondents actively defended the proceedings. The Council further challenged the compliance with Pt 59 of the UCPR including threatening that the proceedings should be struck out and opposing reliance on expert witnesses. An order for indemnity costs should be made against Mr and Mrs Siasat given their failure to respond to warning letters and commencement of work in reliance on the development consent despite the commencement of these proceedings in accordance with the principles in Glaser v Poole (No 2) [2010] NSWLEC 232. 23The Council should have filed a submitting appearance in accordance with the principle in R v Australian Broadcasting Tribunal; ex parte Hardiman (1980) 144 CLR 13 at 35-36, Cutcliffe at [13] and Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [77]-[78]. It is liable for costs given that it actively participated in the proceedings.

Mr and Mrs Siasat's submissions 24Mr Walker bears the onus of convincing the Court why it should depart from the usual order when proceedings are dismissed per Ralph Lauren at [21]. The mere fact Mr Walker achieved some practical success does not alone justify awarding costs in his favour where he is the discontinuing party. The Court did not make any determination on the correctness of Mr Walker's case as there was no final hearing. The extra circumstance is frequently to be found in the unreasonableness of the conduct of a respondent but there was none here per Ralph Lauren at [24]-[27]. No unreasonable conduct occurs where a plaintiff discontinues because it has achieved the result sought by means of settlement of litigation with the consent of all parties or because a supervening event removes or modifies the subject of the dispute so that no issue remains between the parties except costs, per Ralph Lauren at [28]. It is not sufficient that a respondent's actions brought about the supervening event. Ordinarily there needs to be unreasonableness in the defendant taking that action at [31], [33]. Mr Walker has not satisfied the onus he bears to justify the making of a costs order in his favour.

Council's submissions 25Where proceedings are rendered moot by supervening events, the appropriate exercise of the costs discretion is to let losses lie where they fall: Grant at [72]-[77]. This saves the Court from conducting a hypothetical examination into the substantive issues, which no longer need to be run: Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622. The Court need go no further than the terms of the agreement. The principle outlined above is not displaced in the present case. The Council has not acted unreasonably: Grant at [78]. By comparison, the Court may note that significant costs were expended between the other parties in: (a)Numerous amendments to Mr Walker's pleadings; (b)The preparation of multiple reports of contested expert evidence by Mr Walker; and (c)Lengthy processes of unsuccessful mediation between Mr Walker and Mr and Mrs Siasat. 26The Council did not act unreasonably and require the parties to generate such costs. Indeed, the apparent futility of the proceedings was appropriately raised early and often with both parties in an attempt to save them (and it) further costs. 27When the correspondence between the parties' solicitors in September/October 2013 is considered it is not apparent who should have taken steps to settle the matter as between Mr and Mrs Siasat and Mr Walker. The Council could not assist in settlement in any event but endeavoured to progress settlement between the other parties as can be seen in the correspondence in exhibit 1A and exhibit A. No finding was made against the Council as the proceedings did not end in a final determination. The Hardiman principle does not apply in these circumstances, see Capital Airport Group Pty Ltd v Director-General of the NSW Department of Planning (No 2) [2011] NSWLEC 83 at [249]-[252].

Finding 28Under UCPR r 42.19, the default position on discontinuance, or under r 42.20, on dismissal of proceedings, is that a plaintiff pays a respondent's costs, subject to the making of an otherwise order. The parties agree there should be an otherwise order but disagree what it should be. 29Mr Walker's counsel's submissions relied on the fact that the development consent was surrendered by Mr and Mrs Siasat as suggesting Mr Walker was the successful party. That submission fails to adequately recognise that proceedings were dismissed, for which r 42.20 provides that the usual rule is that the plaintiff must pay the defendant's costs. 30The principles identified in the recent decision of Ralph Lauren Preston CJ of LEC (Beazley P, Ward JA concurring) are directly applicable to this matter and it is therefore useful to set out the findings in some detail. That decision was considering an appeal from a costs decision of the trial judge that each party pay its own costs following the discontinuance of judicial review proceedings. Rule 42.20 is similar to r 42.19. Preston CJ of LEC held: 21. The court can only order otherwise if it makes a discretionary decision to depart from the default costs order provided for in r 42.19(2). This means that there is an onus on the discontinuing party to make an application in respect of costs if it does not propose to pay the costs of the other parties: Foukkare v Angreb Pty Ltd [2006] NSWCA 335 at [65]. It also means that there must be some positive ground or good reason for departing from the ordinary course: Australiawide Airlines Ltd v Aspirion Pty Ltd at [54]; Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32 at [54]. As Basten JA summarised in Bitannia Pty Ltd v Parkline Constructions Pty Ltd at [70]: ... the discontinuing plaintiff must be the moving party on an application for an alternative costs order. If it is necessary to establish a factual basis for such an order, the plaintiff will bear the onus of proving the relevant facts. Similarly, if it necessary to draw particular inferences from primary facts, the plaintiff will also bear that burden. Finally, the plaintiff will bear the burden of persuading the court that some other order is appropriate. 22. The circumstances on which a discontinuing plaintiff may rely to persuade the court that an alternative costs order is appropriate are varied and those discussed in the authorities do not exhaust the circumstances in which the discretion might be exercised. However, the authorities reveal that circumstances where a court has made an alternative costs order have a common thread related to the reasonableness or unreasonableness of the conduct of the parties. 23. Where the discontinuing plaintiff is seeking an order that the defendant pay the plaintiff's costs of the proceedings, the circumstances relied on tend to be that the defendant has acted so unreasonably that it should pay the discontinuing plaintiff's costs. The mere fact that the discontinuing plaintiff may have achieved some practical success, such as achieving the result it sought in the proceedings, does not by itself and without some extra circumstance, ordinarily justify the awarding of costs in favour of the discontinuing plaintiff. The extra circumstance needed is frequently found in the unreasonableness of the conduct of the defendant: Australian Securities Commission v Aust-Home Investments Ltd [1993] FCA 585; (1993) 44 FCR 194 at 201; Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622 at 624-625; One.Tel v Commissioner of Taxation [2000] FCA 270; (2000) 101 FCR 548 at [5]. The unreasonableness in the conduct of the defendant may be prior to the commencement of the proceedings, where such conduct may have precipitated the litigation, or in the defence of the proceedings. ... 26. Unreasonableness of conduct can also be found in a defendant continuing to defend litigation until it then surrenders to the plaintiff by consenting to the court making orders, or giving an undertaking to the court, in substantially the same terms and effect as sought by the plaintiff in the proceedings: see Edwards Madigan Torhillo Briggs Pty Ltd v Gloria Stack [2003] NSWCA 302 at [5]; Kiama Council v Grant [2006] NSWLEC 96; (2006) 143 LGERA 441 at [56], [60]-[71], [80]; Ku-ring-gai Council v Minister for Planning (No 2) [2008] NSWLEC 276 at [25], [26]; and Hall v Ku-ring-gai Council [2009] NSWSC 370 at [39]- [48]. This is not a settlement of the litigation in the ordinary sense, but rather a surrender to the plaintiff. In this circumstance, although there has not been a trial on the merits, the court may feel confident that the discontinuing party would have almost certainly have succeeded if the matter had been fully tried: Lai Qin at 625. The defendant's unreasonableness in defending litigation that it would almost inevitably have lost up to the point of surrender, causing the plaintiff unnecessarily and unreasonably to have incurred costs to that point, may provide the justification for a costs order in favour of the discontinuing plaintiff. ... 28. Circumstances where there may be no unreasonable conduct of the parties include where the plaintiff discontinues because it has achieved the relief sought in the proceedings by means of settlement of the litigation with the mutual consent of the parties or by extra curial means, or because of the happening of a supervening event which so removes or modifies the subject of the dispute that no issue remains between the parties except that of costs: Lai Qin at 624; and One.Tel at [6]. 29. In the case of a settlement, the court ordinarily will not look behind the settlement to the reasons or motivation of the parties to settle, and hence will not evaluate the reasonableness of the parties in settling: see Bitannia Pty Ltd v Parkline Constructions at [81]. ... 31. If, however, the defendant's action constituted or caused the supervening event, the reasonableness or unreasonableness of the defendant's actions may need to be assessed. It is not sufficient by itself that the defendant's action is or brought about the supervening event; there ordinarily needs to be something unreasonable in the defendant taking that action. ... Notwithstanding that the defendant's action caused the proceeding to become futile, unless there was some unreasonableness in the defendant so acting, the proper exercise of the costs discretion may still be to make no order as to the costs of the proceeding. Examples of this type of case are given in Kiama Council v Grant at [72]-[77]. ... 33. If there is no unreasonableness in the conduct of the defendant then, notwithstanding that the discontinuing plaintiff might have achieved some practical success by settlement or extra curial means, the proper exercise of the costs discretion will usually be to make no order as to costs. As McHugh J said in Lai Qin at 625... 31As part of the settlement the subject matter of the proceedings, the development consent, was agreed to be surrendered by Mr and Mrs Siasat (order 1). Consequently, the proceedings were dismissed (order 3). There was no finding on the substance of the judicial review proceedings by the Court so that there is no "merit" determination to guide the Court's consideration of costs. The surrender of the development consent meant that the utility of the proceedings was removed. The question to be answered is whether that circumstance, where the proceedings are otherwise dismissed, suggests that Mr Walker should get his costs. 32Ralph Lauren at [21] identifies that Mr Walker bears the onus of establishing to the Court that good reason exists for departing from the usual order that he pay the other parties costs under r 42.20. That generally requires unreasonableness in the conduct of parties to be demonstrated, at [22], [23]. I do not consider there was unreasonableness in the conduct of the other parties in the proceedings. For example and contrary to Mr Walker's counsel's submissions, the Council was not required to accept the assertion of Mr Walker's solicitor that the process for granting the development consent was flawed. The Council's response to a few letters sent before proceedings commenced was reasonable. The actions of the Council in requiring the summons to comply with Pt 59 of the UCPR or not initially consenting to Mr Walker seeking to rely on expert evidence does not suggest unreasonable behaviour. The actions were not unusual or unreasonable in adversarial proceedings. In relation to Mr and Mrs Siasat, in relation to whom an indemnity costs order is sought, they were entitled to rely on the development consent and commence work in the absence of a declaration of invalidity by the Court. They were not bound to provide an undertaking that they would not do work in reliance on the development consent to the Court so that an interlocutory injunction application had to be made. While such behaviour may not be cooperative, given this is adversarial litigation, it is not unreasonable. They also did not have to reply to correspondence sent before the litigation commenced. Their understanding of their position is identified in Mr Siasat's affidavit. 33The main issue in contention is whether Mr Walker can satisfy the Court that as a result of the correspondence between the parties' solicitors set out in some detail at par 9-20 above, about the impact of the CDC on the proceedings and whether Mr and Mrs Siasat would surrender the development consent, the failure to achieve an earlier settlement in September or October 2013 means there was unreasonable behaviour by Mr and Mrs Siasat (I will consider the Council separately below). The position arrived at by the parties on the second day of the hearing which resulted from the agreement of Mr and Mrs Siasat to surrender the development consent could potentially have been arrived at then. The argument about costs would have been smaller in scope because the full costs of preparing for and attending the hearing would not then have been incurred. 34The correspondence between the various parties' solicitors set out above shows that there was active discussion about the impact of the CDC, if any, on the proceedings. The offer made by Mr Walker's solicitor in the letter dated 1 October 2013 was that Mr and Mrs Siasat surrender the development consent and pay Mr Walker's costs as agreed or assessed. The counter offer by the Council (letter dated 18 November 2013) and Mr and Mrs Siasat (letter dated 13 December 2013) was that if Mr Walker discontinued his proceedings each party was willing to pay its costs. An understandable preference of Mr and Mrs Siasat was to maintain the validity of the development consent as it enabled development at the front of the property which the CDC could not. That part of the development was not of concern to Mr Walker, his concern focussed on the work to the rear of the property. Mr and Mrs Siasat also did not wish to pay Mr Walker's costs. In the absence of any consideration of the judicial review grounds there is nothing before me which suggests that the Respondents' defence was hopeless or lacked merit. It follows that I do not consider that the circumstances in Ralph Lauren at [26] apply. I do not consider the Respondents unreasonably defended litigation they would inevitably have lost. Mr and Mrs Siasat's agreement to surrender the development consent was not a surrender in the sense identified in Ralph Lauren at [26]. 35The circumstances of this case appear to come within the principle identified in Ralph Lauren at [28], [31]. As identified in [31] that a defendant's actions cause the proceedings to become futile does not automatically mean that costs should be ordered against him or her. I do not consider Mr and Mrs Siasat's actions were unreasonable in not settling in September or October 2013. While it is unfortunate for all parties that settlement was not then achieved it is not readily apparent who should have settled and therefore who may have acted unreasonably. Mr and Mrs Siasat are not liable for Mr Walker's costs. 36In relation to the Council, Mr Walker's counsel submitted that it should have filed a submitting appearance, relying on the Hardiman principle, Cutcliffe (where a council submitted late in the proceedings and costs were awarded against it) and Gaudron and Gummow JJ in Oshlack in the High Court at [77]-[78]. I do not understand that the Court collectively has to date accepted that there is a presumption that a local council must or should file a submitting appearance where a development consent it has granted is challenged and the beneficiary of the consent also actively seeks to defend it. Whether the Hardiman principle, which is directed to the importance of a consent authority maintaining its impartiality in its statutory functions, applies has to date been assessed on a case by case basis rather than as some kind of presumptive rule as far as I am aware. It follows that I do not necessarily accept Mr Walker's counsel's submission. There are numerous cases in this Court where a local council does choose to be an active party in such judicial review proceedings where the beneficiary may also be an active party. Biscoe J made obiter remarks on the issue of councils participating actively in litigation in Cutcliffe at [29] and in Capital Airport Group at [251]-[252], the latter case a challenge to the decision-making of a council in relation to the making of a local environmental plan. 37As the ultimate thrust of Mr Walker's submissions was that the Council as a party actively engaged in the litigation was exposed to the risk of costs, about which there was no argument from the Council, I do not need to determine any further whether a submitting appearance should have been filed by the Council. 38There is no basis on which the Court would award costs against the Council applying the principles in Ralph Lauren. It was not within the Council's power to achieve the surrender of the development consent, that was a matter solely for Mr and Mrs Siasat. I have already concluded above in par 32 that there was otherwise no unreasonable behaviour by the Council in the proceedings. 39The appropriate costs order in this matter is that each party pay his or her own costs. Costs of the hearing on costs on 18 June 2014 are reserved.

Orders 40The Court makes the following orders: (1)Each party is to pay its own costs of these proceedings. (2)Costs of the hearing on costs on 18 June 2014 are reserved. (3)Exhibits may be returned.

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