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.
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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.
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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].
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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].
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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.