Westfield Management Limited & Ors v Direct Factory Outlets Homebush Pty Limited & Ors

Environmental Planning and Assessment Act 1979 s 123 LEGISLATION CITED: Evidence Act 1995 s 50 Land and Environment Court Act 1979 s 69

Canterbury City Council v Roads and Traffic Authority of New South Wales [2004] NSWLEC 536; Colgate-Palmolive Co & Anor v Cussons Pty Limited (1993) 46 FCR 225; Fountain Selected Meats (Sale) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397; Hofer v Howell (2001) 113 LGERA 391; Leichhardt Municipal Council v Green [2004] NSWCA 341; Lesnewski v Mosman Municipal Council & Anor (No 2) [2004] NSWLEC 422; LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2003] NSWCA 74; Maule v Liporoni (No 2) (2002) 122 LGERA 216; Notaras & Anor v Holman & Anor [2004] NSWLEC 453; CASES CITED: Oshlack v Richmond River Council (1998) 193 CLR 72; Port Stephens Council v Randell [2000] NSWLEC 169; Rosniak v Government Insurance Office (1997) 41 NSWLR 608; Russo v Resource Development International Pty Ltd (No 2) [2003] NSWSC 446; Styles v Wollondilly Shire Council (No 3) [2001] NSWLEC 133; Walton v Gardiner (1993) 177 CLR 378; Westfield Management Limited & Ors v Direct Factory Outlets Homebush Pty Limited & Ors (2003) 133 LGERA 114; Westfield Management Limited & Ors v Direct Factory Outlets Homebush Pty Limited & Ors [2004] NSWLEC 327; Westfield Management Limited & Ors v Direct Factory Outlets Homebush Pty Limited & Ors (2004) 136 LGERA 174; Westfield Management Limited & Ors v Direct Factory Outlets Homebush Pty Limited & Ors [No 3] [2004] NSWLEC 688

DATES OF HEARING: 11/04/2005 12/04/2005

APPLICANTS: Mr I Jackman SC (barrister) with Ms S Pritchard (barrister) SOLICITORS: Speed and Stracey

FIRST RESPONDENT: Mr R Lancaster (barrister) SOLICITORS: Gilbert and Tobin SECOND RESPONDENT: Mr C Leggat (barrister) with Mr T To (barrister) SOLICITORS: LEGAL REPRESENTATIVES: Watkins Tapsell THIRD RESPONDENT: Mr A Galasso (barrister) SOLICITORS: Gadens Lawyers FOURTH RESPONDENT: Mr A Galasso (barrister) SOLICITORS: Deacons FIFTH RESPONDENT: Mr G Newport (barrister) SOLICITORS: Harris Hyde Page

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

WESTFIELD MANAGEMENT LIMITED GPT MANAGEMENT LIMITED CENTRO PROPERTIES LIMITED STOCKLAND TRUST MANAGEMENT LIMITED Applicants

DIRECT FACTORY OUTLETS HOMEBUSH PTY LIMITED First Respondent

SANITY MUSIC STORES PTY LIMITED Second Respondent PERFUMANIA PTY LIMITED T/AS THE PERFUME CONNECTION Third Respondent

COLORADO GROUP LIMITED T/AS MATHERS SHOES Fourth Respondent

FOAD HADDAD & RONDA HADDAD T/AS FLORENTINE EYEWEAR Fifth Respondent

JUDGMENT [No 4] 1 Her Honour: On 25 June 2004 the Court struck out the Applicants' pleadings in the proceedings (see Westfield Management Limited & Ors v Direct Factory Outlets Homebush Pty Limited & Ors [2004] NSWLEC 327 ("Westfield No 1")). On 15 December 2004 the Court dismissed the Applicants' motion seeking leave to replead and summarily dismissed the proceedings (see Westfield Management Limited & Ors v Direct Factory Outlets Homebush Pty Limited & Ors [No 3] [2004] NSWLEC 688 ("Westfield No 3")).

2 In Westfield No 3 I held at [54] that: The Applicants are to pay the costs thrown away by the Respondents in meeting the first, second and third versions of the Second Amended Application Class 4 and the Second Amended Points of Claim and the Applicants' Notice of Motion dated 12 August 2004. The question of whether the costs the subject of order 3 ought be payable on an indemnity basis is reserved.

3 All the Respondents are now seeking costs on an indemnity basis for the whole of the proceedings not just in relation to Westfield No 3. Costs are also sought in relation to the balance of the proceedings in relation to which no costs orders have been made. 4 There have been other costs orders made in the proceedings as numerous interlocutory orders have been made. Following my judgment in Westfield No 1 I ordered on 25 June 2004 that: The Applicants to pay the First, Second and Fourth Respondents' costs of the strike out application commencing from p 26 of the Court transcript for Thursday 17 June 2004. The question of whether costs in prayer 2 are assessable immediately is reserved. I note for completeness that as the action against the Third and Fifth Respondents was stood over for later hearing they are not included in the costs order made on 25 June 2004 as they did not participate in the first strike out application.

5 The Applicants argued in the alternative that each party should pay its own costs until 25 June 2004, the date of my judgment in the first strike out application, and that thereafter the costs are payable on a party and party basis. The costs orders in the Applicants' favour should otherwise stand. The Applicants filed a schedule of costs orders made in favour of the Applicants or costs in the cause. The schedule included the following costs orders: 14 March 2003: Third Respondent's Notice of Motion for summary dismissal dated 3 March 2003 dismissed with costs.

14 March 2003: Costs of First, Second, Fourth and Fifth Respondents' Notices of Motion for summary dismissal (dated 24 February 2003, 25 February 2003, 23 February 2003 and 25 February 2003 respectively) are to be costs in the cause)

15 September 2003: First Respondent to pay Applicants' costs of First Respondent's Notice of Motion dated 1 July 2003.

6 The Applicants also argued that they should be entitled to costs for the Notice of Motion of a successful application made by the Applicants under s 50 of the Evidence Act 1995 ("the s 50 application"). I reserved the question of costs of this motion on 27 May 2004.

7 An abridged chronology of proceedings follows: · Proceedings commenced by Application Class 4 filed 7 November 2002; · Points of Claim filed 20 December 2002; · Amended Application Class 4 filed 14 March 2003; · Amended Points of Claim filed 14 March 2003; · Further Amended Application Class 4 filed 26 December 2003; · Further Amended Points of Claim filed 26 December 2003; · Further Amended Application and Further Amended Points of Claim as against the First, Second and Fourth Respondents struck out in Westfield No. 1 on 25 June 2004; · Consequential orders made striking out Further Amended Application and Further Amended Points of Claim as against the Third and Fifth Respondents on 2 November 2004; · Second Further Amended Application Class 4 filed 16 July 2004; · Second Further Amended Points of Claim filed 16 July 2004; · Notice of Motion filed 12 August 2004 on behalf of Applicants seeking leave to re-plead in terms of the Second Further Amended Application filed 16 July 2004 and Second Further Amended Points of Claim filed 16 July 2004; · The Applicants notified the Respondents of proposed changes to the Second Further Amended Application on 14 October 2004; · Re-plead Second Further Amended Application filed 2 November 2004; · Re-plead Second Further Amended Points of Claim filed 2 November 2004; · The Applicants' proceedings summarily dismissed in Westfield No 3 on 15 December 2004.

There were also numerous interlocutory matters that it is not necessary to set out here.

Indemnity costs Respondents' submissions on indemnity costs 8 There is substantial commonality between the Respondents' submissions in relation to why indemnity costs ought be granted. (i) No chance of success - All Respondents 9 Relying on Colgate-Palmolive Co & Anor v Cussons Pty Limited (1993) 46 FCR 225, Fountain Selected Meats (Sale) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 and Rosniak v Government Insurance Office (1997) 41 NSWLR 608 the First Respondent submitted that the Applicants properly advised should have known that they had no chance of success with the case as pleaded. The First Respondent argued that the Applicants failed to have regard to observations of the Court in Westfield No 1 and thereby continued to plead a case with no reasonable prospects of success. This behaviour was said to be unfair and oppressive in Westfield No 3 and was therefore an abuse of the Court's processes. An award of indemnity costs against the Applicants was appropriate.

10 The Second Respondent also submitted that the Applicants properly advised should have known that they had no chance of success. The Second Respondent argued that the pleadings up to 25 June 2004 failed to contain any reference or "primary function", "factory outlets centre" or "shop" and failed to articulate the breach of Condition 11. In the period from 26 June 2004 onwards, the Applicants' repeated attempts to re-plead continued to fail to address the core issues of their case and thereby continued to plead a case that had no reasonable prospects of success. The Second Respondent submitted that the continual failure to address the core issues after having been expressly alerted to the issue by my judgment in Westfield No 1 amounted to an unfair and oppressive use of the Court's processes justifying an award for indemnity costs.

11 The Third, Fourth and Fifth Respondents submitted that as the proceedings had been summarily dismissed the whole of the Applicants' case was groundless and the Applicants ought to have known that in the circumstances they had no chance of success. In these circumstances the indemnity approach ought to extend to all aspects of the proceedings. The Third, Fourth and Fifth Respondents also argued that as the pleadings had been struck out in a court which did not require "proper" pleading then as a result costs ought to be extended further than the usual orders for costs.

(ii) Unreasonableness 12 Relying on my finding in Westfield No 3 at [48] the Respondents also argued that the Applicants acted unreasonably and pursued a matter that had no reasonable cause of action. The Respondents submitted that the Applicants could not be expected to succeed in a breach of Condition 11 case without referring to the terms of Condition 11 in the pleadings. As the matter was fundamentally unable to be plead or unsatisfactorily able to be plead the Respondent argued that the Applicants pursued a matter that had no reasonable cause of action and acted unreasonably. (iii) Improper purpose - Third, Fourth and Fifth Respondents 13 The Third, Fourth and Fifth Respondents argued that the Applicants were guilty of an improper purpose in commencing and maintaining the proceedings. The Third, Fourth and Fifth Respondents noted that while there were open standing provisions contained in s 123 of the Environmental Planning and Assessment Act 1979 ("EP&A Act"), the open standing provisions do not disentitle the Court from enquiring or assessing the Applicants' motivation behind the proceedings. The Third, Fourth and Fifth Respondents argued that as the Applicants were trade competitors of the First Respondent, and in light of the Court's finding in Westfield No 3 at [51] that the conduct of the Applicants could be characterised as "giving rise to an unfair and oppressive use of the processes of the Court", the Applicants were guilty of commencing proceedings for an improper purpose. The Third, Fourth and Fifth Respondents relied on the decision of Mason P in Rosniak v Government Insurance Office (1997) 41 NSWLR 608 to argue that such conduct warranted more than the usual order as to costs, and Notaras & Anor v Holman & Anor [2004] NSWLEC 453 to argue that indemnity costs should be awarded in circumstances where the Court finds proceedings were commenced for some ulterior motive. (iv) Calderbank letters/offers of settlement - Third, Fourth and Fifth Respondents 14 The Third Respondent relied on a letter dated 24 February 2004 from the Third Respondent to the Applicants as a Calderbank offer of settlement as a further ground for an award of indemnity costs from 28 days after the letter's date. The terms of that offer were that because the Applicants would fail they should discontinue the proceedings and pay the costs incurred by the Third Respondent up to the date the Applicants discontinued the proceedings.

15 The Fourth Respondent relied on a letter dated 19 March 2004 from the Fourth Respondent to the Applicants that was said to be a Calderbank offer of settlement. The terms of the letter indicated that there was no utility in the Applicants proceeding to obtain orders against the Fourth Respondent. The Fourth Respondent submitted that as the Applicants obtained a result significantly less than the terms of the position set out in the letter dated 19 March 2004, the letter constituted a further ground for the award of indemnity costs from 28 days after the letter's date.

16 The Fifth Respondent relied on correspondence between the Fifth Respondent and the Applicants as further grounds for an award of indemnity costs. While accepting that the letters did not constitute Calderbank offers of settlement, the Fifth Respondent argued that correspondence between the Fifth Respondent and the Applicants put the Applicants on notice that they ought to have known their case had no chance of success. This correspondence could be taken into account in the Court's determination of indemnity costs. Applicants' submissions on indemnity costs (i) No chance of success 17 The Applicants argued, firstly, that the Respondents' allegations that the Applicants had no chance of success were unfounded. The Applicants submitted that there could be no suggestion based on my judgment in Westfield No 1 that the Applicants' conduct in relation to the first set of pleadings was in any way unreasonable. Similarly, the Applicants argued that in my judgment in Westfield Management Limited & Ors v Direct Factory Outlets Homebush Pty Limited & Ors (2004) 136 LGERA 174 ("Westfield No 2") concerning the appropriate costs order arising out of the judgment in Westfield No 1 the Court did not regard the Applicants' conduct in relation to the proceedings as unreasonable. In relation to the second set of pleadings the Applicants argued that there was no basis from my judgment in Westfield No 3 which suggested that there was an unarguable case. The Applicants argued that my finding was simply that the case was not articulated adequately in the pleadings.

18 Secondly, the Applicants argued that the Applicants' conduct did not amount to an unfair and oppressive use of Court processes. The Applicants submitted that my finding in Westfield No 3 at [51] that the Applicants' conduct gave rise "to an unfair and oppressive use of the processes of the Court" was not a finding of any improper purpose or intention, or of any moral wrongdoing. Rather it was merely the conventional language used to describe the basis of the Court's jurisdiction to stay the proceedings as an abuse of process. The Applicants argued in any case that there had been a genuine and conscientious attempt (even if it was ultimately unsuccessful) to articulate the Applicants' case in the Second Amended Application and Points of Claim.

(ii) Unreasonableness 19 The Applicants argued that they had not acted unreasonably in the circumstances of the case and merely failed to identify the important aspects of their case. The Applicants noted that in my judgment in Westfield No 1 I struck out the pleadings, but allowed the Applicants another opportunity to re-plead their case. Further, in Westfield No 2 I did not consider that it was appropriate to award costs immediately following the striking out of the pleadings. The Applicants submitted that this indicated the conduct of the Applicants was not unreasonable in my view. As the amended pleadings following the striking out constituted an improvement on the pleadings in Westfield No 1 the Applicants submitted that their actions after 25 June 2004 were also not unreasonable.

(iii) Improper purpose 20 The Applicants argued that there was no evidence to justify the allegation made by the Third, Fourth and Fifth Respondents that the Applicants sought to achieve more from the litigation than the orders sought out in the application. The Applicants argued that there was no impropriety of purpose in bringing the proceedings where the purpose of the proceedings is to obtain a remedy that the law provides.

(iv) Calderbank letters/offers of settlement 21 The Applicants argued that the letters relied on by the Third and Fourth Respondents did not constitute Calderbank letters of offer and therefore were not further grounds for awarding indemnity costs. Relying on the Court of Appeal decision in Leichhardt Municipal Council v Green [2004] NSWCA 341 the Applicants argued that the letters relied on by the Third and Fourth Respondents did not contain any genuine offer of compromise and did not articulate the basis upon which the offer of compromise was made. As a result, a Calderbank offer did not arise.

Costs up to 24 June 2004 22 The Applicants submitted that while the ordinary rule is that the Court's discretion to pay costs is exercised in favour of a successful party, in this instance the circumstances justified a departure from that rule for the period before 24 June 2004. The Applicants argued that the conduct of the Respondents in waiting until 17 June 2004 to bring their motions to strike out the pleadings constituted disentitling conduct in the terms of Oshlack v Richmond River Council (1998) 193 CLR 72 in the period up until 25 June 2004 when I ordered in Westfield No 1 that the pleadings be struck out. The Applicants argued that this was particularly so if the Court accepts the Respondents' submissions that the Applicants' case was hopeless from the commencement of the proceedings.

23 In reply the First Respondent argued that there was no delay on the part of the First Respondent, noting the large number of amendments by the Applicants to the pleadings and the date of the first strike out motion made by the First Respondent on 24 February 2004. The First Respondent submitted that there was no disentitling conduct in the terms of Oshlack merely because the Respondent did not take all steps necessary to reduce the time needed to dispose of a matter.

24 The Second Respondent argued that there was no disentitling conduct because it was not appropriate for the Respondents to make a strike out application until 17 June 2004, after all evidence relied on by the Applicants had been filed in Court. This did not occur until just before 17 June 2004. Relying on the principles outlined in Russo v Resource Development International Pty Ltd (No 2) [2003] NSWSC 446 and Lesnewski v Mosman Municipal Council & Anor (No 2) [2004] NSWLEC 422 the Second Respondent also submitted that the conduct of the Respondents fell short of disentitling conduct.

25 The Third and Fourth Respondents adopted the submissions of the First and Second Respondents and in addition argued that delay, if the Court found there to be delay on behalf of the Respondents, should not constitute disentitling conduct because the defect in the Applicants pleadings resulted in the matter being stayed.

26 The Fifth Respondent adopted the submissions of the First, Third and Fourth Respondents and added that the Applicants had not relied on any authority for the proposition that delay constitutes disentitling conduct within the terms of Oshlack.

Section 50 application submissions 27 The Applicants submitted that as they were successful in their s 50 application they should be entitled to the costs of the application.

28 The First Respondent submitted that the costs order in relation to the s 50 application should follow the costs order in relation to the whole proceedings.

29 The Second, Third, Fourth and Fifth Respondents opposed the Applicants' application for costs of the Notice of Motion in relation to the s 50 application. The Second, Third, Fourth and Fifth Respondents argued that as evidence allowed as a result of the s 50 application could never have been relied upon by the Court (as a result of the inadequacy of the pleadings), the s 50 application was of no utility and a waste of Court time. Accordingly, the Second, Third, Fourth and Fifth Respondents submitted that no costs order should be made in favour of the Applicants in relation to the s 50 application. Finding 30 I have broad discretion under s 69 of the Land and Environment Court Act 1979 ("the Court Act") to award costs. The Respondents have been entirely successful in their substantive challenge to the Applicants' pleadings. Usual practice in this Court suggests that the Respondents would get all the costs of the hearing not otherwise the subject of a costs order on a party and party basis, subject to my finding on the s 50 application.

31 It is appropriate that I deal first with whether the Applicants should pay the Respondents' costs up to June 2004.

Costs up to 24 June 2004 32 The Applicants argued that there was disentitling conduct on the Respondents' part so that they should not receive costs on a party and party basis up to June 2004. Did the Respondents unreasonably delay in making their first application to strike out on the first day of the hearing some 18 months after proceedings were commenced? I do not accept the Applicants' submissions that there was such delay or indeed any delay on the part of the Respondents. None of the cases relied on by the Applicants cite circumstances of disentitling conduct as referred to in Oshlack which can be regarded as equating to the delay of the Respondents in moving their first application to strike out.

33 I do not consider the Respondents in fact delayed in making their application to strike out on the first day of hearing on 17 June 2004. It is clear from Westfield No 1 at [19] that it was not until the case was opened in oral submissions that the nature of the case the Applicants sought to argue became more apparent to the Respondents. This articulation of the case, which changed over the course of further argument, was not reflected in the pleadings, as I found in Westfield No 1.

34 Accordingly the Applicants should pay the Respondents' costs up to 24 June 2004. It follows that I should now consider whether indemnity costs ought be payable for part or all of the proceedings.

Indemnity costs 35 The Court is specifically empowered to award costs on an indemnity basis under s 69(2)(c) of the Court Act. A successful strike out motion or summary dismissal application is not of itself grounds for the award of indemnity costs. Principles I have been referred to by the parties are: Woodward J in Fountain at 401: I believe that it is appropriate to consider awarding "solicitor and client" or "indemnity" costs, whenever it appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success.

Sheppard J in Colgate at 233: In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether her or in England. The tests have been variously put. The Court of Appeal in Andrews v Barnes … at 141 said the Court had a general and discretionary power to award costs as between solicitor and client "as and when the justice of the case might so require". Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v Preston … at 637; namely, there should be some special or unusual feature in the case to justify the Court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, or warranting a departure from the usual rule. But as French J said (atp8) in Tetijo, "The categories in which the discretion may be exercised are not closed". Davies J expressed (at p6) similar views in Ragata … Mason P in Rosniak at 616: Later cases have emphasised that the discretion to depart from the usual "party and party" basis for costs is not confined to the situation of what Gummow J described as the "ethically or morally delinquent party" (Botany Municipal Council v Secretary, Department of the Arts, Sport, the Environment, Tourism and Territories (1992) 34 FCR 412 at 415): see Baltic Shipping Co v Dillon, "Mikhail Lermontov" (1991) 22 NSWLR 1 at 34; Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 233-234. Nevertheless the court requires some evidence of unreasonable conduct, albeit that it need not rise as high as vexation. This is because party and party costs remain the norm, although it is common knowledge that they provide an inadequate indemnity. Any shift to a general or common rule that indemnity costs should be the order of the day is a matter for the legislature or the rule-maker: Huntsman Chemical Co Australia Ltd v International Pools Australia Ltd (1995) 36 NSWLR 242 at 248. (a) No chance of success 36 I held in Westfield No 1 at [27] that the Applicants' case was not manifestly hopeless if it could be properly pleaded. I held at [19] that there had been a failure to plead at all the case on which the Applicants opened. 37 On one view it is too early in the procedings to resolve whether this case has any prospects of success. There has been no final resolution of the proceedings here as they have been dismissed. Further, my conclusion in each of the strike out applications was that there was no arguable case articulated, not that there were no reasonable prospects of success.

38 What the Respondents argued is that because of the way the pleadings were framed there was no prospect of success for a claim based on Condition 11 to have succeeded in the absence of a defined approach to the key terms. I did hold in Westfield No 1 and Westfield No 3 that there was a failure to define the basis on which it was said that Condition 11 could be breached. The failure to do so was greater in Westfield No 1 than in Westfield No 3 although both sets of pleadings were struck out or dismissed. I do not think that it can be said that the failure to plead Condition 11 as found in Westfield No 1 was such that a person properly advised must have known there was no prospect of success. 39 The other period to consider on this issue is the period after June 2004 until my judgment in Westfield No 3. I agree with the submissions of the Applicants' counsel that there was a better attempt in the Second Amended Class 4 Application and Points of Claim to articulate the case intended to be run but obviously held that it still was not good enough to demonstrate an arguable case. I do not consider that the second attempt at drafting the pleadings was so hopeless that no person properly advised would have known there was no prospect of success. The references in Westfield No 3 relied on by the Applicants in their submissions make this clear. (b) Improper purpose 40 There is no evidence from which I can infer any improper purpose in the commencement and maintenance of these proceedings. As I held in Westfield Management Limited & Ors v Direct Factory Outlets Homebush Pty Limited & Ors (2003) 133 LGERA 114 at [19], an interlocutory judgment for a stay of proceedings pending a Federal Court matter, s 123 of the EP&A Act enables any person or entity to commence proceedings to enforce what it considers are breaches of the EP&A Act. It is well recognised that open standing provisions enable the enforcement of planning laws and that this is in the public interest. The fact that business competitors rather than individuals or entities without a financial interest join together to take action seeking enforcement of planning laws is immaterial under s 123 of the EP&A Act.

41 It is clear that the enforcement of Condition 11 in the relevant development consent is problematic given its wording. The Applicants have had two unsuccessful attempts at pleading a breach of Condition 11. Of itself there is nothing improper in their pursuing their case however unsuccessfully.

(c) Calderbank letters/offers of settlement 42 The Court has a general discretion to award indemnity costs against a party where a Calderbank letter of offer is made. A Calderbank letter does not automatically give rise to an award of indemnity costs.

43 In Green the Court of Appeal considered what constituted a Calderbank letter of compromise and the effect a Calderbank letter had on the determination of costs in a personal injury matter where the plaintiff brought an action against the defendant for damages. The Court of Appeal held at [23] per Santow JA that "an offer with no real element of compromise in it, which is designed merely to trigger the costs sanction, will not be treated as a genuine offer of compromise". His Honour then held at [46] and [47] that indemnity costs did not necessarily flow as a matter of course from unaccepted Calderbank letters of offer. The Court has a general discretionary power to award costs and will be reticent to award indemnity costs following offers of compromise. His Honour concluded at [52] that in order for an award of indemnity costs to be made it was necessary for the Court to be satisfied that there were sufficient circumstances to displace the general rule that only party and party costs can be recovered by the successful party. 44 The letters relied on by the Third and Fourth Respondents are dated 24 February 2004 and 19 March 2004 respectively so that these are dated well before Westfield No 1, handed down on 25 June 2004.

45 Are the letters relied on by Third and Fourth Respondents Calderbank offers? I have not been directed to any case law where there has been an analysis of Calderbank offers in the context of judicial review proceedings which are quite different proceedings to claims involving the payment of money. There is obviously far less scope for negotiation of a compromise in judicial review proceedings in the sense that they are either pursued so that the orders or declarations and consequential relief are sought or they are not. It may only be in relation to costs that there is any scope for negotiation and compromise. 46 Both Respondents' letters suggest resolution on the basis that the Applicants discontinue their case. The Fourth Respondent offered that each party pay its costs up to that point. The Third Respondent offered that the Applicants pay its costs from the commencement of proceedings to the date of discontinuance. I agree with the Applicants' submission that there is no genuine offer of compromise in the Third Respondent's letter at all, not even on costs. Nor do I think that the Fourth Respondent's letter can be said to be a genuine offer of compromise in the sense that there was room for negotiation on the part of the Applicants. 47 In any event these letters can be considered as relevant conduct in the exercise of the Court's general discretion to award costs. This must also apply to the correspondence dated 29 July 2004 relied on by the Fifth Respondent. In Hofer v Howell (2001) 113 LGERA 391 Lloyd J noted at 397 that there was no statutory rule in the Land and Environment Court dealing with offers of compromise and then said: Although there are policy arguments in favour of putting the makers of compromise offers in a better position in relation to costs, these alone are not sufficient to justify departure from the well settled principles relating to costs where the legislature has not seen fit to intervene. In the end, these policy objectives may be better served by recognising compromise offers within the existing discretionary framework than by introducing a new presumption. The applicant's rejection of what proved to be a reasonable offer by the respondent is, therefore, only one consideration among many to be taken into account in determining whether there are special circumstances justifying an order for indemnity costs. These comments were made in Class 3 proceedings involving claims for costs in an encroachment matter. They were expressly adopted by the Court of Appeal in LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2003] NSWCA 74 at [118] and applied again by Lloyd J in Canterbury City Council v Roads and Traffic Authority of New South Wales [2004] NSWLEC 536 at [22] - [23], which were Class 3 proceedings. 48 In Styles v Wollondilly Shire Council (No 3) [2001] NSWLEC 133, Class 4 judicial review proceedings, Sheahan J noted that the failure to settle a matter which was ultimately unsuccessful could be considered in determining whether a party had acted so unreasonably as to warrant the making of indemnity costs. In Port Stephens Council v Randell [2000] NSWLEC 169, also Class 4 proceedings, Cowdroy J adopted the approach of several decisions of the Full Federal Court of Australia considering that an order for indemnity costs is only appropriate in a case where an offer of settlement has been rejected in circumstances that made the further litigation of the proceedings plainly unreasonable.

(d) Unreasonableness 49 It is necessary that I consider all these matters in deciding whether the Applicants have acted so unreasonably as to justify an award of indemnity costs against them. In Westfield No 2 where I was considering whether costs ought be payable immediately in relation to the award of costs following Westfield No 1, I held that the Applicants had not engaged in unreasonable conduct in the proceedings. While that finding was being considered in a different context to the application for indemnity costs, the consideration of reasonableness covers similar territory in terms of an analysis of the Applicants' action.

50 The cases relied on by the parties emphasise that an application for indemnity costs must be considered in the circumstances of each matter, there being no defined category of cases where such orders ought be made. It is clear that such orders are not lightly made given the prevalence of the rule that costs are payable on a party and party basis. For example in Maule v Liporoni (No 2) (2002) 122 LGERA 216 indemnity costs were awarded in circumstances suggesting greater unreasonableness than in the matter before me.

51 If I consider the first part of the proceedings leading up to my judgment of 25 June 2004, and taking into account the so called offers to settle, in light of the conduct of the case it cannot be said the Applicants acted so unreasonably that costs on an indemnity basis are warranted up to 25 June 2004. 52 Nor do I consider they are warranted in relation to the second strike out summary dismissal application. As observed earlier, there was a greater attempt to identify the nature of the breach of Condition 11 in the later pleadings. That it was not successful does not render the Applicants' actions unreasonable. My observations about unfair and oppressive use in Westfield No 3 at [51] were directed to the reason I did not strike out the proceedings on that occasion, with presumably opportunity to replead, but rather ordered summary dismissal. I did not hold that there was abuse of process by the Applicants and did not intend to do so. The Applicants submitted that the use of the words does not denote improper purpose or moral opprobrium, based on Walton v Gardiner (1993) 177 CLR 378 at 392.9 - 393.7 and I agree with those submissions. 53 While the Applicants have clearly been entirely unsuccessful on two occasions their behaviour has not been so unreasonable that indemnity costs are warranted. Section 50 application costs 54 I accept the Respondents' submissions that as the evidence in relation to which the s 50 certificate was prepared has no utility given the order for summary dismissal, then the Applicants should not have their costs of this application.

Other orders 55 Where I have made orders that costs are in the cause, the relevant Respondents should have their costs given their overall success in the proceedings. This is relevant to the second item set out above in par 5 concerning applications for summary dismissal. 56 As the parties have not been entirely successful in their respective applications I consider the appropriate order for these proceedings is that each party pay its own costs.

Orders 57 The Court makes the following orders:

1. The Applicants are to pay the Respondents' costs of the proceedings unless otherwise ordered.
2. The Applicants are to pay the First, Second, Fourth and Fifth Respondents' costs of Notices of Motion for summary dismissal (dated 24 February 2003, 25 February 2003, 23 February 2003 and 25 February 2003 respectively).
3. Each party pay its costs of the First, Second, Third, Fourth and Fifth Respondents' Notices of Motion (dated 17 January 2005, 20 January 2005, 20 January 2005, 21 December 2004 and 19 January 2005 respectively) and the hearing on 11 April 2005 and 12 April 2005.
4. No orders as to costs in relation to the Notice of Motion made by the Applicants under s 50 of the Evidence Act 1995 and Orders dated 27 May 2004.
5. Exhibits are to be returned.

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