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

Westfield Management Limited & Ors v Direct Factory Outlets Homebush Pty Limited & Ors - [2005] NSWLEC 168 - NSWLEC 2005 case summary — Zoe

[27]

(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.

[47]

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.

[48]

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.

[52]

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.

At a glance

Court

Decision date

Before

Source

Judgment (58 paragraphs)

Parties

Cases Cited (22)

Cited By (8)