Wollondilly Shire Council v 820 Cawdor Road Pty Ltd & Anor

Judgment 1On 5 April 2012, after a three day hearing, I delivered a judgment in which I dismissed a summons brought by Wollondilly Shire Council against the owner of a properly at Cawdor, 820 Cawdor Road Pty Ltd (the first respondent) and the occupier of a building on that property, Mr Richard Garton (the second respondent) : Wollondilly Shire Council v 820 Cawdor Road Pty Limited [2012] NSWLEC 71. The council had sought a number of declarations and orders relating to the unlawful use and occupation by Mr Garton of a building used by him as a dwelling. 2Despite the outcome of the proceeding, there are now three competing notices of motion for costs. The council seeks the following orders : (i) that the first respondent, 820 Cawdor Road Pty Ltd, pay 85% of the Council's costs (including the costs of certain interlocutory proceedings) and (ii) that the Council pay 15% of Cawdor's costs; (iii) alternatively to (i) and (ii), that Cawdor pay 70% of the Council's costs; and (iv) that Cawdor pay the council's costs of its motion for costs. 3Cawdor seeks orders that, (i) the Council pay Cawdor's costs (including costs on an indemnity basis from 21 February 2012), and (ii) the Council pay Cawdor's costs of its motion for costs. 4Mr Garton seeks orders that, (i) the Council pay Mr Garton's costs, and (ii) the Council pay Mr Garton's costs of his motion for costs. 5All three notices of motion are contested. 6The issues in the principal proceeding were (a) whether Mr Garton's use and occupation of the building was for the purpose of a "dwelling" as defined in the Wollondilly Local Environmental Plan 2011 and was thus a purpose which was prohibited, (b) whether Mr Garton's use and occupation of the building was protected by the Residential Tenancies Act 2010, (c) whether Mr Garton's use and occupation of the building was permitted by cl 10(1) of State Environmental Planning Policy No 4, (d) whether the building was structurally sound, (e) whether the use by Mr Garton of a toilet in a nearby building known as "the pink building" was unlawful, and (f) whether in the exercise of the Court's discretion Mr Garton should nevertheless be permitted to remain in the building. 7I found that although Mr Garton's use of the building was for the purpose of a dwelling and was thus unlawful, a proper exercise of the Court's discretion was to permit him to stay there. I also found that the Residential Tenancies Act did not protect Mr Garton's occupation and that State Environmental Planning Policy No 4 did not apply. During the hearing Cawdor gave an undertaking by its solicitor Mr P R Rigg that it would not allow the toilet in "the pink building" to be used without an approval under s 68A of the Local Government Act. The end result was that the Council's summons was otherwise dismissed. 8Costs are in the discretion of the Court, subject to the rules : s 98 Civil Procedure Act 2005. Part 42.1 of the Uniform Civil Procedure Rules 2005 (which applies in this court) states : "Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs." 9As to this rule, Young JA (McColl JA concurring) said in Hastings Point Progress Association Inc. v Tweed Shire Council [2010] NSWCA 39, 172 LGERA 157 at [18] : "The Rule speaks for itself. However, judicial exposition has noted that it means that a person seeking to displace its prima facie effect must show that there is something out of the ordinary in the case in order to justify the departure : see eg New South Wales v Gebethner [2009] NSWCA 237." 10It is accepted that an award of costs is not by way of punishment of the unsuccessful party, but is compensatory, the rationale of such an order being that it is just and reasonable that the party who has caused the other party to incur the costs of the litigation should reimburse that party for the expense to which he or she has been put : Latoudis v Casey [1990] HCA 59, 170 CLR 534 at 543, 563 and 566 - 567. Moreover, as McHugh J (Brennan CJ concurring) said in Oshlack v Richmond River Council [1998] HCA 193 CLR 72 at [66] : "By far the most important factor which courts have viewed as guiding the exercise of the costs discretion is the result of the litigation. A successful litigant is generally entitled to an award of costs." 11Part 42.1 of the Rules expresses this principle in statutory form. The rule allows, however, for exceptions - as Young JA observed in Hastings Point Progress Association, something out of the ordinary to justify a departure. A successful party may be deprived of costs and ordered to pay the other party's costs on an issue that was clearly dominant or separate : Griffith v Australian Broadcasting Corporation (No 2) [2011] NSWCA 145 at [15] - [20], and the cases cited therein. As Hodgson JA also observed in Griffith at [18]; "the principles only identify cases in which is may be appropriate to depart from the usual result as to costs, not cases in which the court must do so (citing James v Surf Road Nominees (No 2) [2005] NSWCA 296 at [34] - [36]). 12Hodgson JA also noted in Griffith at [19], that the application of these principles may not be exactly the same for successful defendants as for successful plaintiffs. In the case of successful defendants, as is the case here, it may be considered appropriate that the defendant have costs associated with reasonable defences, even if they ultimately proved to be unsuccessful and severable. 13In the same case Basten JA said, at [39] that caution should be taken in allowing an unsuccessful plaintiff to resist payment of costs in respect of particular independent defences which are unsuccessful. In expressing this view his Honour relied upon the following statement of Burchett J in Australian Conservation Foundation v Forestry Commission of Tasmania (1988) 76 LGRA 381 at 384 : "A party against whom an unsustainable claim is prosecuted is not to be forced, at his peril in respect of costs, to abandon every defence he is not sure of maintaining, and oppose to his adversary only the barrier of one hopeful argument : he is entitled to rise his earthworks at every reasonable point along the path of assault. At the same time, if he multiplies issues unreasonably, he may suffer in costs." 14The question then appears to be whether, in raising the defences that were unsuccessful, the issues were multiplied unreasonably. In another way, were the defences that were raised reasonable ? In Bullabidgee Pty Ltd v McCleary (No 2) [2011] NSWCA 343 at [10] the Court of Appeal used the expression "just and reasonable" : "We do not consider that individual issues should be isolated and weighed with minute precision. That said, the costs orders below and on appeal should be a just and fair reflection of the cases run, won and lost, given the range of issues litigated, the manner of running the trial and the basis of success. That course is not inconsistent with the prima facie rule that costs follow the event, depending on what the event is : Uniform Civil Procedure Rules, Pt 42 r 42.1. In this respect, the Civil Procedure Act, s 98(1) gives ample authority to determine the costs according to what is just and reasonable : Ohn v Walton (1995) 36 NSWLR 77 at 79." 15In the present case, I find that it was reasonable for the successful respondents to raise the unsuccessful defence of whether the building in question was a "dwelling". The question was clearly open and arguable and, if successful, would have been determinative and meant that the case (apart from the use of the toilet in the pink building) must have been dismissed. The issues relating to the Residential Tenancies Act and State Environmental Planning Policy No 4, whilst separate and distinct, were neither dominant nor did they occupy any significant amount of the court's time. It would be a minutely precise exercise to isolate these issues for separate consideration. Although the structural stability of the building was in issue, it was not a factor which swayed the Court in coming to the ultimate decision. The Council's real success came when Cawdor by its solicitor gave the undertaking in relation to the use of the toilet in "the pink building". 16Apart from achieving the concession in relation to the toilet in "the pink building", I question the Council's pursuit of Mr Garton following the service upon it on 21 February 2012 of the medico legal report and his affidavit. It would have been self evident to the council upon receiving both the report and Mr Garton's affidavit that there was a powerful, even persuasive, case for the exercise of the Court's discretion in favour of the respondents. Although the medico - legal report suggests that Mr Garton would adjust to life in an alternative dwelling on the property, the affidavit of Mr Garton is strongly to the contrary, in which he states that he is used to living in the building which is well suited to him and if given the chance to upgrade he would most likely decline as the change would ruin his familiarity with the building. 17The considerations noted at [15] and [16] above persuade me that, subject to one matter, it is appropriate to adopt the general approach of awarding the costs of the proceedings to the successful parties without attempting to differentiate between the particular issues on which they were successful and those on which they failed. There is nothing out of the ordinary in the present case to justify a departure from the prima facie effect of Pt 42.1 of the Rules. 18The one matter which qualifies this conclusion is the concession made at the hearing by Cawdor which resulted in the undertaking noted at [7] above. 19However, as Mr P R Rigg, appearing for Cawdor, submits, Cawdor never used the toilet facilities in the "pink building", there is no evidence to suggest that it gave permission to anyone to use the toilet in that building, the council did not ask Mr Garton not to use the toilet before it commenced the proceeding, and Cawdor decided to give the undertaking as an appropriate means of bringing closure to the issue. Again, it would be a minutely precise exercise to exclude this matter from the overall costs. 20As noted at [3] above, Cawdor seeks an order that not only should there be an order that the council pay its costs, but that the council should pay its costs on an indemnity basis after 21 February 2012, when it was served with the medico legal report and the affidavit of Mr Garton. It submits that on and from that date the council's case had become hopeless and it would never be successful in the proper exercise of the court's discretion. 21The proper basis for an award of indemnity costs in such circumstances is that the action must have been commenced or continued where the applicant, properly advised, should have known that it had no chance of success : Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401. The Council's case, however, included a claim that the building which was occupied by Mr Garton was structurally unsound and unsafe. Although the case for the exercise of the Court's discretion in favour of Mr Garton continuing his occupation of the building was strong and even compelling, it cannot be said in this circumstances that the Council's desire to get Mr Garton out had no choice of success, given the state of the building. There is no ground for departing from the usual basis for an order as to costs. 22Although I find that the respondents are entitled to an order for the cost of the proceeding, the Council submits that there should be a separate order for costs in its favour for certain interlocutory proceedings. 23As part of the preparation for the proceeding the Council sought access to the building. Access was resisted based on s 118J of the Environmental Planning and Assessment Act 1979 which restricts a Council's power to enter and inspect premises that are being used for "residential purposes". This caused the Council to file a notice of motion on 16 November 2011 for access. The motion came before the court on 2 December 2011 when Mr Rigg, appearing for Cawdor, said that the premises were being used for residential purposes. The Council complains that on a number of occasions Cawdor was requested to explain its potential defences, both before and after the commencement of the proceedings. It was not until about 17 February 2012 that Cawdor, in its Points of Defence, denied that the structure was a dwelling. The Council submits that the question of whether the structure was being used as a dwelling consumed a considerable proportion of the time both in preparation and at the hearing. 24In my view the facts do not justify a special order for costs. The Council did not file its Points of Claim until 5 December 2011. Only then was Cawdor made aware of the Council's case. Cawdor was then entitled by its Points of Defence to put the Council to proof of its case, including proof that the building was being used as a "dwelling" within the meaning of the local environmental plan. 25The Council next complains that it was put to unnecessary expense in relation to a Notice to Produce that Cawdor had served upon it. The notice was issued by Cawdor on 21 November 2011 and required the Council to produce for inspection its property file and related documents, zoning maps and relevant planning instruments. The parties were unable to agree in the manner of production. The Council was prepared to allow inspection at the Council's office or, alternatively, was prepared to photocopy the documents or transfer the documents to a disk at Cawdor's expense. Cawdor wanted the documents to be delivered to its solicitor's office. As a compromise the Council then offered to have one of its officers deliver the documents for inspection at Cawdor's solicitors office on condition that the officer stay within sight of the files and that Cawdor pay the officer's costs of attendance at $100 per hour. The parties were unable to reach agreement and on 22 February 2012 the Council filed a notice of motion seeking an order for its reasonable costs and expenses in complying with the notice. The Registrar then fixed a rate of $80 per hour for a Council officer to travel to Sydney with the documents and remain with them whilst they were inspected. 26These facts do not, in my view, call for a special order as to costs. The inability of the parties to agree in a sensible way of answering the notice to produce called for the issue to be determined by the Registrar. From this distance it is not possible to determine which party was most reticent. The costs relating to answering the Notice to Produce must be general costs in the proceeding. 27It follows that it is not appropriate to make any special order for costs in relation to any part of the proceeding. The orders of the Court are : (1) The applicant's Notice of Motion for costs is dismissed. (2) The applicant must pay the respondents' costs of the proceedings. (3) The applicant must pay the costs of the motions for costs. Exhibit 'A' returned.